Jeff Kaplan makes many good points about best practices ― among them, that benchmarking FCPA and UK Bribery Act compliance is not only about operational excellence. The benchmarking has legal significance. The FCPA and Bribery Act provide a defense if an act of bribery happens despite having a compliance program.
The defense will be it had adequate procedures in place or had an effective compliance and ethics program to prevent bribery. How will it show that? By reference to other companies’ efforts ― and how will it show it took that into account? From benchmarking.
Benchmarking does not eliminate the proportionality test, as Kaplan notes in his podcast discussing the benchmarking survey. The compliance program will still be tested by whether adequate resources were allocated to the program proportionate to the risks of corruption in the particular transaction, the type of industry, the country and other foreseeable risks of corruption.
For example, if direct harm to the public has resulted, such as from defective drugs or damage to the environment, it is likely that the company’s efforts will be judged as having required more resources than if the corruption impacted only another business. There may be no escaping subjective or situational factors that make it hard for a company to plan its compliance program. At least with solid benchmarking, there is some objective anchor for a company’s compliance program and the argument that other minds thought about it and reached not too dissimilar conclusions at the time and in the same context.
Benchmarking will not replace the judgment of public opinion and prosecutors about how responsible a whole industry should be about fighting corruption in various contexts. However, a company that shows leadership in its industry by its superior compliance program ― in effect raising the bar for benchmarking ― will stand out, with benefits for reputation and for public approval of business integrity.
Michael Scher has over thirty years experience as senior in-house counsel for anti-fraud and money laundering, regulatory compliance, international transactions and litigation management for financial or aerospace companies based in New York and the Middle East. He consults and provides training on the FCPA and related laws. He can be contacted here.
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The Anti-Corruption Compliance Program Benchmarking Survey is available here.