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Harry Cassin
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Marc Alain Bohn
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Bill Waite
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Shruti J. Shah
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Russell A. Stamets
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Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

Compliance alert: Do your sales people have too much discretion?

The DOJ’s charges against Vincente Garcia, the former SAP regional director and head of SAP’s Premier Client Network for Latin America, are filled with advisors, consultants, agents, and channel partners. In the e-mails, they refer to one another as friends and associates, and they talk about their connection with a public official, who at the end of a long transactional road will “owe us a big one.”

Garcia pleaded guilty in August to an FCPA conspiracy and was sentenced in December to twenty-two months in prison.

The SEC brought an enforcement action against his former employer, SAP SE, which paid $3.9 million to settle the FCPA offenses.

The SEC said Garcia “excessively discounted SAP software” in order to both facilitate bribery and to engage in self-dealing. Discounting goods and services to create a bribery slush fund isn’t new — we saw it also in FCPA enforcement actions against Weatherford in 2013 and Mead Johnson in July 2015, among others.

It was also part of my FCPA case, for which I ultimately spent fourteen and a half months in federal prison, until my release in December 2013.

Are there messages in Garcia’s case and mine that might bring some insight to today’s compliance challenges? I think there are, and they might not be what you think.

It’s all about discretion.

International field personnel, especially in remote locations, often have more discretionary authority than their counterparts who work in lower risk regions, where offices are usually more thoroughly staffed. That was true during my working life, and from my conversations with  today’s compliance professionals and other executives, it remains true.

In other words, the amount of autonomy given to international sales people is often a function of distance, oversight, and internal resources. When they are further from home, they typically have more individual discretion. Sometimes compliance personnel would rather not pay a field visit to validate what’s happening out there, or they don’t have the travel budget. It’s one of the last vestiges in the compliance world of don’t ask, don’t tell.

The irony is that when forward-positioned sales people are most successful, the compliance risks from their discretion are likely to grow too. Here’s why.

Successful sales personnel are typically given more tools, resources, and discretion. After all, if someone is a rain maker, his or her bosses will want to crank sales up to the next level. There’s never really any finish line for sales people. The reward for success is more pressure to achieve even more success, and the sales people are given the tools and latitude to do that.

Profit motive drives companies to grow and that’s not always a bad thing. But particularly in low integrity regions, someone needs to be asking how the sales success is being achieved. Someone needs to be willing to know what’s really behind the apparent success, particularly before granting more latitude or investing more resources.

During my 20-year sales career, I often had an abundant amount of authority. Eventually I was able to decide for myself whether to give deep product discounts. I had the authority to negotiate success fees with agents, and set their commission rates.

The discretionary matrix that governed other parts of the organization did not apply to my sector — that was part of the reward for my sales success. What did I do with the discretion? I took advantage of it for my own gain, and eventually to break the law. That’s my responsibility and I went to jail for it.

I’m talking about it now because the idea of giving sales people in frontier markets who are hitting their numbers more autonomy — without bringing more oversight — remains an area of tremendous risk. It’s still hard to find senior managers who are willing to second guess success in distant provinces, and who might want to take  a very long plane ride to some rough places so they can eyeball the sales people and make sure what they’re doing is compliant. In today’s expense-cutting environment, they might not have the travel budget, and a phone call won’t achieve the drill down that’s necessary.

That means sales people are still left to themselves. So they use their wits and ingenuity to meet their numbers, and the company grows. At some level, it’s what they’re hired to do. But when that ingenuity comes with autonomy, there might be compliance problems lurking behind the sales success.

Someone may up in prison, like I did, and their company may take a big ugly hit for fines and disgorgement, and suffer serious reputational damage.

Preventing such disasters isn’t  complicated, but it’s loaded with lots of potential pain. Home office executives who are supposed to oversee sales activity in remote and high risk sectors need to look at who’s making their forecast and earning their bonus, quarter after quarter.

Then, before giving those sales people even more discretion with little oversight, the executives need to ask a simple question: How are you getting there?


Richard Bistrong is a contributing editor of the FCPA Blog and CEO of Front-Line Anti-Bribery LLC. He was named one of Ethisphere’s 100 Most Influential in Business Ethics for 2015. He consults, writes and speaks about compliance issues. He can be contacted here.

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