The Ultimate Guide to 45 Minute FCPA Training

What if you only had 1 hour to teach your employees about the anti-bribery regulations found in the US Foreign Corrupt Practices Act (FCPA)?

I usually reserve at least 25% of the time for questions and conversation, so now you're down to 45 minutes. 

Given the ambiguity of the FCPA, it's not immediately apparent which topics corporate counsel should cover more in depth in their legal training presentation. Realistically, it might take 4-5 hours to give employees a presentation covering every potential FCPA risk. 

As we've previously covered in the InHouseOwl Ultimate Guide on Antitrust Training, and the Ultimate Guide on Advertising Law Training, corporate counsel need to start with the basics. What do employees need to know? And when do they just need to spot a red flag and report back to legal? 

In those posts, we discussed that corporate counsel need to focus on teaching employees to (1) spot red flags and (2) respond appropriately in risky situations. This training concept similarly applies to the FCPA, but certain employees will need to do more than just spotting red flags - I'm looking at you, sales and accounting departments. 

By focusing on these 2 principles, you will give employees the confidence to identify FCPA risks, avoid problematic behavior and refer any potential issues to the legal department for a more detailed analysis. 

Here's the breakdown on the critical concepts you'll cover during the 45 minute FCPA training: 

  1. The FCPA applies to you - 5 mins
  2. The FCPA was created to promote integrity and fairness - 5 mins
  3. Define "anything of value"  - 15 mins
  4. Define "foreign government official" - 5 mins
  5. Define "knowledge" - 15 mins
  6. Q&A

One other question: which employees should get training on FCPA compliance?

Let's start with the policy (and you should have an FCPA policy). Whenever the company has a complex policy in place, all employees should receive at least enough training to understand its general prohibitions. So in short, all your employees should receive at least some training to understand your FCPA policy. Even the new hire in customer service. 

But there are 2 functional groups (in addition to executive officers) who need to receive most of your focus for this training: salespeople (and the department who controls pricing & promotions) and accounting employees. These are the 2 highest risk groups for potential FCPA issues, and are the main focus of this article. I don't expect you to train a mixed group of engineers, operations managers and customer service reps for 45 minutes.

Attempting to create legal training following these guidelines, I vetted a large number of resources to create the following Ultimate Guide. No doubt, there are areas of anti-corruption/anti-bribery that affect certain companies differently, and corporate counsel will need to adapt the guide accordingly. 

Please note: where a specific FCPA topic only impacts one department (such as the accounting requirements for public companies), you may need to schedule follow-up training with a smaller group. I will note where this is most likely to occur throughout the guide, but I won't address it much. 

Also please note: I'm not going to go deep into each concept (I won't discuss recordkeeping and internal controls requirements much at all, as they only apply to public companies). This is an FCPA Training Guide - I'm going to give you the training structure, timing and the most important points you need for effective training. That said, I am going to link to resources to help you with the content. 

Without further ado, here are the most important topics to focus on during FCPA training, presented in order. 

1. FCPA anti-bribery provisions apply to everyone (for US companies)

This is pretty simple.

If the law doesn't apply to your employees, why are you training them on it?

Save your employees the extra time and just stress that the law applies to everyone working at a US-based company - even (for the most part) foreign subsidiaries. For more background, see the explanation of the "business-purpose test" and applicability in the DOJ's FCPA Guide.

The recordkeeping and internal controls provisions apply only to companies registered with the SEC for reporting purposes (i.e., publicly-traded companies). Corporate counsel for such companies should build additional training on this topic into their presentation as needed.

Suggested time: 5 minutes - 1 slide

DIY FCPA Training Guide

2. The FCPA was created to promote fair competition and protect political integrity

The power of "because" is uncanny. Research shows that giving people a reason (nay any reason) they need to follow a certain rule will make them more likely to comply. 

Because of this (no pun intended), it's important for corporate counsel to tell employees during legal training why the anti-corruption/anti-bribery laws like the FCPA exist - namely, to promote fair competition and protect the integrity of political process (where possible). Some believe the FCPA also lowers the cost of doing business internationally. 

I've found that when employees understand why the laws exist, they're more likely to understand what conduct is appropriate under the circumstances. 

If you want to start your legal training with a video relevant to anti-bribery or anti-corruption, check out these TED Talks.

Suggested time: 5 minutes - 1 slide

3. What are the big risks employees need to know?

Corporate counsel should organize the FCPA anti-bribery legal training by making sure to touch on each of the elements of an FCPA claim (simplified for training use from the actual elements) that is not obviously applicable to your company (i.e., don't get deep in the weeds on defining something employees already understand): 

  1. Knowing about (or making)
  2. a payment (including offers and authorizations) of
  3. anything of value (including money)
  4. directly or through a 3rd party
  5. to a foreign government official
  6. for a corrupt purpose

Now, employees will not need to know all of these by heart, and 3 are pretty self-explanatory (#2, #4, #6 - on which I wouldn't spend much time in your legal training presentation - and on which I won't spend much time in this post).

NOTE: #6 - A corrupt purpose is an intent to wrongfully influence the recipient of the payment

It is likely more effective on some elements to teach employees how to spot red flags to bring to the legal department instead of expecting them to make decisions in the field.

However, where employees need to make quick decisions (e.g., your international salespeople are out to dinner with potential customers who work for a government-owned company), here are the big risks that employees need to know:

a.  What can employees give to or do with potential customers? (i.e., what is "anything of value" - #3?)

The FCPA defines "anything of value" extremely broadly. It can include money, stock, real estate, favors, services, entertainment, discounts, forgiveness or assumption of debts, and many more. Also, there's no materiality standard for any of these items.

This means that if any value is conveyed corruptly to a foreign government official, the employee and your company can be held civilly and criminally liable. 

What are the important takeaways employees need to know?

First, employees need to know your company's gifts and entertainment policy like the back of their hand (and follow it). Although there are no materiality standards, gifts of nominal value are unlikely to result in an enforcement action. Accordingly, make sure to cover the basics of your gifts policy during your legal training presentation. 

NOTE: It's important to mention the FCPA does not prohibit "grease" or "facilitating" payments for the promotion, demonstration or explanation of your product. That said, most companies narrowly construe such payment in their policies in order to avoid any perception of bribery.

Second, whenever an employee knows in advance they're going to be meeting with prospective customers (who are also foreign government officials), they should alert the legal department and discuss any planned gifts and entertainment in advance of the trip.

Suggested Time: 15 minutes - 3 slides

NOTE: You will want to use a lot of hypotheticals and examples during legal training to illustrate what sorts of gifts and entertainment your employees can actually use without concern. We have a big list of hypotheticals you can get here by subscribing to our newsletter. 

b. Who is a foreign government official? (#5)

It's critical that corporate counsel train employees to identify foreign government officials in the field. Employees won't always have time to pick up the phone and call legal before interacting with a foreign government official at a trade show or other place of business.

Defining a foreign government official is a relatively easy exercise in a vacuum. Any officer, employee, or person acting on behalf of a foreign government, department, public international organization, foreign political party or government-owned corporation will count as foreign government officials. The DOJ Guide has a more detailed definition, but it shouldn't be necessary to get more detailed for most companies.

However, it can be difficult for employees in the field to spot a government official. What if the prospective client is an employee of a company partially-owned by the government? The employee may have no idea what percentage of ownership the government has...

Corporate counsel should put together a standard questionnaire for employees to use when engaging a new business partner (example here). During legal training, simply instruct employees how to use the questionnaire. 

Suggested Time: 5 minutes - 1 slide

NOTE: You will want to use a lot of hypotheticals and examples during legal training to illustrate what is considered to be a foreign government official - it can be quite confusing when individuals have multiple roles across different state-owned entities and organizations. We have a big list of hypotheticals you can get here by subscribing to our newsletter. 

4. What are the risks where employees only need to spot red flags?

After covering the immediate "must know" categories, corporate counsel should present the following during legal training in the context of identifying red flags and reporting back to legal to do a more in-depth analysis.

NOTE: "know" versus "spot red flags" is not indicative of importance or risk level. It is built on timing. If employees can run specific questions past the legal department before engaging in a potentially risky action, then red flag spotting is all that's needed. If there's no time to call legal before the interaction, employee's need to "know" how to handle the risk.

a. What if we use a sales rep or 3rd party? (i.e., what is "knowing") (#1)

The FCPA does not allow companies to bury their heads in the sand if the company's agents are bribing foreign government officials (nor does the DOJ take kindly to a company bribing foreign government officials through a 3rd party intermediary).

For purposes of legal training, employees should know 2 things: 

  1. You can't bribe officials indirectly (or directly, obviously)
  2. You can't disregard "red flags" which convey a high probability of bribery 

Even though measuring "knowledge" is one of the most difficult areas of FCPA compliance, it's absolutely critical employees understand red flags which might indicate bribery. Here are some of the red flags you should incorporate into your legal training presentation:

  • High commissions or success fees
  • Large discounts to distributors
  • Consulting agreements with vague services descriptions
  • 3rd parties recommended by foreign officials
  • Shell companies involved with government bids
  • 3rd parties with no business experience
  • Countries or 3rd parties with poor reputations
  • Familial relationships between 3rd parties and foreign officials
  • Refusal to sign contracts with audit rights or compliance with laws representations
  • Lack of transparency in expenses
  • Lack of qualification to perform services
  • Many, many more

Each of these red flags is contextual, so it's important you have a strong understanding of the underlying business. For example, high commissions may be standard fare for your industry. But if it's not, it's major cause for concern.

Check out the MoFo FCPA White Paper and FCPA Americas blog post for a lot more examples of potential red flags.

Ultimately, the best ways to avoid your employees putting their heads in the sand are good due diligence processes and consistent training. Ideally, you can incorporate your due diligence process into FCPA training to give employees specific ideas of what they should be looking for inside your systems. 

NOTE: One helpful suggestion is to ask potential distributors and contractors to provide a detailed business or project plan.

Suggested Time: 15 minutes - 3 slides

PS: Is it a good use of your time to sit and develop hours of training materials? On average it takes 43 hours (!!!) of work to develop 1 hour of classroom training! That is insane. Stop spending your time to staring at a blank PowerPoint. Contact us today about IHO Custom Services if you're looking for awesome training materials!

5. Q & A

Even though I've placed questions and answers at the end of the outline, making your FCPA training interactive is extremely important. If your audience is not engaged, you might as well not do the training. Remember, the federal sentencing guidelines require compliance programs to be "effective". 

In order to do this, I encourage you to allow Q&A throughout the training presentation. Let employees interrupt you when they don't understand a concept. I realize this makes staying on schedule much more difficult, but it's important to make sure concepts are understood before you move on. You may never get another chance as I'm sure most of your employees aren't writing down a list of questions to ask you at the end. 

Conclusion

Here's the final breakdown of the key topics which you'll be able to cover in 45 minutes: 

  1. FCPA applies to you - 5 mins
  2. FCPA was created to promote integrity and fairness - 5 mins
  3. Define anything of value - 15 mins
  4. Define foreign government official - 5 mins
  5. Define "knowledge" - 15 mins
  6. Q&A

Of course it's preferable for all employees to have comprehensive knowledge of the FCPA, but that's just not realistic in most cases. If you determine certain employees to be higher risk, you may want to take more than 45 minutes to train them. That said, for the majority of the employee population, you will be able to mitigate some of the huge risks of corruption and bribery by providing effective legal training on these few critical concepts. 

What do you think should be added or subtracted from this 45 minute training? Let me know in the comments or by email at joel@inhouseowl.com!

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