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首页 Ten Questions Every Director Should Ask About FC…

Ten Questions Every Director Should Ask About FCPA Compliance.doc

Ten Questions Every Director Sh…

张佳芳
2019-06-17 0人阅读 举报 0 0 暂无简介

简介:本文档为《Ten Questions Every Director Should Ask About FCPA Compliancedoc》,可适用于考试题库领域

TenQuestionsEveryDirectorShouldAskAboutFCPAComplianceOnAugust,,thechairmanofChinaNorthEastPetroleum'sauditcommittee,RobertBruce,tenderedhis"noisyresignation"fromthecompany'sboardofdirectorsMr Bruceresignedbecausetheboard'schairman,EdwardRule,haddaysearlierdeclinedMr Bruce'srequestthatthecompanyinvestigatepotentialviolationsoftheForeignCorruptPracticesAct("FCPA")IndenyingMr Bruce'srequest,Mr Rulereasonedthat,amongotherthings,suchaninvestigation"couldlastaslongasafullyearandcosttheCompanyasmuchasseveralmillionsofdollars"andcouldevenleadtothedelistingofthecompanyfromthestockexchangesMr Ruleendedhisletterbynotingthat"thecourseofactionyourecommendthattheBoardpursueseemsatoddswiththeprudentdischargeofdutiestotheshareholders" ChairmanRule'srefusaltoinvestigatepossibleFCPAviolations,whetherornotwarrantedunderthecircumstances,squarelyraisestheissueofanindependentdirector'sroleinFCPAcompliance Thereisnodoubtthataboardhasaroletoplayinfact,adutyunderlawandcriticalgovernmentpoliciestodischargewithrespecttoFCPAcomplianceTheFederalSentencingGuidelines,forexample,statethataboardmustbeknowledgeableaboutthecontentandoperationofthecompany'scomplianceprogramandmust"exercisereasonableoversightwithrespecttotheimplementationandeffectivenessofthecomplianceandethicsprogram" Likewise,theDepartmentofJustice'sprosecutionguidelinesconsiderwhethertheboardexercisesindependentreviewofthecomplianceprogramandwhethertheboardisprovidedwithinformationsufficienttoenabletheexerciseofindependentjudgment Directorshavesimilaroversight"Caremark"dutiesarisingundercaselaw,  andvariousothersources,suchasstockexchangerules,SarbanesOxley,andauditcommitteechartersTobesure,althoughnotinthecontextoftheFCPA,theSEChasrecentlysuedanindependentdirectorforfailingtoadequatelydischargeoversightresponsibilities AnddirectorsofcompanieswithFCPAproblemsfrequentlyfindthemselvesnamedasdefendantsinshareholderderivativeactions Finally,iftheworsthappens,theFCPAprohibitscompaniesfromindemnifyingdirectorsforfinesassessedforviolationsoftheFCPA, andinsurancewillnotusuallybeavailabletocoversuchfinesInshort,thereisnodoubtthatdirectorsarewelladvisedtocloselyoverseeFCPAcomplianceTothatend,whatfollowsbelowarekeyquestionsthateverydirectorshouldaskaboutFCPAcompliance DoWeSetandCommunicatetheRight"ToneattheTop"TheGuidelinesprovidethat,aspartofaneffectivecomplianceprogram,anorganization"shall…otherwisepromoteanorganizationalculturethatencouragesethicalconductandacommitmenttocompliancewiththelaw" Indeed,"theeffectivenessofinternalcontrolscannotriseabovetheintegrityandethicalvaluesofthepeoplewhocreate,administerandmonitorthem" Consequently,ataminimum,thehealthofacompany'scompliancecultureisjudgedby(a) whethertheorganizationexplicitlyencouragesethicalconductandcompliancewiththelaw(b) whethermanagement"buysin"totherequirementofethicalconduct,thuscreatinganappropriate"corporateculture"and(c) whethermanagementreinforcesthecompany'spropercorporateculturebyenforcingcompliancewithappropriatestandardsofbehaviorMinimally,directorsshouldnottolerateuppermanagementwhofailtothemselvesactethicallywhetherinthecontextoftheFCPAorotherwiseDirectorsshouldthoroughlyunderstandseniormanagement'seffortstofrequentlydiscusscompanyvaluesandethicsdiscuss,guide,andempowermiddlemanagementtoresolveethicaldilemmasandmakecleartoalllevelsofmanagementthatethicalperformanceisbeingwatchedascloselyasfinancialperformance DoWeEffectivelyAssessOurFCPARiskAprimarycomponentofanyeffectivecomplianceprogramisriskassessmentGenerally,anappropriateriskassessmentconsistsofsettingobjectives,identifyingrisks,andanalyzingthoserisksandtheperformanceofrelatedcontrols FCPAriskassessmentinparticularrequiresthatacompany,ataminimum,givethoughttoseveralspecificquestions First,thecompanymustconsider where itdoesbusinessAcompanythatispursuingbusinessinNigeriaorAfghanistan,forexample,mustviewcompliancethroughadifferentlensthanacompanypursuingbusinessinacountrywithalowercorruptionriskSecond,thecompanymustconsiderwithwhom itdoesbusinessAcompanythatseeksbusinessfromaforeigngovernment,oranentityinwhichaforeigngovernmenthassomeinterest,triggersincreasedFCPAconcernsThird,acompanymustconsider how itdoesbusinessAcompanythatusessalesagentsorotherthirdparties,forexample,introducesanadditionallevelofriskthatitmustbepreparedtoaddressDirectorsshouldunderstandhowthecompanyadequatelyaddressesanddocumentstheseissuesaspartofitsFCPAcomplianceprogram DoWeHaveEffectiveStandards,Policies,andProcessestoAddressThoseRisksItiscrucialtohavewrittenstandards,policies,andprocedurestoguideemployeesandagentsInthecontextoftheFCPA,thisusuallymeans,ataminimum,thatacompanyhaveawrittencodeofconductthatreinforcesthecoreethicalvaluesofthecompanyMostcompaniesalsobenefitfromhavingaspecificFCPApolicythatisclearlywritten,regularlyupdated,andtailoredtoactualoperatingrisksAsoundFCPApolicyexplainsthelaw(includingapplicablelocallaws)andgenerallyprovidesguidanceonpermissiblebehaviorSuchapolicywillalsoprovideguidelinesforothersensitiveFCPAareas,suchasfacilitatingpayments,giftgiving,travelandentertainment,andcharitableandpoliticalcontributionsFurthermore,althoughreceivinglesspublicitythantheantibriberyprovisions,theFCPAalsocontainsaccountingprovisionsthatrequirecompaniestomaintainaccuratebooksandrecordsandimplementinternalcontrolsAcompanymustimplementspecificanticorruptioncontrolsandcannotmerelyrelyonitsexistingSarbanesOxley§ controlsbecause,unlike§ ,theFCPAdoesnothaveamaterialitythresholdAfocusonlyonmaterialdollaramountscaneasilyoverlookpotentialFCPAissuesEvensmallbribescanresultintheawardoflargeamountsofbusinessandpotentiallyhugepenalties Furthermore,typicalSarbanesOxley§ controlssimplymaynotcatchmanytypesofevenmaterialcorruptpaymentsForexample,acorruptcharitablecontributionorpoliticaldonationmaybedulyprocessedthroughaccountspayablewiththerequireddocumentationandauthorizationsCompaniesneedspecificanticorruptioncontrols DoWeAdequatelyCommunicateandTrainonFCPAStandards,Policies,andProcessesThePrinciplesofFederalProsecutionofBusinessOrganizationsexpresslycontemplatethatprosecutorsshould"attempttodeterminewhetheracorporation'scomplianceprogramismerelya'paperprogram'orwhetheritwasdesignedandimplementedinaneffectivemanner" Toillustratethatprinciple,oneneedonlytolooktothe Siemens casewhere,eventhoughSiemenshadFCPAandotheranticorruptionpolicies,thegovernmentchargeditwithhavingonlya"paperprogram"thatitfailedtoimplementSiemenshas,asaresult,paid$ billion inFCPApenaltiestovariousauthoritiesAccordingly,directorsshouldinquireastowhichpersonsreceivetrainingwithaneyetowardtheriskassessmentAsoundcompliancetrainingprogramwillinevitablyrecognizethatmanyareasofthecompanybesidesjustthesalesforcehavearoleinFCPAcomplianceforexample,employeesinvolvedintheaccountspayablefunctionTheriskassessmentmaylikewisecompelthatthecompanytrainsomethirdparties,agents,orconsultantsItisalsoimportantthatthe"trainers"arequalified,andthatthecontentofthetrainingisappropriatelytailoredtothejobfunctionandtherisksspecifictotheparticularaudiencebeingtrainedOnesizemaynotfitallThegoalofanyFCPAtrainingprogramisnottocreateanarmyofFCPAexperts,buttoensurethateachemployeehassufficientbackgroundtobeabletoidentifyandreport"redflags,"withintheirareaofresponsibility HowDoWeKnowthatOurTrainingIsEffectivePartandparcelofadequatelycommunicatingandtrainingoncompanypoliciesandprocessesisassessingtheeffectivenessofthetrainingAtaminimum,ameaningfultrainingassessmentincludesa"quiz"duringorattheendofthetrainingthatis"graded"toensurethattheemployeehaslearnedattheleasttherequiredconceptsTheresultsofsuchgradesalsoprovideimportantfeedbackregardingthecontentofthetrainingmaterialsandwherethetrainingneedstobeclarifiedorimprovedManyvendorsareavailabletoassistinFCPAtrainingandassessment WhatIncentivesDoWeProvideforComplianceandDisincentivesforNoncomplianceTocreateapropercorporateculture,managementmusttakeappropriateremedialactioninresponsetodeparturesfromapprovedpoliciesandprocedures Likewise,employeesshouldbegivenincentivestoperforminaccordancewiththecomplianceandethicsprogramInshort,goodenforcementofcompliancerequiresboththe"carrot"andthe"stick" CompaniesshouldcreateexplicitlinksbetweengoodbehaviorandcompensationCompliancewithcorporatepoliciesandethicalbehaviorshould,ataminimum,factorintoemployeeperformanceevaluationsAlthoughitraisestrickyquestionsofcorporateculture,companiesmayconsiderofferingincentivestoemployeeswhoreportunethicalbehaviorespeciallynowthatnew"whistleblower"provisionsintheDodd–FrankWallStreetReformandConsumerProtectionActincentivizeemployeestoreportcomplianceissuesexternallytothegovernmentOntheothersideofthecoin,theFederalSentencingGuidelinesreinforcethat"adequatedisciplineofindividualsresponsibleforanoffenseisanecessarycomponentofenforcement" Moretothepoint,howeverthemessagegetsdelivered,employeesmustbelievethatifcaughtviolatingbehavioralstandards,theywillsufferconsequences HowDoWeMonitorandAudittoDetectImproperConductTheGuidelinesstatethatacompanyshalltakereasonablesteps"toensurethattheorganization'scomplianceandethicsprogramisfollowed,includingmonitoringandauditingtodetectcriminalconduct" MonitoringandauditingisalsocriticaltotheBoard'sdischargeofitsdutiesunderDelawarelawtooverseetheimplementationofaneffectivecomplianceprogram Itishelpfultoappreciatethedifferencebetween"monitoring"and"auditing"MonitoringisadifferenttypeofcontrolprocessthanauditingMonitoringisanongoingactivityfrequentlyembeddeddirectlyintocontrolsorsystemsMonitoringcanincluderegularmanagementandsupervisoryactivitiessuchasworksiteanddocumentinspections,andsupervisorandemployeeinterviewsAuditstyletestingcanbeincludedinmonitoringAuditingingeneral,however,ismuchlessfrequentandmorefocusedonbacktestingofcompliancewithrequirementsremoteintimefromtheactualoperationoftheunderlyingcontrolprocess Botharekeyaspectsofaneffectivecomplianceprogram DoestheComplianceOfficerHaveAdequate"Clout,"Resources,andIndependenceTheamendmentstotheGuidelinesprovidethatthecomplianceofficermustbegiven"directaccesstothegoverningauthorityoranappropriatesubgroupofthegoverningauthority" ThereissomedebatesurroundingwhetherthisprovisionoftheGuidelinesrequiresthecomplianceofficertoreportdirectlytotheboardorwhetherthecomplianceofficermustmerelyhaveaccesstotheboardInallevents,thecomplianceofficershouldmeetwiththeboardatleastannuallyandalsoannuallymeetwiththeindependentdirectorsinexecutivesessionsLesscontroversial,thecomplianceofficermustbegiven"adequateresources"and"appropriateauthority"toperformhiscompliancedutiesThismeansthatthecompliancefunctionmusthavepersonnelandfinancialresourcescommensuratewiththecompany'ssizeandriskprofileIfportionsofthecompliancefunctionaredelegatedtootherareasofthecompany(oftenLegalorHumanResources),thecompanyshouldformallymemorializethatdelegationofauthorityinwritingtoavoidmiscommunicationaboutwhoisresponsibleforwhatLikewise,itisbeneficialforthecomplianceofficertohaveawrittenjobdescriptionthatexpresslystatestheofficer'sauthoritywithrespecttocomplianceatthecompany HowDoWeReviewtheEffectivenessofOurComplianceProgramWhatcanbemeasuredcanbecontrolledRegularevaluationsofprogrameffectivenessareessentialtoensuringthecompletenessandsuccessofacomplianceprogramThus,theSentencingGuidelinesstatethatan"organizationshalltakereasonablesteps…toevaluateperiodicallytheeffectivenessoftheorganization'scomplianceandethicsprogram"Corporatecomplianceevaluationmechanismscantakemanyforms,includingmonitoring,auditing,selfassessments,independentassessmentsandothersystemstoperiodically"measureresultsandunderstandwhatishappeningintheorganization" Thecharacteristicsofanorganization'sevaluationeffortsshouldbelinkedtoacompany'sriskassessment,aswellasthesizeandbreadthoftheorganizationSomeoftherelevanteffectivenessindicatorsthatcanbetrackedinclude:thenumberofpoliciespromulgatedorrevisedthenumberofthirdpartiesthathavepassedorfailedtheFCPAvettingprocess"toneatthetop"informationsuchasthenumberof"townhall"meetingsconductedoncomplianceissuesthetrackingofimplementationofauditrecommendationsemployeedisciplinestatisticsemployeecomplaintsandquestionsrelatedtocomplianceortheamountofcompliancerelatedtrainingconductedDirectorsshouldunderstandtheeffectivenessmeasuresnotjust"activitymeasures"oftheprogramWhenWeFindaProblem,DoWeEnsurethatanIndependentandThoroughInvestigationIsDoneTheamendmentstotheFederalSentencingGuidelinesprovidethatameaningfulcomplianceprogramrequires,amongotherthings,thatwhencriminalconductisdetected,thecompanyimplement"reasonablestepstorespondappropriately…topreventfurthersimilarcriminalconduct"Further,SarbanesOxley§ requiresthattheauditcommitteebenotifiedofcomplaintsrelatedtoaccounting,internalaccountingcontrols,orauditingmatters Assuch,whenconfrontedwithapotentialFCPAproblem,itisimperativethatacompanyappropriatelyinvestigatethecomplaintandconsiderwhethertoreporttotheauditcommittee ItremainstobeseenwhetherChinaNorthEastPetroleumwillbeabletoconvincetheauthoritiesthatitactedproperlyinrefusingtoinvestigatepotentialFCPAviolationsCertainly,Siemensandcountlessothercompanieshavebeenburnedbytheirfailuretoinvestigateredflags Furthermore,theDOJandtheSEChavebothrecentlyputseniorexecutivespersonallyinthecrosshairsforfailingtoinvestigateFCPAredflags And,asmentionedabove,theSEChasrecentlyshownawillingnesstotargetindependentdirectorsforfailingtoadequatelydischargetheirdutiesasaboardmemberInshort,directorsshouldsatisfythemselvesthatwhenpotentialFCPAissuessurface,anindependentandadequateinvestigationisconductedandproblemsarethoroughlyaddressedConclusionFCPArelatedprosecutions,enforcementactions,andprivatelawsuitsareincreasinglyintheheadlinesBysomeprojections,bytheendof,theSECandDOJwilllevy$billioninfinesandpenaltiesandprosecutedozensofindividualsCompaniesneedtominimizetheriskassociatedwiththeFCPAbyimplementingstrongcomplianceprograms,andtheboardofdirectorsisakeyplayerinthatprocessTominimizetherisktotheircompaniesandthemselves,directorsneedtoexercisereasonableoversightwithrespecttotheimplementationandeffectivenessoftheircompany'sFCPAcomplianceprogram,includingaskingthe"right"questions LawyerContactsForfurtherinformation,pleasecontactyourprincipalFirmrepresentativeoroneofthelawyerslistedbelowGeneralemailmessagesmaybesentusingour"ContactUs"form,whichcanbefoundat wwwjonesdaycom HenryKlehmIIINewYorkhklehmjonesdaycom JoshuaSRosemanDallasjsrosemanjonesdaycom JonesDaypublicationsshouldnotbeconstruedaslegaladviceonanyspecificfactsorcircumstancesThecontentsareintendedforgeneralinformationpurposesonlyandmaynotbequotedorreferredtoinanyotherpublicationorproceedingwithoutthepriorwrittenconsentoftheFirm,tobegivenorwithheldatourdiscretionTorequestreprintpermissionforanyofourpublications,pleaseuseour"ContactUs"form,whichcanbefoundonourwebsiteatwwwjonesdaycomThemailingofthispublicationisnotintendedtocreate,andreceiptofitdoesnotconstitute,anattorneyclientrelationshipTheviewssetforthhereinarethepersonalviewsoftheauthorsanddonotnecessarilyreflectthoseoftheFirm  See SECFormKfiledbyChinaNorthEastPetroleum,datedAugust,,availableat  USSentencingGuidelinesManual§ B(b)()() USDeptofJustice,USAttorney'sManual:PrinciplesofFedProsecutionofBusOrgs§(B) InreCaremarkInt'lIncDerivLitig,Ad,(DelCh)Seealso StonevRitter, Ad,(Del) SarbanesOxleyActof,PubLNo,§ ,Stat,(providingthatauditcommitteesmustestablishproceduresforreceivingcomplaintsregardingaccountingmatters)NewYorkStockExchangeListedCompanyManual§ A(vestingauditcommitteewithresponsibilityforassistingwithboardoversightofcompliancewithlegalandregulatoryrequirements)  Complaintat, SECvRaval,No:cv(DNebMar,),ECFNo See,eg, Complaint, HawaiiStructuralIronworkers'PensionTrustFund,derivativelyonbehalfofAlcoa,IncvBelda,cv(WDPaMay,) ECFNoParkerDrillingCompany, NotestotheUnauditedConsolidatedFinancialStatements, in FormQ(Aug,)(disclosingthatthecompanyisfacingtwoderivativessuitsinHarrisCo,TexrelatedtoallegedFCPAviolations)  Section(c)()oftheSecuritiesExchangeActof,USC§ff(c)() USSentencingGuidelinesManual§B(a)()() CommitteeofSponsoringOrganizationsoftheTreadwayCommission,GuidanceonMonitoringInternalControlSystems()hereinafterCOSO() §B(a)()()CommitteeofSponsoringOrganizationsoftheTreadwayCommission,InternalControlIntegratedFramework()hereinafterCOSO()COSO(), supra note,atAlexandraWrage,"HowtoKillaCodeofConduct," Ethisphere (Jan,),   Seegenerally COSO(), supra note Seealso NationalCenterforPreventiveLaw,CorporateCompliancePrinciples Forexample,inrecentyearsMonsantopaida$millionpenaltyfora$,bribe  Memorandumre:PrinciplesofFederalProsecutionofBusinessOrganizations,LarryDThompson,DeputyAttorneyGeneral,atPointVIIB(Jan,) SiemensisalsoagoodexampleofhowrobustcomplianceandgoodbusinessarenotmutuallyexclusiveSincethetimeofitsFCPAproblems,Siemenshasdramaticallyincreaseditscompliancestaffandtrainedmorethan,employeesonFCPAissuesYet,thecompanyrecentlyannouncedoneofitsbestquartersever COSO(), supra note,atCOSO(), supra note,at("Corporatecultureincludesethicalandbehaviorstandards,howtheyarecommunicated,andhowtheyarereinforcedinpractice") §Bcmtn() §B(b)()(A)() StonevRitter,Ad,(Del) InreCaremarkInt'lIncDerivLitig, Ad,(DelCh) Effectiveprogrammonitoringshouldbe:()consistentwiththeorganization'ssizeandcomplexity() independent,totheextentpossible,fromtheareasoftheorganizationbeingmonitored()plannedinwritingincludingthesubject,method,andfrequencyofaudits()reportedtotheBoardandseniormanagementformajorfindings()thebasisforcorrectiveactionplansfromadversefindings()responsivetotheorganization'shistoryofproblemsandmisconductand()disseminatedtoappropriategroupsforcorrectiveactionsCOSO(),supra note,at AmendmentstotheSentencingGuidelines,submittedtoCongressApr,,§B(b)()(C)(effectiveNov) USSentencingGuidelinesManual§B(b)()(B) NationalCenterforPreventiveLaw, supra note,at(Principle:EnforceInternally)  AmendmentstotheSentencingGuidelines,submittedtoCongressApr,,§B(b)()cmtn(effectiveNov) SarbanesOxleyActof,PubLNo,§ ,Stat, Complaintat, SECvSiemensAG,Nocv(DDCDec,),ECFNo(chargingthatcompanyignoredandfailedtoadequatelyinvestigate"redflagsandfailedtotakedisciplinaryactionagainstknownwrongdoers") Judgment, USvKozeny,CaseNocrSAS(SDNYNov,),ECFNoComplaintat, SECvNature'sSunshineProducts,Inc,CaseNocv(DUtahJuly,),ECFNoSeealso BourkeConvicted,FCPABlog(July,,:PM),  

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Ten Questions Every Director Should Ask About FCPA Compliance

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