FCPA Compliance: Proper Oversight and Independence

In terms of FCPA compliance and compliance programs, one of the considerations that is often overlooked or otherwise not observed is the ability, and, indeed, the requirement, for compliance officials to report directly to independent monitoring bodies, like a board of directors.  For compliance programs to be effective, compliance officials must be sufficiently senior and autonomous and be furnished with sufficient resources and authority.

These criteria are consistently being identified in the language in what has become, in large part, a standardized “Attachment C” to deferred prosecution agreements now being entered into by the U.S. Department of Justice with respect to FCPA investigations:

The Company will assign responsibility to one or more senior corporate executive of the Company for the implementation and oversight of the Company’s anti-corruption compliance code, policies, and procedures. Such corporate official(s) shall have the authority to report directly to independent monitoring bodies, the Company’s Board of Directors, or any appropriate committee of the Board of Directors, and shall have an adequate level of autonomy from management as well as sufficient resources and authority to maintain such autonomy.1

The concept of an entity having a compliance official, even at a senior level, is neither new nor unique. Nor are the other cited concepts either new or unique. What is important here is the emphasis placed on ensuring that compliance officials are truly independent, both in concept and in reality. Having sufficient resources and authority to maintain the independence of compliance officials is viewed as being essential to an effective FCPA compliance program. All too often, such considerations are not seriously addressed.

1E.g., Deferred Prosecution Agreement, Attachment C, ¶ 7, United States v. Weatherford International Ltd., No. 4:13-cr-00733 (S.D. Tex., filed Nov. 26, 2013), ECF No. 4 (emphasis added).

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