When considering FCPA compliance issues, the U.S. Department of Justice’s (DoJ) resolution with Louis Berger International, Inc. (“LBI”) provides valuable insights. Two U.S. citizens and former officials of LBI entered pleas for conspiring to violate the anti-bribery provisions of the FCPA for orchestrating the payment of bribes to government officials in various parts of the world. Despite the rather graphic nature of the allegations concerning LBI’s conduct, the (“DoJ”) entered into a deferred prosecution agreement (“DPA”) with LBI.
Among the factors cited for the DPA were: “(1) LBI’s self-reporting of the misconduct; (2) the company’s cooperation, including voluntarily making both U.S. and foreign employees available for interviews, and collecting, analyzing and organizing evidence and information for federal investigators; (3) the company’s extensive remediation, including terminating the officers and employees responsible for the corrupt payments; and (4) the company’s demonstrated commitment to improving its compliance program and internal controls.”
The factors cited provide useful insights in designing and implementing an effective compliance program. Of particular note is the reference to making both “U.S. and foreign employees available for interviews.” When working out compliance provisions in agreements with partners and third parties, audit provisions are often and quite properly included. But, in many instances, audit provisions may not suffice in determining whether there may be a problem. The better practice is to expressly extend those audit rights to include the right to interview employees and agents of the other party.
A review of records through an audit may not be sufficient in discerning what may have occurred. An ability to actually interview employees and agents greatly enhances the ability of the party seeking compliance to address the realities of a particular situation. At the same time, they also have the benefit of being coercive in encouraging compliance of the other party. Indeed, they can serve as a major deterrent.
Obviously, any provision calling for audit rights as well as rights to interview employees and agents of another party should be part of a compliance provision calling for full cooperation on the part of that other party. In the absence of there being some sort of leverage to ensure full cooperation, audit rights and rights to interview employees and agents may be rendered meaningless.
