If there is one key message that you can expect General Counsels and Chief Compliance Officers to build into every export control training session, it’s that exporting from the United States is a privilege, not a right. It’s hard to overstate how important this is as a concept, even if it seems counterintuitive to many business people who sell internationally.
At its simplest, the issue comes down to the fact that a failure to adhere to any number of laws, but notably those that address bribery and corruption, can have far-reaching consequences on any company involved in the exportation of goods and services. Recognizing this reality helps employees to understand how crucial compliance is to the company’s success – and even its continued existence.
Global energy sector and aerospace companies are particularly vulnerable when it comes to having export restrictions placed on their business, since they are uniquely dependent on foreign markets. At the same time, they are also more likely to be investigated for anti-corruption law breaches, since they very often deal with politicians and procurement officials in foreign governments or state-owned entities.
Most countries now have some version of an anti-corruption law. Some of these laws, such the U.S. Foreign Corrupt Practices Act of 1977 (FCPA) and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Convention), which went into effect in 1999, specifically target behavior involving government employees. The U.K.’s Bribery Act of 2010 goes further and also addresses unethical dealings by or toward commercial entities. All have global reach, known as extraterritorial application, if a company has any connection to the country in which the particular law has been adopted.
Penalties for violations range from civil to criminal, from fines to jail time, and lasting damage to corporate and personal reputations - all following intrusive, time-consuming and expensive investigations. At least as important is the risk of a suspension or cancellation of the right to export products or services, which may be the death-knell for companies whose business is built on a steady flow of international transactions.
As legislative and media pressure grows and there is an almost daily revelation of yet another bribery scandal somewhere in the world, it is not enough for companies simply to draft and circulate a policy banning unethical behavior. Increasingly, enforcement authorities want evidence that employees have been made aware of the contents of that policy and, more importantly, have been adequately trained on it.
Adequate training usually means attendance at an in-person class, or documented completion of an online course, with refreshers ideally being built into each training schedule. Better still is proof of a commitment to uniformly ethical business practices at the top of every organization, combined with a willingness of executives and management to “walk the walk.”
Ethical behavior should of course be a companywide requirement, so some level of anti-corruption training is beneficial for all employees. That being said, it is particularly crucial for employees involved with the export of goods and services, those who interact with government agencies, and those who are located outside the company’s home country of operation.
Additionally, General Counsels and Chief Compliance Officers should work with their Finance counterparts to initiate a documented internal (or external) audit practice of evaluating international transactions for corruption risks and checking for red flags that may indicate potential corruption problems.
These audits should specifically include a regular review of activities carried out by third parties on the company’s behalf, since many a successful bribery investigation has zeroed in on supply chains or service contractors, including distributors, freight forwarders and other third-party agents.
Companies are also strongly advised to seek input from in-country legal advisers when doing cross-border business. Local anti-corruption laws will generally follow common themes recognizable to Western businesses, but there will often be nuances that are important and require local knowledge. The same is true, of course, for the importation end of an export transaction.
It is hard to exaggerate the negative impact of a serious violation of anti-corruption laws on a company dependent on international business. Export regulations themselves are certainly complex and errors do occur, but it must be made clear to all relevant employees that compliance with anti-corruption laws is not optional, since the company’s export privileges are often its lifeblood.
We're sorry this resource is no longer available, we've redirected you to our Resource center.