By - Alexandra Wrage
Category - Attractions In West Miami
Posted By - Inn and Suites In West Miami
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| Attractions In West Miami |
It’s what makes it difficult for compliance officers to sleep at night. You’re going about your day when the phone rings; on the other end of the line is an attorney from the Department of Justice (DOJ) telling you that they’ve received an anonymous tip of bribes paid by a distributor in Europe to a foreign government official. Now what?
That scenario recently turned into a reality for Microsoft Corporation, which is under investigation by the DOJ and the Securities and Exchange Commission (SEC) for bribes allegedly made on the company’s behalf to officials in Italy, Romania and China. The investigations were made public yesterday in an article by the Wall Street Journal. Microsoft now faces what an increasing number of other multinationals are dealing with in their interactions with foreign third parties: potential liability under the Foreign Corrupt Practices Act (FCPA). The Microsoft story is indicative of the compliance times in which we live; companies must manage large networks of long distance business partnerships while remaining alert to credible whistleblower “chatter” in their ranks. They must exhaustively investigate all credible claims of wrongdoing, often at extraordinary expense and with considerable disruption.
Increase in Whistleblower Actions
As reported by the Wall Street Journal, the Chinese bribery allegations against Microsoft were brought to the attention of the DOJ and SEC by an anonymous whistleblower. This won’t surprise those in the compliance community. A year ago, the Dodd-Frank whistleblower provisions went into effect, promising tipsters as much as 30% of any monetary sanction the agency ultimately recovers. Since then, whistleblower allegations have increased sharply, with the SEC receiving over 100 credible tips from whistleblowers in 2012 alone. In response, companies are redoubling efforts to strengthen their internal disclosure programs in order to try to deal with potential problems before employees choose to take them to outside authorities.
FCPA Liability from Third Parties
The Microsoft investigation highlights the liability companies may face when doing business with third parties overseas. Under the FCPA, companies may be liable for bribes paid on their behalf by foreign intermediaries even if the company is not aware of the bribe. For a large multinational like Microsoft, which has offices in more than 100 countries, this can mean keeping tabs on thousands of business partners all across the globe. “In a community of 98,000 people and 640,000 partners,” writes Microsoft Vice President and Deputy General Counsel John Frank in a response to the investigation posted on Microsoft’s website, “it isn’t possible to say there will never be wrongdoing.” This summarizes the challenges and the reality for most companies doing business abroad.
Best Efforts Not Always Enough
The Microsoft investigation reveals the unvarnished truth that, despite best efforts, bribes are a constant risk in business. Microsoft appears to have instituted a robust anti-bribery compliance program. Microsoft’s Standards of Business Conduct, for example, explicitly states Microsoft’s strict policy against bribes:
“Microsoft prohibits corruption of government officials and the payments of bribes or kickbacks of any kind, whether in dealings with public officials or individuals in the private sector. Microsoft is committed to observing the standards of conduct set forth in the United States Foreign Corrupt Practices Act and the applicable anti-corruption and anti-money laundering laws of the countries in which we operate.”
Perhaps of even greater importance, Microsoft also requires all outside vendors to read and comply with the Microsoft Vendor Code of Conduct, which also prohibits incentives such as kickbacks or bribes.
Microsoft has made significant efforts to encourage internal reporting. Not only are employees and partners who have concerns about compliance or Microsoft business practices allowed to report their concerns to Microsoft’s Office of Legal Compliance, but so too are customers and others outside the company. These compliance practices are specifically designed to prevent the need for outside investigation by the DOJ that Microsoft now faces.
All of this should not be discouraging to companies worried about complying with anti-bribery laws. Strong compliance programs, even those that fail to prevent all forms of bribery, do provide protection from liability. “[A] company’s failure to prevent every single violation does not necessarily mean that a particular company’s compliance program was not generally effective,” write the DOJ and SEC in their recently published Resource Guide to the FCPA. “[The] DOJ and SEC…do not hold companies to a standard of perfection,” the Guide continues. This may not be enough to guarantee corporate compliance officers a full night’s rest, but it should provide some comfort.
That scenario recently turned into a reality for Microsoft Corporation, which is under investigation by the DOJ and the Securities and Exchange Commission (SEC) for bribes allegedly made on the company’s behalf to officials in Italy, Romania and China. The investigations were made public yesterday in an article by the Wall Street Journal. Microsoft now faces what an increasing number of other multinationals are dealing with in their interactions with foreign third parties: potential liability under the Foreign Corrupt Practices Act (FCPA). The Microsoft story is indicative of the compliance times in which we live; companies must manage large networks of long distance business partnerships while remaining alert to credible whistleblower “chatter” in their ranks. They must exhaustively investigate all credible claims of wrongdoing, often at extraordinary expense and with considerable disruption.
Increase in Whistleblower Actions
As reported by the Wall Street Journal, the Chinese bribery allegations against Microsoft were brought to the attention of the DOJ and SEC by an anonymous whistleblower. This won’t surprise those in the compliance community. A year ago, the Dodd-Frank whistleblower provisions went into effect, promising tipsters as much as 30% of any monetary sanction the agency ultimately recovers. Since then, whistleblower allegations have increased sharply, with the SEC receiving over 100 credible tips from whistleblowers in 2012 alone. In response, companies are redoubling efforts to strengthen their internal disclosure programs in order to try to deal with potential problems before employees choose to take them to outside authorities.
FCPA Liability from Third Parties
The Microsoft investigation highlights the liability companies may face when doing business with third parties overseas. Under the FCPA, companies may be liable for bribes paid on their behalf by foreign intermediaries even if the company is not aware of the bribe. For a large multinational like Microsoft, which has offices in more than 100 countries, this can mean keeping tabs on thousands of business partners all across the globe. “In a community of 98,000 people and 640,000 partners,” writes Microsoft Vice President and Deputy General Counsel John Frank in a response to the investigation posted on Microsoft’s website, “it isn’t possible to say there will never be wrongdoing.” This summarizes the challenges and the reality for most companies doing business abroad.
Best Efforts Not Always Enough
The Microsoft investigation reveals the unvarnished truth that, despite best efforts, bribes are a constant risk in business. Microsoft appears to have instituted a robust anti-bribery compliance program. Microsoft’s Standards of Business Conduct, for example, explicitly states Microsoft’s strict policy against bribes:
“Microsoft prohibits corruption of government officials and the payments of bribes or kickbacks of any kind, whether in dealings with public officials or individuals in the private sector. Microsoft is committed to observing the standards of conduct set forth in the United States Foreign Corrupt Practices Act and the applicable anti-corruption and anti-money laundering laws of the countries in which we operate.”
Perhaps of even greater importance, Microsoft also requires all outside vendors to read and comply with the Microsoft Vendor Code of Conduct, which also prohibits incentives such as kickbacks or bribes.
Microsoft has made significant efforts to encourage internal reporting. Not only are employees and partners who have concerns about compliance or Microsoft business practices allowed to report their concerns to Microsoft’s Office of Legal Compliance, but so too are customers and others outside the company. These compliance practices are specifically designed to prevent the need for outside investigation by the DOJ that Microsoft now faces.
All of this should not be discouraging to companies worried about complying with anti-bribery laws. Strong compliance programs, even those that fail to prevent all forms of bribery, do provide protection from liability. “[A] company’s failure to prevent every single violation does not necessarily mean that a particular company’s compliance program was not generally effective,” write the DOJ and SEC in their recently published Resource Guide to the FCPA. “[The] DOJ and SEC…do not hold companies to a standard of perfection,” the Guide continues. This may not be enough to guarantee corporate compliance officers a full night’s rest, but it should provide some comfort.
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