At recent forum, Google, Wells Fargo and SNC-Lavalin discussed steps taken to prevent and mitigate internal corruption
From due diligence processes to willingness to exit difficult markets, corporate compliance and ethics programs appear to be getting stronger as companies around the world come to terms with much stricter regulations aimed at combating corporate corruption. At a Newsmakers’ Forum in New York hosted by the Wall Street Journal’s risk & compliance section on April 21, compliance officers from Google, Wells Fargo and SNC-Lavalin Group spoke about some of their challenges and priorities. The forum was held in conjunction with the release of Dow Jones’ 2015 State of Anti-Corruption Survey results.
Stefan Hoffmann-Kuhnt, head of compliance at Canadian engineering and construction company SNC-Lavalin, said he wishes his company had access to US-style deferred prosecution agreements (DPAs), which would allow the firm to settle corruption charges with the government without necessarily having to admit any guilt. He called the absence of this option in Canada ‘a big problem’ as DPAs can help prevent a loss of business by minimizing the reputation damage caused by prosecution of such charges. DPAs and non-prosecution agreements (NPAs) have become a staple of US enforcement efforts over the past 10 years. (For a more in-depth analysis of the impact these agreements have had on US enforcement of the FCPA, please see Corporate Secretary’s summer issue, due out in June.)
SNC-Lavalin has been in the spotlight for alleged corruption violations since late 2012. In February this year Canada’s national police charged the company regarding past business activities in Libya. Hoffmann-Kuhnt is the third compliance officer in the company’s relatively brief history of having a formal compliance program, which was established in March 2013. He is also the second compliance chief at the firm to have come from Siemens, whose corruption history is now legion.
When a point was raised about the decline in the prosecution of individuals in the US since DPAs and NPAs became more prevalent, Hoffman-Kuhnt said that because there is already enforcement of individuals occurring in Canada, he’s not concerned that the use of DPAs in Canada might lead to a similar drop-off.
The lack of success in making corruption charges stick to individuals is likely the main reason the Department of Justice (DoJ) continues to emphasize the need for companies to identify individuals and provide evidence of their misconduct in order to qualify for co-operation credit in DoJ compliance investigations. Co-operation credit almost always ensures companies will pay smaller penalties in these cases. Last Friday at NYU’s Law School, Leslie Caldwell, chief of the DoJ’s criminal division, reiterated this point while speaking about corporate compliance and enforcement and her division’s efforts to clarify ‘what we expect from those companies that choose to co-operate’ with compliance investigations, as reported by Richard Cassin on the FCPA Blog on April 20.
On the sidelines of yesterday’s forum, Hoffmann-Kuhnt told me that co-operation with enforcement officials is becoming more challenging as governments in various jurisdictions around the world strengthen their own cross-border efforts to pursue enforcement on a co-operative basis. Co-operation can be particularly difficult when jurisdictions involved have significantly different enforcement cultures. Hoffmann-Kuhnt said that while he was at Siemens, he helped arrange for an employee working in the Persian Gulf to be transferred to Frankfurt for questioning and eventual prosecution out of concern about potentially more draconian enforcement methods under the other country’s legal system.
Aside from the obvious benefits of co-operation in investigations, it’s important that companies ‘maintain good relationships with law enforcement officials [because] it keeps the dialogue going about what things we should be looking for’ in the course of due diligence to vet prospective business partners, as Yvette Hollingsworth, chief compliance officer at Wells Fargo, said during a separate session at the WSJ forum.