VOR: What does FCPA provide for the companies?
Thomas Firestone: It’s not so much what it provides for the companies. The FCPA, I should just back up, is a law that was passed in the US in 1977, and it was the first law to provide for criminal liability for the payment of bribes to foreign government officials. It was passed by Congress as a result of the Watergate scandal, which revealed among other things, that American companies have been paying bribes to foreign government officials, in order to win government contracts overseas with some regularity. So the law asserts criminal liability for the payment of bribes to foreign government officials, and it also maintains civil liability in some cases.
VOR: Do you expect the guide to be effective in preventing US-based companies from paying bribes to foreign officials?
Thomas Firestone: I think it already is effective. As I said, the law has been in use for over 30 years now, and I think it has substantially reduced the number of bribes paid by US companies. I should note in this regard that the law applies not just to US companies, but also to foreign companies that are registered on the US Exchanges. Furthermore, it applies to foreign companies that pay bribes, in situations in which part of the bribery takes place on the US territory.
VOR: The guide is set to constitute a helpful tool for a compliance officer, in what way will this document be used in practice?
Thomas Firestone: I think that the guidance is extremely useful, because before the guidance the Department of Justice (DoJ) took a number of positions some in court proceedings, some in opinion forms issued to companies seeking guidance on an individual basis. All of DoJ’s and ACC’s proceeding were never gathered in one place with clearly articulatedstandards about what is and is not acceptable. And now we have these guidelines, which cover almost every situation that one is likely to encounter.
When in the compliance area: how much can you spend to provide entertainment to foreign government officials, can you invite them to dinner, can you buy them a cup of coffee, can you invite them to a conference, what kind of due diligence do you need to do in a merger and acquisition context, for instance.
All of these situations are addressed in the guidelines, and so I think it is an extremely useful tool for compliance officers. Having said that, the guidance is general, because DoJ and ACC can’t foresee every situation companies may encounter. So I think it is very useful, as it is a reference book for everybody working in the compliance field.
VOR: And if we look at the Russian situation, we know that issues like bribery and red tape are quite a big problem for the country. So will the FCPA guide somehow affect those US-based companies investing in Russia, or planning to enter the Russian market?
Thomas Firestone: I think it will as it affects them in the same way as it affects companies operating all around the world. Because now the guide gives them more accessible guidance on what is permitted and what is not. It’s a tool for all American companies that operate overseas.
0Of course, the Russian market as everybody knows doesn’t have good ratings on Transparency International and other international organizations, which assess corruption risks overseas. I should note that Transparency International ratings are rankings of the perception of corruption, rather than actual corruption. Still Russia is considered by many to be a high-risk market; it’s a market where one has to pay special attention to compliance risks. So I think this is something that will be especially helpful for companies operating in high-risk corruption markets and markets that are perceived as high-risk, like Russia.