cKinsey and Company Africa, which operates in South Africa as a subsidiary of international consulting firm McKinsey & Co., will pay over $122 million to resolve an investigation by the Justice Department into a scheme to pay bribes to government officials in South Africa between 2012 and 2016. A former McKinsey senior partner who participated in the bribery scheme has also pleaded guilty in the case.

McKinsey Africa also entered into a three-year deferred prosecution agreement (DPA) with the department in connection with criminal information filed in the Southern District of New York charging the company with one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). Vikas Sagar, a former senior partner of McKinsey who worked in McKinsey Africa’s South Africa office, previously pleaded guilty to one count of conspiracy to violate the FCPA.

According to court documents and admissions, McKinsey Africa, acting through a senior partner, agreed to pay bribes to then-officials at Transnet, South Africa’s state-owned custodian of ports, rails, and pipelines, and at Eskom, South Africa’s state-owned energy company. Between at least 2012 and 2016, McKinsey Africa obtained sensitive confidential and non-public information from Transnet and Eskom regarding the award of lucrative consulting contracts and submitted proposals for multimillion-dollar consulting engagements, while knowing that South African consulting firms with which McKinsey Africa had partnered would pay a portion of their fees as bribes to officials at Transnet and Eskom. As a result of the bribery scheme, McKinsey and McKinsey Africa earned profits of approximately $85,000,000.

“McKinsey Africa bribed South African officials in order to obtain lucrative consulting business that generated tens of millions of dollars in profits,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, in a statement. “The resolution announced today — the department’s third coordinated resolution with South African authorities in only two years — is evidence that our International Corporate Anti-Bribery (ICAB) initiative, which we announced in November 2023, is bearing fruit.”

“This settlement underscores our unwavering commitment to holding companies accountable that willfully engage in corrupt activities around the world,” said Assistant Director Chad Yarbrough of the FBI Criminal Investigative Division. “This misconduct is a blatant violation of law and a breach of public trust. No matter what country the crime occurs in, the FBI will always work closely with our international partners to root out corruption.”

Details of McKinsey Africa’s Credit for Cooperation

The Justice Department has agreed to credit up to one-half of the criminal penalty against amounts McKinsey pays to authorities in South Africa in related proceedings. In addition, both McKinsey and McKinsey Africa have agreed to, among other things, continue cooperating with the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of New York in any ongoing or future criminal investigation arising during the term of the DPA. McKinsey and McKinsey Africa have also agreed to enhance their compliance program where necessary and appropriate and to report to the government regarding remediation and implementation of their enhanced compliance program.

The Justice Department reached this resolution with McKinsey Africa based on a number of factors, including, among others, the nature and seriousness of the offense. McKinsey Africa received credit for its cooperation with the department’s investigation, which included:

• Immediately and proactively cooperating from the inception of the department’s investigation.
• Making numerous factual presentations to the department over the course of its investigation, derived from information obtained through the company’s internal investigation.
• Collecting, reviewing, and producing voluminous records, including those located abroad, in response to requests from the department.
• Promptly reporting the discovery of document-deletion efforts by the McKinsey partner involved in the conduct found during its internal investigation, taking additional investigative steps to uncover information and evidence regarding those efforts, and producing such information and evidence to the department.
• Reporting, in real time, newly discovered information and documents that allowed the department to preserve and obtain evidence as part of its independent investigation.
• Tracing complex internal accounting money-flows and currency exchange-information in response to requests from the department
• Preserving, collecting, and producing to the department documents located abroad, and engaging a third-party forensics consultant to analyze key electronic devices and providing to the department the results of that analysis.

McKinsey and McKinsey Africa also engaged in timely remedial measures, including:

• Putting the McKinsey partner involved in the criminal scheme on leave when it learned of the partner’s role in the scheme, subsequently separating that partner from McKinsey after discovering his deletion activity, and requiring that partner’s continued cooperation post-separation.
• Conducting additional anti-corruption training for employees in South Africa and elsewhere in Africa, and ceasing work with all state-owned enterprises (SOEs) for a period of time while it conducted its internal investigation.
• Enhancing due diligence processes for third-party partners, including instituting controls to ensure that due diligence is completed before work begins on an engagement and imposing a more rigorous risk-review for public sector clients.
• Carrying out an enhanced review process for all sole-source work that requires advance-approval before the engagement can begin.
• Voluntarily repaying, in 2018 and 2021, all revenues that McKinsey and McKinsey Africa received from potentially tainted contracts to the SOEs in South Africa from which they received contracts as a result of the criminal scheme.

In light of these considerations as well as McKinsey’s prior history, the criminal penalty calculated under the U.S. Sentencing Guidelines reflects a 35 percent reduction off the fifth percentile of the otherwise applicable guidelines fine range.  

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The SEC found that SAP violated the FCPA by paying bribes to foreign officials in South Africa and Indonesia through third-party intermediaries, delivering money in the form of cash payments, political contributions, and wire and other electronic transfers, along with luxury goods purchased during shopping trips.

According to the SEC, SAP bribed South African officials to win business contracts with South African government departments and agencies between 2013 and 2017. The Commission also accused SAP of forging books and records to conceal the bribery.

In addition, the SEC says SAP bribed Indonesian officials between 2015 and 2018 to obtain advantages in winning contracts with various Indonesian departments and agencies. According to the SEC’s order, SAP recorded the bribes as legitimate business expenses in its books and records.

“Today’s resolution—our second coordinated resolution with South African authorities in just over a year—marks an important moment in our ongoing fight against foreign bribery and corruption,” said Assistant Attorney General Nicole Argentieri of the Justice Department’s Criminal Division. “We look forward to continuing to strengthen our relationship with South African authorities and others around the world. This case demonstrates not only the critical importance of coordinated international efforts to combat corruption, but also how our corporate enforcement policies incentivize companies to be good corporate citizens, by cooperating with our investigations and appropriately remediating, so that we can take strong action to address misconduct.”

SAP’s Credit for Cooperation

SAP received credit for cooperating with the department’s investigation, which started immediately after investigative reports made public allegations of the South Africa-related misconduct in 2017. The SEC says SAP provided well-timed information attained through its own internal investigation, which allowed the government to preserve and obtain evidence as part of its independent investigation.

The software company also engaged in timely remedial measures, including:

• Conducting an assessment of the root causes of the underlying conduct, and undertaking appropriate remediation to address those root causes and enhance its compliance program;
• Undertaking a comprehensive risk assessment focusing on high risk areas and controls around payment processes and enhancing its regular compliance risk assessment process, including by incorporating comprehensive operational and compliance data into its risk assessments.
• Eliminating its third-party sales commission model globally, and prohibiting all sales commissions for public sector contracts in high-risk markets;
• Significantly increasing the budget, resources, and expertise devoted to compliance and restructuring its Offices of Ethics and Compliance to ensure independence and access to executive leadership;
• Enhancing its code of conduct and policies and procedures regarding gifts, hospitality, and the use of third parties;
• Enhancing its reporting, investigations, and consequence management processes;
• Adjusting compensation incentives to align with compliance objectives and reduce corruption risk; and
• Enhancing and expanding compliance monitoring and audit programs

SAP has agreed to  pay a fine of more than $98 million to the SEC to settle the charges of FCPA violations. The Commission’s action is part of a coordinated global settlement that includes the DoJ and criminal and civil authorities in South Africa. In its parallel case, SAP agreed to pay the DoJ a total of $118.8 million in criminal fines.

Jacob Horowitz is a contributing editor at Compliance Chief 360°

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Until now, the primary tool that the U.S. Department of Justice used to prosecute those involved in bribery schemes was the Foreign Corruption Practices Act. The FCPA, however, only provides the power to prosecute those on the “supply side” of the transaction, meaning those who offer bribes to secure business or pursue other goals. With the enactment of FEPA, U.S authorities can now prosecute foreign officials who demand or accept such bribes — the “demand side” of the transaction. Violators of FEPA face a maximum fine of $250,000 or three times the amount of the bribe, up to fifteen years in prison, or both.

Elements of FEPA

Specifically, FEPA makes it illegal:

For any foreign official or person selected to be a foreign official: 1. To corruptly demand, seek, receive, accept, or agree to receive, or accept, directly or indirectly, anything of value personally or for any other person or nongovernmental entity; 2. By making use of mails or any means or instrumentality of interstate commerce;

From: 1. Any person while in the territory of the United States; 2. Any issuer; or 3. Any domestic concern;

In return for: 1. Being influenced in the performance of any official act; 2. Being induced to do or omit to do any act in violation of the official duty of such foreign official or person; or 3. Conferring any improper advantage, in connection with obtaining or retaining business for or with, or directing business to, any person.

“Without this, the U.S. legal arsenal for combating international corruption was incomplete,” said Tom Firestone, a partner at law firm Squire Patton Boggs. “If it’s enforced effectively, it would hopefully protect U.S. companies operating abroad so they won’t be subject to these demands.”

Under FEPA, the DOJ can charge foreign officials with bribery and can be arrested while in the U.S or in any country that has an extradition treaty with the U.S. Before the enactment of FEPA, the DoJ had brought charges against foreign officials for bribery, but such charges were brough under different laws such as money-laundering or fraud. Now, the DoJ is provided with a direct means to purse corrupt foreign officials and will most likely increase their efforts in targeting the “demand side” of these prohibited transactions.  

Jacob Horowitz is a contributing editor at Compliance Chief 360°

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The SEC’s order finds that Clear Channel, a U.S. based company in the out-of-home advertising industry, violated the FCPA in connection with the actions of its agent, Clear Media Limited, a Clear Channel majority-owned subsidiary in China at the time.

According to a statement from the SEC, from at least 2012 through 2017 Clear Media bribed Chinese government officials to obtain contracts required to sell advertising services to public and private sector clients for display on public bus shelters and other outdoor displays. In addition, the order finds that Clear Media used sham intermediaries and false invoices to generate cash for off-book “customer development” consultants engaged to win advertising business from government and private customers.

According to the order, Clear Media’s improper payments were falsely characterized as legitimate entertainment, cleaning and maintenance, and “customer development” expenses in Clear Channel’s consolidated books and records. The order further finds that, from at least 2012 through 2019, Clear Channel failed to ensure that sufficient internal accounting controls were in place at Clear Media.

“As the SEC’s order finds, Clear Media bribed Chinese officials with expensive gifts and entertainment and used off-book consultants to obtain contracts from Chinese authorities,” said Charles Cain, chief of the SEC Enforcement Division’s FCPA Unit. “Despite repeated red flags raised by its internal auditors, Clear Channel failed to address the deficient internal accounting controls that allowed Clear Media to continue these improper payments for many years.”

Clear Channel consented to the SEC’s order finding that it violated anti-bribery, recordkeeping, and internal accounting controls provisions of the Securities Exchange Act of 1934. Without admitting or denying the findings, Clear Channel has agreed to cease and desist from committing or causing any future violations of these provisions, pay disgorgement plus prejudgment interest totaling approximately $20.1 million, and pay a $6 million civil penalty.  

PHOTO BY MARCO VERCH; USED UNDER LICENSE: CC BY 2.0 DEED

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The 2022 Corruption Perceptions Index (CPI), released this month by bribery watchdog Transparency International, shows that most of the world continues to fail to fight corruption. It finds that 95 percent of countries have made little to no progress on fighting corruption since 2017.

Indeed, several have declined on TI’s corruption scale. Since 2017, ten countries significantly declined on their CPI scores. The significant decliners are: Luxembourg (77), Canada (74), the United Kingdom (73), Austria (71), Malaysia (47), Mongolia (33), Pakistan (27), Honduras (23), Nicaragua (19) and Haiti (17). Canada has declined eight points on the index since 2017, while the United Kingdom has fallen nine points. Both are among the biggest decliners during the last five years.

Governments hampered by corruption lack the capacity to protect the people, while public discontent is more likely to turn into violence, said TI in its report. This vicious cycle is impacting countries everywhere from South Sudan (13) to Brazil (38).

“Corruption has made our world a more dangerous place, says Delia Ferreira Rubio, Chair of Transparency International. “As governments have collectively failed to make progress against it, they fuel the current rise in violence and conflict—and endanger people everywhere. The only way out is for states to do the hard work, rooting out corruption at all levels to ensure governments work for all people, not just an elite few.”

Not Much Rotten in Denmark

The CPI ranks 180 countries and territories by their perceived levels of public sector corruption on a scale of zero (highly corrupt) to 100 (very clean). The United States was ranked as the 24th least corrupt country with a 69 on the scale, up 2 clicks from its score in 2021.

The CPI global average remains unchanged at 43 for the eleventh year in a row, and more than two-thirds of countries have a serious problem with corruption, scoring below 50.

• Denmark (90) tops the index this year, with Finland and New Zealand following closely, both at 87. Strong democratic institutions and regard for human rights also make these countries some of the most peaceful in the world according to the Global Peace Index.
• South Sudan (13), Syria (13) and Somalia (12), all of which are embroiled in protracted conflict, remain at the bottom of the CPI.
• 26 countries—among them the United Kingdom (73), Qatar (58) and Guatemala (24)—are all at historic lows this year.
• Eight countries improved on the CPI during that same period: Ireland (77), South Korea (63), Armenia (46), Vietnam (42), the Maldives (40), Moldova (39), Angola (33) and Uzbekistan (31).

Russian Corruption

Corruption, conflict, and security are profoundly intertwined, says Transparency International.  The misuse, embezzlement or theft of public funds can deprive the very institutions in charge of protecting citizens, enforcing the rule of law and guarding the peace of the resources they need to fulfill that mandate, it says. Criminal and terrorist groups are often aided by the complicity of corrupt public officials, law enforcement authorities, judges and politicians, which allows them to thrive and operate with impunity.

The Russian invasion of Ukraine in February 2022 was a stark reminder of the threat that corruption and the absence of government accountability pose for global peace and security: kleptocrats in Russia (28) have amassed great fortunes by pledging loyalty to President Vladimir Putin in exchange for profitable government contracts and protection of their economic interests. The absence of any checks on Putin’s power allowed him to pursue his geopolitical ambitions with impunity. According to TI, this attack destabilized the European continent, threatening democracy and killing tens of thousands.

After decades of conflict, South Sudan (13) is in a major humanitarian crisis with more than half of the population facing acute food insecurity—and corruption is exacerbating the situation, notes the bribery watchdog. A Sentry report from last year revealed that a massive fraud scheme by a network of corrupt politicians with ties to the president’s family siphoned off aid for food, fuel and medicine.

“The good news is that leaders can fight corruption and promote peace all at once,” says Daniel Eriksson, Chief Executive Officer of Transparency International. “Governments must open up space to include the public in decision-making – from activists and business owners to marginalized communities and young people. In democratic societies, the people can raise their voices to help root out corruption and demand a safer world for us all.” 

Joseph McCafferty is editor & publisher of Compliance Chief 360°

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In its annual report, the U.S. manufacturing company said it “has identified certain transactions relating to its international operations that may raise compliance questions” under the FCPA, and that it has voluntarily disclosed this information to both the Department of Justice and the Securities and Exchange Commission. “The company is cooperating with both agencies in their investigations,” Stanley Black & Decker said in the filing.

The company added that it is “committed to upholding the highest standards of corporate governance and is continuously focused on ensuring the effectiveness of its policies, procedures, and controls.” It further noted that it is “in the process, with the assistance of professional advisors, of reviewing and further enhancing relevant policies, procedures, and controls.”

In that same filing, Stanley Black & Decker disclosed that “certain expenses it incurred in previous years constituted undisclosed perquisites,” and that it has voluntarily disclosed this information to the SEC as well “and is cooperating with the SEC’s investigation of this matter.” 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

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In December 2019, Ericsson was ordered to pay more than $1 billion in criminal and civil penalties—a $520 million criminal penalty and approximately $540 million to the SEC—for violations of the Foreign Corrupt Practices Act (FCPA) arising out of a widespread scheme to make and improperly record tens of millions of dollars in improper payments around the world.  Ericsson further entered a deferred prosecution agreement with the DoJ, in which it agreed to the imposition of an independent compliance monitor for a three-year term.

The newly agreed upon term of the compliance monitorship will run through June 2024. “This extension is consistent with our commitment to continuous improvement of Ericsson’s ethics and compliance program,” said Ericsson President and CEO Börje Ekholm. “We have made significant progress in changing our culture and implementing an enhanced compliance framework and system of internal controls, and we will use this additional time to ensure these improvements are ingrained in our organization, our daily interactions and the way we do business.”

Board Chairman Ronnie Leten commented, “We are dedicated to acting with integrity in everything we do and continuing to align business operations with strengthened internal controls, governance and risk management processes. Our work with the monitor has meaningfully advanced our ethics and compliance program, and we welcome this extension of our engagement with the monitor.”

Iraq affairs

The public statements made by Ekholm and Leten do not align with the additional corruption allegations the company is now facing. The company’s $1 billion settlement with the DoJ and SEC in 2019 did not mention anything about corrupt dealings in Iraq or alleged payments made to terrorist group ISIS.

On Feb. 27, 2022, a leaked internal investigation report obtained by the International Consortium of Investigative Journalists (ICIJ) revealed that Ericsson “made tens of millions of dollars in suspicious payments over nearly a decade to sustain its business in Iraq, financing slush funds, trips abroad for defense officials and payoffs through middlemen to corporate executives and possibly terrorists.”

“The internal investigation describes a pattern of bribery and corruption so widespread, and company oversight so weak, that millions of dollars in payments couldn’t be accounted for – all while Ericsson worked to maintain and expand vital cellular networks in one of the most corrupt countries in the world,” the ICIJ report revealed. “The review, which has not been made public, covers the years 2011 to 2019.”

According to the ICIJ, the company internally investigated alleged corrupt practices in 15 countries in 2011. “The records show that besides Iraq, the company examined alleged misconduct in Lebanon, Spain, Portugal and Egypt. In addition, a spreadsheet lists company probes into possible bribery, money laundering and embezzlement by employees in Angola, Azerbaijan, Bahrain, Brazil, China, Croatia, Libya, Morocco, the United States and South Africa.  These probes have not been previously disclosed.”

To date, many questions remain unanswered. On Dec. 14, 2022, the ICIJ reported that the SEC is still investigating the matter, and that the DoJ is preparing to bring additional penalties against Ericsson. Lawsuits alleging the company withheld material information about its operations in Iraq have also been filed. 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

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In a Nov. 1 quarterly filing, Leidos cryptically said “through its internal processes, the company discovered in late 2021 activities by its employees, third-party representatives and subcontractors, raising concerns related to a portion of our business that conducts international operations.”

Leidos added that it is conducting an internal investigation that is being “overseen by an independent committee of the board of directors, with the assistance of external legal counsel,” to determine whether the identified conduct may have violated the company’s Code of Conduct, the FCPA, and other applicable laws.

“The company has voluntarily self-reported this investigation to the Department of Justice and the Securities and Exchange Commission and is cooperating with both agencies,” Leidos said in regulatory filing.

Leidos further disclosed that it received a federal grand jury subpoena in September 2022 related to the criminal investigation by the U.S. Attorney’s Office for the Southern District of California, in conjunction with the DoJ’s Fraud Division.

“The subpoena requests documents relating to the conduct that is the subject of the company’s internal investigation,” Leidos said. “The company is in the process of responding to the subpoena.”

Antitrust Investigation

The subpoena that Leidos received in September 2022 was the second one received in a span of a month. In August 2022, the company received a federal grand jury subpoena in connection with a criminal investigation being conducted by the DoJ’s Antitrust Division.

“The subpoena requests that the company produce a broad range of documents related to three U.S. government procurements associated with the company’s Intelligence Group in 2021 and 2022,” the company said.

“We intend to fully cooperate with the investigation, and we are conducting our own internal investigation with the assistance of outside counsel,” Leidos added. “It is not possible at this time to determine whether we will incur, or to reasonably estimate the amount of, any fines, penalties, or further liabilities in connection with the investigation pursuant to which the subpoena was issued.” 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

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According to the SEC order, from at least 2014 through 2019, employees of Oracle subsidiaries in India, Turkey, and the United Arab Emirates (UAE) “used discount schemes and sham marketing reimbursement payments to finance slush funds held at Oracle’s channel partners in those markets.”

The SEC’s order further stated that employees of Oracle’s subsidiary in Turkey routinely used the slush funds to pay for the travel and accommodation expenses of foreign officials to attend technology conferences in Turkey and the United States. In some instances, employees of the Turkey subsidiary used these funds for the foreign officials’ families to accompany them on international conferences or take side trips to California, the SEC order stated.

“Oracle Turkey’s management, including the country leader, knew of and condoned the practice,” the SEC order stated. “Given how these schemes were implemented, Oracle lacks records regarding the full size and scope of how these off-book slush funds were used.”

Repeat Offender
This is the second time Oracle has been sanctioned by the SEC concerning creation of slush funds. In 2012, Oracle paid a $2 million penalty to resolve SEC charges for FCPA violations for failing to prevent Oracle India from secretly setting aside money off the company’s books that was eventually used to make unauthorized payments to phony vendors in India.

“The creation of off-book slush funds inherently gives rise to the risk those funds will be used improperly, which is exactly what happened here at Oracle’s Turkey, UAE, and India subsidiaries,” said Charles Cain, the SEC’s FCPA Unit Chief. “This matter highlights the critical need for effective internal accounting controls throughout the entirety of a company’s operations.”

Without admitting or denying the SEC’s findings, Oracle agreed to cease and desist from committing violations of the anti-bribery, books and records, and internal accounting controls provisions of the FCPA and to pay approximately $8 million in disgorgement and a $15 million penalty. 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

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Last week, Deputy Attorney General Lisa Monaco announced several policy changes intended to clarify how the agency prioritizes and prosecutes corporate crime. At a high level, the policy changes address four key areas: individual accountability and what information or documents companies must produce to show individual culpability; corporate recidivism; the benefits of voluntary self-disclosure and cooperation; and what considerations prosecutors will give in deciding whether a compliance monitor is required.

In follow-up remarks made at the University of Texas Law School on Sept. 16, Assistant Attorney General Kenneth Polite shared two new issues the Criminal Division is currently reconsidering in its prosecution of corporate wrongdoing, and what impact those changes are expected to have on companies moving forward. Those two isses are:

Personal devices and third-party messaging apps: The first area of enforcement focus is on the use of personal devices and third-party messaging applications by executives. Specifically, Polite said the Criminal Division will examine whether additional guidance is necessary regarding best practices for companies on the use of personal devices and third-party messaging apps, including ephemeral messaging, such as Snapchat.

“We have seen a rise in companies and individuals using these types of messaging systems, and companies must ensure that they can monitor and retain these communications as appropriate,” he warned. Until the agency issues additional guidance, however, the use of personal devices and third-party apps remains a heightened enforcement risk.

Compensation clawback policies: A second focus area for the Criminal Division, Polite said, will be to examine “whether, in some cases, we may be able to shift the burden of corporate financial penalties away from shareholders—who in many cases do not have a role in misconduct—onto those more directly responsible.” One potential option still being weighed, he said, is “how prosecutors will consider and reward corporations that develop and apply compensation clawback policies.” This is another area where more guidance may be forthcoming.

Voluntary self-disclosure
In addition to the two areas being examined by the Criminal Division, Polite provided further details about some of the major policy changes announced by Monaco, including relating to voluntary self-disclosure. In this regard, DoJ officials have noted that, even companies with a long history of prior misconduct may still benefit from voluntarily self-disclosing known misconduct.

“A history of misconduct will not necessarily mean an automatic guilty plea, unless aggravating factors—such as misconduct posing a national security threat, or deeply pervasive conduct—are present,” Polite said. How much comfort that actually brings to companies, however, remains to be seen.

Polite further shared what aggravating factors the Criminal Division will consider going forward that all companies should be aware of. These include, but are not limited to, “involvement by executive management of the company in the misconduct, significant profit to the company from the misconduct, or pervasive or egregious misconduct,” he said.

“Unless these factors are present, even a company with a history of misconduct has a powerful incentive to make a timely self-disclosure,” Polite added. “Why? Because it could make all the difference between a deferred prosecution agreement and a guilty plea resolution, assuming that the company has also cooperated, and timely and appropriately remediated the criminal conduct.”

CCO certifications
In March, Polite announced for the first time that, for all Criminal Division corporate resolutions—including guilty pleas, DPAs, and non-prosecution agreements—the agency would consider requiring both the chief executive officer and chief compliance officer (CCO) to sign a certification at the end of the term of the agreement certifying that the company’s compliance program is “reasonably designed, implemented to detect and prevent violations of the law, and is functioning effectively.”

In his Sept. 16 remarks, Polite restressed that the certifications are “designed to give compliance officers an additional tool that enables them to raise and address compliance issues within a company or directly with the Department early and clearly” and is “meant to guarantee a seat at the table that all compliance officers should have in an organization with a functioning compliance program.”

There have now been two cases in which the agency has used CCO certifications: the DoJ’s resolution with Glencore, and for the first time in a DPA reached with Brazil-based GOL Airlines related to violations of the Foreign Corrupt Practices Act.

“We did not impose a monitor in [GOL’s] case,” Polite explained, “because at the time of the resolution, the company had redesigned its entire anti-corruption compliance program, demonstrated through testing that the program was functioning effectively, and committed to continuing to enhance its compliance program and internal controls.”

The agency did, however, require that the CEO and CCO certify at the end of the DPA term that the “compliance program is reasonably designed to detect and prevent violations of the [FCPA] and other applicable anti-corruption laws throughout the company’s operations.”

“We will continue to use similar certifications in our corporate resolutions as appropriate for each case,” Polite stated.

As in his previous remarks, Polite, once again, tried to ease concerns within the compliance community about the certification process creating personal liability risk. “A corporate leader who ignores the emphasis we are placing on compliance does so at his or her own risk—but [compliance personnel] cannot shy away from this role,” he said. “You cannot run away from the responsibility. My call is that you embrace it, knowing full well that stronger, more empowered voices are exactly what we need.” 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

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