The FCPA states, “The FCPA’s anti-bribery provisions apply to corrupt payments made to (1) “any foreign official”; (2) “any foreign political party or official thereof”; (3) “any candidate for foreign political office”; or (4) any person, while knowing that all or a portion of the payment will be offered, given, or promised to an individual falling within one of these three categories. Although the statute distinguishes between a “foreign official,” “foreign political party or official thereof,” and “candidate for foreign political office,” the term “foreign official” in this guide generally refers to an individual falling within any of these three categories.”

Government policies affect the commercial environment.  A company is subject to legislation and regulation that affects how it conducts its business and generates value for its investors.  Participating in the political process is part of a business strategy to protect a company’s interests.

Most international businesses have strategy to engage in the political process with a view to the long-term interests of the company and to promote and protect its interests. All political contributions and expenditures on behalf of the Company and management reports on these political contributions and expenditures should be reported to the Board of Directors annually.  No political contributions may be made or promised unless written pre-approval has been obtained from the corporate compliance function.

Among the factors that influence which candidates merit political donations include:

  • Candidate support for key company business and public policy priorities;
  • Candidate voting record and leadership position;
  • Candidate commitment to company’s industry growth, and ability to positively impact its goals; and
  • Company assets or employees in a region or state represented by the candidate.

All political contributions should be made in accordance with all applicable laws and regulations and disclosed as required by law. Any requests for contributions to a political candidate, committee, or party must be addressed to the corporate compliance function and must include an analysis of the four factors above, as well as business justification for the request to support the particular candidate, committee, or party.

Additionally, no Company funds or other assets may be used for political contributions outside the U.S., unless expressly approved in writing by Government Affairs.  A Company employee seeking approval for political contributions outside the U.S. must present Government Affairs, in writing, with all relevant information to allow for a thorough and careful analysis.  Among the information required by compliance function should be:

  • The name of the candidate, committee, or political party;
  • The government agency(ies) with which the candidate is or has been affiliated (e.g., has the candidate served with the Ministry of Interior and in what period of time);
  • The candidate’s position on key issues that affect Company’s business (e.g., human rights, equality, labor laws, unionization, taxes, foreign investment, etc.);
  • The candidate’s voting record on the issues affecting the Company;
  • Whether Company does business with the government entity with which the candidate is seeking a position and the amount of such business in the preceding 24 months;
  • Any pending or recently awarded contracts with the government entity with which the candidate is affiliated or is seeking a position;
  • Any pending or recently awarded contracts overseen or managed by the committee, party, or political entity for which the political contribution is sought; and
  • The business justification for making the political contribution.

Your company policy should prohibit politically exposed persons (PEPs) from exerting pressure or undue influence over you employees, agents, consultants, or representatives to make personal political contributions.

Your policy should prohibit use of your company’s resources or assets, including work time, to support candidates or campaigns personally. In the course of employment, PEPs should be prohibited from engaging in any activity on a company’s behalf that is intended to influence legislation, rulemaking, or governmental policy or engage lobbyists or others to do so, without pre-authorization of the corporate compliance function.

Political contributions shall not be used to disguise a payment that is prohibited by a company’s Code of Conduct, Anti-Corruption Policy, or other policies or procedures.  If your company’s policies prohibit the payment in another form, it should not be made under the guise of a political contribution.  No employee should utilize third parties or their own personal funds to make a payment that cannot be made under a company’s policies and procedures.

Any exceptions to this policy should only be approved by the CCO, Compliance Oversight Committee or Board of Directors.

Three Key Takeaways

  1. Political candidates are covered by the FCPA.
  2. What is the business purpose for the contribution?
  3. Do not make contributions towards candidates who can award your company business.

 

This month’s sponsor is the Doing Compliance Master Class. In 2018, I am partnering with Jonathan Marks and Marcum LLC to put on training. Look for dates of one of the top compliance related training going forward.

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