DOJ’s bribery guidelines place greater importance on expense reporting

The Department of Justice has now enacted recommendations from the FCPA Pilot Program into the official US Attorney’s Manual (USAM). This was first announced in November 2017, by Deputy Attorney General Rod Rosenstein, he said the DOJ would extend the pilot’s “presumption that the company will receive a declination” into official policy. The FCPA Pilot Program started in April 2016 when the Justice Department created an incentive for companies to self-disclose FCPA related issues and increase the transparency of their internal findings with the DOJ. Disclosure would reduce the fines up to 50% and be eligible for complete declination (no fines) with only disgorgement of the illicit profits.

Increasing Bribery Risks

One year ago, The Expense Reporter documented the increasing risks of bribery and corruption for companies of all sizes. As Ebright and Cottrell point out on Parker Poe GRC Blog, “Over the last 10 years, 143 companies have paid a combined $10.9 billion to resolve Foreign Corrupt Practices Act cases.” The ACFE says that 45% of all fraud cases are bribery & corruption related with a median loss of $200k USD.

The risks continue into 2018, especially as global economies grow and US based business target developing countries for increased revenue. The new policy changes give companies an opportunity and incentive to join the fight against bribery and corruption.

Why this matters for T&E

As George Terwilliger said in a post for the FCPA Blog,

. . . to benefit from the policy the company will have to demonstrate that its compliance commitment is real and its compliance program meets standards articulated by the government, even if scaled to the size and complexity of the business entity employing it. 

Many bribery scandals included meals, gifts, entertainment and travel. All items that should be captured and monitored by your global T&E programs. Million dollar bribery schemes typically involve face to face business meetings on international trips. Corruption happens during business meals with attendees.

T&E data is part of the solution

Finding fraud can be a needle in a haystack challenge. Bribery is a very high risk but low frequency issue for most companies. Whistle-blowers are often the first ones to identify potential bribery. These warnings can come from internal employees or third-parties, but they are themselves incentivized to report the crimes to federal agencies. Going to the DOJ gives allows them a financial reward from the fines collected. Often this is worth millions of dollars to an employee.

ACFE Fraud Tips

This is why having a committed internal compliance program and effective controls on your T&E is so important. If you can catch and disclose FIRST then fines are greatly reduced or eliminated. But your organization still has the ability to reduce fines due to the compliance program’s overall efforts.  Most importantly, the full cooperation and overall effectiveness of your program will be openly commented on by the DOJ during their public remarks. These comments are critical to controlling the far larger impacts to the company’s stock values and market perceptions. Damaging remarks by the DOJ, can impact your organization’s ability to partner with other businesses in markets around the world.