"How to Find a Business-Minded Compliance Monitor and Minimize Reporting Requirements When Negotiating an FCPA Settlement (Part One of Three)"The FCPA Report
In this article, Kathryn Atkinson discusses FCPA compliance monitors and her experiences as a monitor for KBR. Compliance monitors have traditionally been imposed by the DOJ and SEC when a company is reaching an agreement resolving FCPA charges. The monitor's task is to "evaluate the anti-corruption compliance program, including both components, the anti-bribery pieces and the internal controls as they relate to anti-corruption compliance," Atkinson said. "The mandate is typically that the monitor will ideally get to the point where he or she can certify that the compliance program, as designed and implemented, is adequate to prevent a recurrence of FCPA violations and also is designed to address other anti-corruption laws depending on where the company operates. The end goal is that by the time the monitor is done, the monitor is satisfied that the company has what it needs to maintain compliance with the FCPA and parallel foreign anti-corruption laws," Atkinson explained.
The reporting requirements of the monitor are created as terms of a settlement agreement between the government and the company. Atkinson explained that the government has articulated a variety of factors that it considers when determining what type of reporting obligation is appropriate. For instance, she said, the government will likely consider whether the company voluntarily disclosed its conduct and whether the company cooperated fully with the government's investigation and will ask extensive questions about the character of the violations.
The DOJ or SEC may ask, "to what extent did the violations evidence a real absence of effective compliance versus something more akin to a rogue employee or a set of rogue employees?" Atkinson said. "How long did it go on? What types of red flags had shown themselves that weren't recognized by others in the company? Were there clear gaps that permitted conduct to go on for a long period of time? How egregious was it? How high up in the company was it?"
She added, "There is a theory that, if it's broken at the top, it is hard to take comfort in the concept that the program is effective, because presumably the tone at the top was defective and that's your starting point for compliance."
While some companies have found monitorships to be costly and burdensome, others feel they can be a positive experience. Atkinson, who served as a monitor for KBR, a global engineering, construction and services company that settled charges with the SEC and DOJ in February 2009, argued that "most of the companies that have been through monitorships in hindsight have found them to be very helpful. Sometimes with more pain than they feel was necessary, whether emotional or financial, but I think most of the companies look back and say their program and their company is stronger for it, and that should be the answer if the monitorship is done right," she said. "There is no reason for it not to be a positive in the end."