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The Foreign Corrupt Practices Act
(FCPA) ________________________
John Parkerson, General Attorney
Law Department
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Foreign Corrupt Practices Act ___________________________
Antibribery ProvisionsAntibribery Provisions
• Prohibits offers or giving anything of value to foreign government officials to obtain or retain business or secure an improper advantage
Recordkeeping ProvisionsRecordkeeping Provisions
• Requires that company records be kept in reasonable detail to accurately reflect transactions
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Antibribery Provisions ____________________________
Delta, its officers, directors, employees, and others working for Delta, no matter where located, are prohibited from:
• making an offer, payment, promise or authorization of payment of money or anything of value
• to a foreign official, political party or candidate or to a third person while knowing part of the money or thing of value will be transmitted to a foreign official
•to influence the foreign official in order to obtain or retain business or to secure any improper advantage
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Who is covered? ___________________________
• Delta
• Delta Officers & Directors
• Delta Employees
• Delta Agents (including GSAs and consultants)
For acts in furtherance of a corrupt payment occurring anywhere in the world
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What Acts are Prohibited? ___________________________
• Offers, payments or authorization of payments of: – Money or
– Anything of value including:
• free flights or upgrades, gifts, unusual discounts, etc.
• Any act in furtherance of improper payments, including:– telephone calls, faxes, e-mail messages, etc. to arrange for
payments to be made
Note: Payments need not be received to be in violation of the FCPA.
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Further Prohibited Acts_____________________________
Third Parties (Agents)
Delta is responsible for corrupt offers, payments, or authorization of payments made by third parties
• such as a GSA, consultant or alliance partner
• if Delta or its employee knew or should have known
• that the third party intended to make an improper payment.
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What Officials are Covered? ___________________________
• Foreign Government Officials
– Officers/employees of foreign governments
– Employees of government-controlled companies, such as national airlines or public airports
– Employees of public international organizations, such as the International Civil Aviation Organization
– Any person acting in an official capacity for or on behalf of any such a government or agency
• Foreign Political Parties
• Candidates for Foreign Political Office
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What Constitutes an Improper Motive?___________________________
• Offer, promise or payment for the purpose of:
- Influencing any act in the foreign official’s “official capacity”
- Inducing the official to act in violation of a duty, or to “look the other way”
- Inducing the official to use his or her influence to affect an act or decision of the foreign government
• To obtain or retain business or gain an improper advantage.
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Examples of Improper Motive _____________________________
– To gain an award of business from the foreign government or private sector
– To reduce tax assessments in the foreign country
– To obtain a favorable lease agreement
– To obtain anything of competitive value that would not have been available otherwise
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FCPA Recordkeeping Provisions _____________________________
The recordkeeping provisions serve to deter businesses that wish to “hide” improper payments and prevent corporate
assets from being used for corrupt purposes.
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Recordkeeping Provisions__________________________
Delta and its subsidiaries must:
• Maintain financial records and accounts in reasonable detail to accurately represent transactions and the status of its assets and liabilities
• Develop and maintain a reasonable system of internal accounting controls
• Refrain from making false or misleading entries or off-the-book transactions
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Exception to the FCPA Facilitating payments for routine governmental action
_____________________________
• Permits or licenses that Delta is entitled to receive under local laws
• Processing certain governmental papers such as visas and work orders
• Mail pick-up and delivery
• Providing phone service, power and water supply
• Loading or unloading cargo
• Protecting perishable products
from deterioration
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Affirmative Defenses __________________________________
• Payment is lawful under the written laws of the country
• Payment is a reasonable and bona fide expenditure, such as travel and lodging expenses, directly related to
– Promotion, demonstration or explanation of products or services
– Execution or performance of a contract with a foreign government or agency
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Penalties_____________________________
Criminal Penalties (per violation)
• Company: up to $ 2 million in fines
• Officer, director, employee, or agent of Company:
– up to $100,000 fine or twice the benefit sought and
– up to 5 years in prison
Civil Penalties (per violation)
• Company OR officer, director, employee, or agent: $10,000
Individuals’ fines CANNOT be paid by the Company
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Anti-Bribery Legislation in Other Countries_____________________________
• OECD members include the majority of industrialized countries of the world, including the U.S.
• The OECD Convention requires member countries to pass laws criminalizing bribery of foreign officials
• To date, most member countries have enacted anti-bribery laws similar to the FCPA
OECD CONVENTION
(Organization for Economic Cooperation and Development)
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Elements of Delta’s FCPA Compliance Program
_____________________________• Due Diligence
• Contract Provisions
• Monitoring -- Red Flags
• Periodic Certification
• Bookkeeping Rules
• Established Lines for Reporting Violations
• Training
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Compliance Program – Due Diligence
_______________________________________
• When hiring consultants or other agents:
– Identify qualifications sought for the position
– Identify candidates for the position
– Collect information regarding the candidates
– Review information collected to evaluate and compare candidates
– Review local law
– Prepare written report documenting due diligence
– Request approval of appointment
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Compliance Program - Contract Provisions _____________________________
• FCPA compliance provisions are mandatory for certain agreements related to Delta’s international business
• Delta’s legal department must approve all agreements with
– GSAs
– Airline affiliates
– Consultants with international functions
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Compliance Program - Red Flags___________________________
When doing business in a foreign country, certain circumstances should alert you that there is an
increased risk of an FCPA violation.
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Red Flags – Examples ______________________________
• Rumors regarding unethical conduct by an employee, GSA, consultant or government official
• In a transaction, any unusual payment patterns or financial arrangements, including
– Requests for payment in a third country
– Requests for payment in cash
• Consultant refuses to disclose associates or subcontractors who share the commissions or fees
• Political contributions are requested
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Red Flags (Cont’d) _____________________________
• Doing business in a country with history of corruption
• Requests for unusually large commissions or other payments, or payments that appear excessive for the service rendered
• Agent or representative who is related to, or has close personal relationship with a government official
• Agent or representative is recommended by a government official
If you discover a red flag, contact the Law Department immediately for further review.
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Compliance Program - Bookkeeping Rules _____________________________
• No circumvention of controls for:
– Internal accounting, expenditures, or purchasing
– Sale, barter, transfer or disposition of assets.
• No intentional failure to make a correct entry in the accounting system for any disbursement.
• No orders, barter agreements, or purchase payments without purchase requisition, contract or other written authorization.
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Bookkeeping Rules (Cont’d) _____________________________
• No spending cash or issuing a check or draft without approved documentation supporting the reason for the refund or disbursement, including for petty cash funds.
• Report any request to participate in an illegal payment or “off-the-book” disbursement to the Law Department.
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Additional Elements of Delta’s Compliance Program
___________________________• Open lines of communication
– Employees encouraged to ask questions
– Employees encouraged to report “red flags” including requests for corrupt payments
– Availability of Ethics and Compliance HelpLine
• Training
– Periodic refresher courses
– Training for new employees
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Where to Get Help _____________________________
To get answers to questions or reportsuspected violations or red flags, contact:
– Law Department (Sally Hogsette, General Attorney: 404-715-2467)
– Delta Ethics & Compliance HelpLine: Outside U.S. - call collect: 770-409-5006
All reports of suspicious activity, red flags and possible violations are confidential.
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