With all the hoopla over hiring of relatives of foreign officials, it is important to keep in mind the risks and how the FCPA applies.
The talismanic concept for tan FCPA violation is “corrupt intent.” It is always difficult to know what is going on in someone’s mind (unless you are Kreskin from the past). White collar crimes usually turn on proof of an actor’s intent. In some cases there is direct evidence of an actor’s intent (e.g. statements, emails), and in other cases, the intent has to be inferred from surrounding circumstances (e.g. large payments or benefits, pendency of contracting competition).
In the current atmosphere surrounding hiring of relatives of foreign officials, it is important to consider steps that would demonstrate the absence of such intent.
First, and most important, every company has to design and implement a policy and procedure to conduct due diligence on any hiring of an employee to ensure that there is no connection between the prospective employee and a foreign government.
Second, the policy has to ensure that appropriate steps are documented so that there is a record of the company’s due diligence review of the issue.
Third, the company has to ensure there is appropriate review and approval by senior compliance and/or legal officers.
Many companies hire relatives of foreign officials not with an intent to bribe a foreign official but because the relative is well qualified. It is important for these companies to implement a due diligence screening system to ensure that the absence of any corrupt intent in the transaction.
Initially, it is critical to confirm whether or not the prospective employee has a close family connection to a foreign government official. As the relationship between the employee and the foreign official becomes more attenuated, the risk may diminish.
In addition, the importance of the foreign official to the company’s business is a significant risk factor. If the foreign official has an important role in awarding the company business, the risk increases and the need for protections increases.
Against these risks, it is important to weigh the need for the company to hire the relative of the foreign official. In most circumstances, it is hard to imagine that the prospective employee is critical to hire but if there is a real business need identified, that has to be considered in weighing the risk.
Certainly, there are situations where the hiring of a relative of a foreign official is too risk to approve. However, if a careful policy and procedure is followed to address the risks, the number of denials of prospective hires is likely to be small.