World's Most Ethical Companies and the FCPA
26 Corporate Crime Reporter 4, January 17, 2012

Every year, Ethisphere magazine names its World’s Most Ethical Companies.

On the list last year were companies like General Electric, Cisco Systems, Ford Motor Company, and Pepsico.

Let’s put aside pollution and childhood obesity for a moment.

The magazine says the designation is awarded “to those companies that have leading ethics and compliance programs, particularly as compared to their industry peers.”

What about Foreign Corrupt Practices Act (FCPA) problems?

Michael Koehler is an assistant professor of business law at Butler University.

He’s the man behind the popular FCPA Professor blog.

Koehler did a quick survey and found nine companies that have earned “World’s Most Ethical Company” designation during the same general time period as also resolving FCPA enforcement actions or being under FCPA scrutiny.

And the winners are:

General Electric, Statoil, Deere & Company, Hewlett-Packard, Rockwell Automation, AstraZeneca, Novo Nordisk, Sempra Energy and Oracle.

“I would guess that Ethisphere probably has a reasonable basis to conclude that these companies are ethical,” Koehler told Corporate Crime Reporter last week. “Just because the company resolved an FCPA enforcement action doesn’t remotely mean that it is a bad or unethical company.”

“Given how the FCPA is enforced, if all companies subject to the FCPA would do an extensive throrough worldwide review of their business operations, the vast majority of those companies would find technical FCPA violations.”

“The Department and SEC say there is no de minimus standards, so those would be enforcement technical violations.”

“There is no way, given respondeant superior, how a company can assure itself of being clean. And that’s why it should be revised.”

Last month, in an article to be published in the Wisconsin Law Review, Koehler proposed a safe harbor provision to the FCPA.

Koehler argues that a corporation’s pre-existing compliance policies and procedures, and its good faith efforts to comply with the FCPA, “should be relevant as a matter of law when a non-executive employee or agent acts contrary to those policies and procedures and in violation of the FCPA.”

The Justice Department is opposed to such a defense, arguing that it would undermine effective FCPA enforcement.

Seventy-eight public companies are currently being investigated by federal authorities for violations of the FCPA.

The Corporate Investigations List was compiled by J. Cody Worthington, an associate director with Navigant Consulting.

The list was posted on the FCPA Blog.



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