CEOs should understand that compliance officers are there to prevent problems

In a few months, she is going to leave Romania after a three-year long assignment. Over these years she witnessed an impressive work of the Anti-Corruption Department and an emerging widespread understanding that behavior needs to change to really overcome corruption.

Meet American Embassy’s in Bucharest Rule of Law Officer, Ms. Marisa Mac Isaac, who strongly believes that younger generation could make Romania a different place.

“Last week, for example, I was speaking to students about corruption, and an 8th grade student told me he would not give a donation to a university admissions officer to secure a place in the university because it was illegal. I was very impressed- if everyone thinks like that, Romania will be a different place! At the same time, there’s now a big space for everyone—youth, businesses, the government, the judiciary, the parliament, political parties—to come to a consensus of what the rules should be, and to undertake a wide effort to make sure everyone, from the youngest to the oldest, the richest to the poorest, understands what the rules are and agrees to abide by them. This starts with a basic understanding of the rights and responsibilities of being a citizen accorded by the Romanian Constitution and a basic understanding of how government works, to strong compliance and ethics regimes for FCPA and Romanian anti-bribery legislation for politicians, government officials and the private sector,” says Marisa.

According to the FCPA investigation list, last year Romania was mentioned three times in the Country Count for the Corporate Investigations. I know you can’t provide any details on the investigations. However, in your opinion is that a good or a bad sign for American businesses?

Corruption, unfortunately, is a worldwide phenomenon and no country, including the United States is corruption free. What matters, then, is how much corruption a country is willing to tolerate. One of the most useful parts of the Foreign Corrupt Practices Act (FCPA) is that companies get bonus points for self-reporting, which, in the U.S., has led to somewhat of a partnership between the government and the private sector in fighting corruption.

When it comes to FCPA, what is the lesson that Romanian companies that are part of American undertakings’ supply chain should be aware of?

FCPA applies to both American companies, companies listed on an American stock exchange, and to any company which sends money through a U.S. bank. FCPA does not apply foreign officials, but it prohibits companies from giving anything of value to a foreign or elected official, or foreign political candidate in exchange for business. Anything of value is not just cash, it can also be jobs, plane tickets, car, dinners, et cetera. Since FCPA applies to more than American companies, it is thus an imperative for virtually any company in Romania to have a compliance system in place to prevent these types of transactions.

Additionally, while an FCPA violation can result in prosecution or jail time, more often than not, FCPA violations result in huge fines for companies- millions of dollars. Having to pay a 10 million USD fine can really cut into the bottom line of many businesses.

Whether we are talking about conformity 1.0 or 2.0, compliance officers should identify and manage risks. What are the FCPA-related challenges that lie ahead of Romanian compliance officers and how can they help companies better address these challenges?

Creating a compliance regime requires a whole-of-company commitment. CEOs should understand that compliance officers are there to prevent problems, and are not there to act as company police. CEOs should transmit this message to all employees, and employees need to be made to understand than an FCPA violation can cost the whole company as possible fines are very high. Whistleblowing mechanisms should be established. Compliance officers should provide regular training to employees about the rules- more often than just a once per year in person training. For example, mandatory online training or displaying compliance tips of the day when logging into a computer in the morning can be effective in transmitting the message.

Finally, FCPA is not the only anti-bribery legislation applicable to Romanian companies. Effective compliance regimes should also take into account the UK Anti-Bribery Act and also the Romanian legislation on anti-bribery.

According to various international studies, SMEs are a vehicle of economic growth. There are more corporations performing social audits (ethics and compliance) to make sure their supply chains are safe and healthy. In your view is prevention a cost or an investment for a business of any size?

Prevention is absolutely an investment for a business of any size. Prevention means deterring issues from becoming big problems later on. SME’s who invest in compliance regimes early on will do better in the long run because investing in ethics and compliance at an early stage will ensure a culture of ethics and compliance that will stay with the SME as it grows. Prevention is also much cheaper for any company than investigation and prosecution.

Bloomberg reported a couple of weeks ago that there are hundreds of Romanian public officials facing criminal trials, and that the anticorruption agency (DNA) is reviewing more than 10,000 files. In a way, these are positive developments. However, no one in the institutions seems be willing to sign any formal document, which makes it difficult for businesses to secure approvals to operate.  How are American companies affected by this state of fact?

Businesses report to the Embassy that while some government officials seem hesitant to sign, they ok with this because it gives a huge opportunity to alter the methods of doing business to make the playing field more level. We’ve seen, in recent months, more and more businesses come forward and say that they are ready to make changes. The development of a new National Anti-Corruption Strategy provides a good opportunity to introduce mandatory compliance and ethics training for government officials, so that they can feel confident that making decisions will not lead to legal difficulties. If both government and businesses take this opening, the investment climate in Romania can really change for the better. More American companies will come to Romania if the playing field becomes level.

What are the priorities of the American Embassy in Romania (in terms of rule of law / business compliance) for the next 3-4 years?

As I said above, there’s an opportunity now to create a culture of ethics and compliance in all levels of society. The U.S. Embassy is ready to assist Romanians in doing so. We are working on the third Action Plan for Good Governance with the Romanian government, which will include a bigger focus on regulatory impact assessment. We’re supporting Romania as Open Government Partnership (OGP) members. We’re sharing our experience in civic education with teachers, NGOs and magistrates. We’re organizing a number of events to publicize FCPA. 

Report a FCPA Violation FCPA.Fraud@usdoj.gov