In Walks a Public Official: A Compliance Challenge
For the compliance practitioners and professionals, I have put together different elements from my experience in overseas sales into a single scenario, for your review, thoughts and comments, which I invite and welcome. The following event did not occur as a single integrated scenario. But there are common threads from different places and different times, to demonstrate how a sales individual or organization might encounter a situation which demands the focus of a compliance professional, either internal or external.
A Night Out
The story starts without controversy. A dinner between a line salesperson, US citizen, (not an executive, but someone who has a small international sales territory) and his third party intermediary (agent) at an overseas location. The two are on friendly terms, have been together professionally and personally over the course of five years, and have successfully worked together on small to medium sized tenders for a national purchasing entity. As far as the sales person is concerned, the prior successes were based solely on the strength of the technical proposals and competitive pricing submitted to win those tenders. The following morning both the salesperson and the agent will attend the public opening of a significant tender for a national purchasing entity, on which they have been working together for a year. The technical and pricing package was just submitted hours before they sat down to dine, as the deadline for submission was close of business that day.
In Walks a Public Official
About half-way through dinner a gentleman walks in and joins the two. He is introduced as a member of the Technical Evaluation Committee (falling clearly within the FCPA definition of Public Official). While it was clear that the agent expected the public official’s arrival, it came as a surprise to the salesperson. As to the public official, bids which do not pass his scrutiny the next day will be eliminated. While the conversation between the agent and the public official is in the foreign language, the salesperson notices that the tenders for the competition are now out on the table. During his visit, the sales person witnesses an extended conversation (again, in a foreign language) between the agent and the public official, and they are reviewing, page by page, the tenders of the competition. The salesperson is not asked to participate in the conversation, nor does he volunteer and within an hour the public official makes his exit.
After the public official departs the agent simply says something to the effect that “he is with me.” The sales representative does not ask any questions. He realizes that the competitors bids are not yet public information, and understands that access to that level of non-public documentation did not come for free to the agent.
To the compliance professionals and practitioners, here are the common threads of this scenario, through my own perspective:
1. An event happens which was not shared prior with the salesperson. While the agent expected the arrival of the public official, he did not disclose it to the salesperson until the official’s arrival at dinner.
2. There is no visible exchange of cash, or monetary equivalent.
3. The exchange which was witnessed by the US citizen is in another language or in broken English.
4. The agent refers to the relationship between himself and the foreign official in language which is meant to be vague, give cover, or, in simpler terms “a wink and a nod.” The agent makes no mention of a bribe, using that terminology, to the representative.
5. The sales representative now has to make a decision in a hurry, given the time differences between his current location (GMT+2), and the location of his company’s offices (EST).
To the Compliance Professional, what would you advise the sales representative to do?
As background, the tender opens the following day, the sales representative has this sale in his forecast, has spent the better part of a year working on this transaction, and before that dinner, expected that his firm would win the tender based on the strength of his company’s proposal and competitive pricing. He has had a successful experience in this country, without any evidence, discussion or reference of bribery, real or potential. Also, he is close to the agent, and has worked with him successfully in the past on other tenders, and is still working together on future ones. If he walks away from tomorrow’s tender he faces a deficit in his sales forecast, reduction in quarterly bonus, and will end up having to sever the relationship with this highly successful agent, who will certainly go to the competition. That is what this line sales person is thinking as he retires to his hotel room. This is the environment under which overseas sales personnel often have to operate.
The tender opens at 9:00 the following morning. It is now midnight local time, 5:00 pm EST? What does that sales person do?
I invite and welcome your comments, thoughts and guest blogs on this subject.