When I received my copy, my first thought was that, finally, it’s about time for this book to come out. Then I read it and realized I was glad he put so much time into it. I am referring to Matt Ellis’ new book The FCPA in Latin America, which was published by Corporate Compliance Insights (CCI) last fall. If your company gets into Foreign Corrupt Practices Act (FCPA) hot water in Latin America, I tell folks that Matt Ellis is the guy to call. Not only is he fluent in both Spanish and Portuguese; he has extensive work experience in Latin America, performing investigations for the World Bank. Now a partner at Miller & Chevalier, he is a member of the firm’s top notch FCPA team. Fortunately for the rest of us, Ellis published his book. It combines key FCPA enforcement actions with practical advice on how to handle compliance work in Latin America.
With the Petrobras scandal still ongoing, the recent FCPA guilty pleas from individuals involved with the Venezuelan state oil company Petróleos de Venezuela SA (PDVSA) and the recent FCPA and greater global enforcement action involving the Brazilian construction giant Odebrecht, we are seeing an uptick in focus on bribery and corruption in Latin America. If your company does business in or you are representing clients doing business in that part of the world, you need to read this book.
In chapters 2 & 3, Ellis details some of the reasons bribery and corruption risks can be so paramount in Latin America. He details not only the structural reasons for corruption but some specific corruption risks which may not be immediately apparent to a US-centric compliance practitioner. He also discusses the always delicate subject of conveying US based compliance solutions to a Latin American business audience and suggests explaining some specific provisions of the FCPA for a Latin America based company.
He goes through a number of risks a company doing business in Latin America could well face. It includes regulatory risks and associated risks in public procure; risks for being shaken-down at the border by customs officials and other law enforcement corruption risks and the ever touchy issue of facilitation payments. He also speaks to specific risks from family owned businesses and monopolies unique to the region. Additional conversations include describing the FCPA’s accounting provisions and criminal bribery provisions; explaining the declination process and how compliance with the FCPA is actually good for the bottom line.
In Chapters 5 & 6 Ellis discusses some tailored compliance strategies for both Latin American based entities and US companies doing business in Latin America. Beginning with risk based compliance programs, Ellis moves to unique training scenarios, ongoing monitoring and auditing as key tools to upgrading your compliance regime and the always difficult problem of sham contracts and phantom vendors which can be problematic in the region.
He also relates how cultural norms in Latin American can lead to companies and their employees embracing compliance. He then relates how to build off of this enthusiasm and use it as momentum to move forward. He starts with the “Circle of Trust” and uses that discussion to focus on the inherent cultural values. He concludes with a piece on the cultural nuances regarding internal reporting in the area.
He devotes an entire chapter to managing third party risks in Latin America, which is always a significant risk. He lays out some common red flags to look for, how to conduct effective due diligence and (where the rubber meets the road) managing third party relationships and how to manage third party relationships with the government officials you will inevitably interact with going forward. He concludes this chapter with some timely words on how to respond to third party corruption.
His text concludes with a chapter about what a Latin American company should do if it comes under FCPA suspicion, investigation or is simply required to respond to the inquiries from a US contractor. He talks about retention and use of counsel, what to expect in the investigation process and the importance of the discussion around the decision to disclose to the Department of Justice (DOJ), Securities and Exchange Commission (SEC) or the appropriate local authorities.
All of these facets would be worth the price of admission alone. However, I have saved what I feel is the best for last. Ellis opens his book with a firm debunking of the US-centric myth that corruption is endemic to Latin America, which many Americans believe to be the only way to do business in region and in fact is what Latin Americans want to do in the first place. He exposes these myths and the final one that the FCPA is bad for business for what they are: stereotypical blatherings from people who simply do not know the region. Every compliance practitioner should read Chapter 1 and be thoroughly familiar with these points.
For the Latin American company looking to do business in the US or attract US investment, having an effective compliance program is a mandatory requirement. This book lays out for entities and business people what will be expected of them. As Ellis is publishing his book in Spanish and Portuguese as well, this book could become the standard text for business folks in Latin America.
Matt Ellis has set the standard for anyone who wants to understand FCPA compliance in Latin America. More than simply a recitation of the rules, The FCPA in Latin America speaks closer to my heart because it is about actually doing compliance. If you are doing business in Latin America or even considering it, you need to read this book.
You can check out a copy of The FCPA in Latin America on Amazon.com by clicking here.
