Beyond “Check the Box” Intermediary Compliance Training Programs

Read Part 4 here.

The general counsel for our Asian operations was a very impressive man. He was among the first 400 attorneys licensed in China following the death of Chairman Mao Zedong. Later, he also obtained a law degree in the United States and became licensed to practice in Ohio. He did an extraordinary job supporting our businesses in China, Japan, Hong Kong and Taiwan, and he strongly advocated ethical business practices both internally and with our Intermediaries. So, I was very interested in witnessing first hand his annual anti-corruption training program for 40 of our largest third-party distributors in China who we had assembled in a hotel ballroom in Shanghai.

Because our general counsel delivered his training presentation in Chinese, I could not understand a word of what he said. But as he droned on in a monotone for 45 minutes, I knew for certain that the training session failed to have the desired effect. Shortly after he took the podium, I noticed that no one was paying attention to him. Instead, the intermediaries in the audience were looking at their computers or their phones or were having lively conversations with one another. Although our company was able to “check the box” to indicate we had provided compliance training to our Chinese distributors, I know that few, if any, in attendance heard a word of what our general counsel had to say.

An Appropriate Manner

Intermediary training programs are an important part of any anti-corruption program. They are yet another opportunity to communicate your expectations regarding how your intermediaries should conduct their business and to educate them about applicable anti-corruption laws and industry ethics standards. Not surprisingly, they are also one of the factors the DOJ and SEC will consider when evaluating the effectiveness of your compliance program. The second edition of the DOJ’s and SEC’s Resource Guide to the U.S. Foreign Corrupt Practices Act released on July 3, 2020 states:

“… DOJ and SEC will evaluate whether a company has taken steps to ensure that relevant policies and procedures have been communicated throughout the organization, including through periodic training and certification for all directors, officers, relevant employees and, where appropriate, agents and business partners. For example, many larger companies have implemented a mix of web-based and in-person training conducted at varying intervals. Such training typically covers company policies and procedures, instruction on applicable laws, practical advice to address real-life scenarios and case studies. Regardless of how a company chooses to conduct its training, however, the information should be presented in a manner appropriate for the targeted audience, including providing training and training materials in the local language [emphases added].”

My Chinese colleague in Shanghai satisfied the DOJ and SEC requirement that training be presented in the local language. However, he failed to deliver the training “in a manner appropriate for the targeted audience.” The stiff lecture style of teaching he chose turned everyone off and caused our intermediaries to tune out.

In his defense, let me stipulate that delivering anti-corruption training to intermediaries is a tough gig. This is especially true in jurisdictions where corrupt business practices are a way of life. Intermediaries working and living in such environments might quietly sit through your compliance training sessions but are likely thinking that you are spouting ideals that have no connection to reality. To break through this significant barrier, you must go beyond a mere recitation of the rules and find a way to engage your intermediaries in a meaningful dialogue about the challenges they face in conducting business on your behalf.

Strategies to Deliver Dynamic Training

• Briefly summarize the rules but bring them to life by providing specific examples of business practices that are prohibited and realistic challenges your intermediaries might face while conducting business in jurisdictions where corruption is endemic.
• Share real-life stories about companies that were caught and punished for violating the law or industry ethics standards.
• Use realistic scenarios and the Socratic method to challenge the intermediaries with questions about the appropriateness of various business practices and invite them to participate in a dialogue about how best to respond if such circumstances arise.
• Make extensive use of audience response devices to obtain attendee’s responses to specific questions. In so doing, consider splitting the attendees into teams and inviting them to engage in a competition to see which team gets the most answers right. I’ve used this technique dozens of times in corporate training programs and it never fails to get participants fully engaged in the learning activity.
• Call on your intermediaries to share with one another challenges they have encountered from corrupt competitors or government officials and how they responded to such challenges.
• Ask your intermediaries to explain why understanding anti-corruption rules and engaging in ethical business practices is important to them and their long-term business success.
• At the end of the training program, ask your intermediaries to share with one another how they will use the things they learned in the future when providing services to your company.

In addition to using one or more of the engagement techniques detailed above, make sure the individuals assigned the responsibility for delivering your intermediary compliance training are well-trained and competent presenters. A well-designed training program poorly delivered will not achieve desired learning objectives. Also, treat your intermediaries with respect by beginning your training session with an acknowledgement of how important they are to your business. Do not threaten or talk down to your intermediaries. Consider their level of sophistication and tune your training program accordingly. If your intermediaries are highly educated and sophisticated business professionals, don’t insult them with an anti-corruption 101 course. Whatever you do, don’t engage in a law school style lecture. You don’t need your intermediaries to be able to recite statutory text or understand the nuances of the FCPA or 2010 U.K. Bribery Act. Instead, you want them to leave the training session with a clear understanding of what they can and cannot do when conducting business on your company’s behalf.

Finally, provide your intermediaries with resources they might need to meet your expectations. These could include an anti-corruption policy template, copies of applicable industry ethics standards, online training modules and/or slide decks they can use to deploy anti-corruption training to their employees.

Regardless of how effective your intermediary compliance training program might be, it will not guarantee your intermediaries will follow the rules. Consequently, it is vital that you develop and implement an effective monitoring and auditing program to keep an eye on your intermediaries’ actual business practices. This will be the subject of the sixth and final article in this series.