ALUMNI ARTICLE
»
Alum shares experiences in complex
international commerce
GLOBAL VIEW
Creating a
culture of
compliance
FCPA violations stemming from international
commerce frequently occur as a result of business
practices that are common in the foreign country.
In fact, many are practices so entrenched that it
may not even occur to local employees that they
are engaging in “corrupt” activities. Because the
FCPA places liability on companies and individuals
not only for their own acts, but for acts of agents
working on their behalf, shippers, logistics
providers, customs brokers, and other companies
that assist with the movement of goods around the
globe and rely on a complex system of local agents
and subagents may be at especially acute risk.
For example, a shipper may direct its customs
broker to secure the release of goods from
customs by doing “whatever it takes.” That broker
subsequently makes an unauthorized payment
directly to a customs official to secure the release.
Such transactions may be quite common in
numerous developing economies, but under this
example the broker may have created FCPA liability
not only for itself, but also for the shipper who
directed the broker’s actions. Beyond the FCPA,
the same transaction likely also violates local law
and, depending on the circumstances, the recently
enacted U.K. Bribery Act.
Given how established some of these practices
are in certain areas, what can a company seeking
to ensure lawful operations do to guard against
potential liability? First, make sure your company
has a proper FCPA/Anti-Corruption Policy and
Program in place (and follow it). Second, equally
important, make sure your agents do so as well.
MIQ is a global third-party logistics provider
with more than 1,200 employees in 20-plus
countries, and agent relationships in more than
50 other countries. As a third-party logistics
provider, we work with essentially every mode of
transportation, including air, ocean, road, and rail,
on a global basis. We also have very active customs
brokerage and warehousing businesses.
Each element of our business is governed by
its own sets of rules and regulations. Multiply
those rules and regulations by the number of
countries we operate in and you get an idea of
some of the legal/regulatory complexities that
confront us every day. Mix in an invigorated, global
focus on anti-corruption laws such as the FCPA and
the U.K. Bribery Act, and the result is a very active
legal department.
As international trade continues to grow, the
skill set demanded from in-house counsel for a
third-party logistics provider charged with ensuring
the safe and timely delivery of a customer’s goods
(if not its entire global supply chain) is forever
expanding. For example, we routinely conduct
in-house training sessions or otherwise support
areas covering our FCPA compliance policy and
procedures and import/export regulations, and
even offer our own “Contracts 101” seminars.
Our legal and compliance departments
understand that the most effective way to protect
our company is to deliver this information in
person. For example, with a topic like the FCPA,
delivering the message is merely a prelude to
gaining buy-in from employees, whether it is in
the U.S., Malaysia, the Philippines, or Peru. If a legal
department aspires to make compliance part of a
company’s DNA, such buy-in must be present from
top to bottom— inspired by the appropriate tone
at the top—and supported thoroughly by personal
and practical training and guidance.
A Loyola-laid foundation
To help describe how my time at Loyola
University Chicago School of Law influenced my
career, I have to take one chronological step back
in my educational path to Thunderbird School
of Global Management. At Thunderbird, I was
introduced to the world of international business
and trade. Two phrases commonly encountered
around campus were a quote from former
Thunderbird President William Schurz, “Borders
frequented by trade seldom need soldiers,” and
Socrates, “I am not an Athenian or a Greek, but a
citizen of the world.”Those two phrases helped
shape not just my career, but also my mindset.
When I arrived at Loyola, my focus was on a
second career in law. I had just concluded an
extended assignment in Europe for a multinational
manufacturing company and wanted a law school
experience in a large, diverse metropolitan area
that offered a strong legal education with a solid
international curriculum. Loyola fit the bill.
One class with continuing resonance to my
career was International Business Transactions
(IBT). I recently told Margaret Moses, my then IBT
professor, “I live that class every day.”My experience
at Loyola not only gave me a foundation in the
theoretical aspects of law; more importantly,
it taught me to approach legal challenges in a
practical, solutions-oriented manner.
These are invaluable assets in private practice,
as well as for an in-house attorney. Many business
operators do not have a reference point to
understand the value an in-house attorney brings
them until they are stuck in a legal jam and have a
savvy internal counsel on their side who is able to
react quickly and plan proactively, and is willing to
put in the time and effort to get the best results for
the company.
Ultimately, if you are responsible for the
legal health of a U.S. entity (including its foreign
subsidiaries and affiliates) involved in the business
of shipping goods internationally, it is critical that
your third-party logistics provider, broker, and/or
agent involved in your supply chain is both fully
familiar with, and committed to the adherence to,
the U.S. FCPA regulations. The regulatory breadth
of these restrictions attaches to cultural standards
and personal foibles at a much more intimate level
than most, making it essential that you set the right
tone from the top down, and conduct meaningful,
relevant, and personal training sessions so that a
culture of compliance becomes embedded in your
company’s DNA.
■
149M from Jeffrey Tesler,
$90.8M from Magyar
Telecom, and $14.5M
from Aon Corporation…
these are just a few of
the $508.7 million in
penalties, disgorgement,
and prejudgment
interest awards collected
by the U.S. Department
of Justice and U.S.
Securities and Exchange Commission last year
for violating the U.S. Foreign Corrupt Practices
Act (FCPA). In my role as general counsel and
chief administrative officer of MIQ Logistics, I’ve
discovered the myriad ways the FCPA touches
international commerce, and the value of an
in-house counsel in ensuring a company’s
employees and agents understand and comply
with the requirements of the FCPA and other
domestic and international statutes.
$
Before joining MIQ Logistics, Reid Schultz (JD ’04) was vice president-legal and assistant general counsel for YRC Worldwide Inc. He previously was an attorney with Schiff
Hardin LLP, and a major accounts group manager-Europe and corporate accounts manager-Latin America for Butler Manufacturing Company. He holds an MBA degree
from the Thunderbird School of Global Management.
TOMAKE COMPLIANCE
PART OF A COMPANY’S DNA,
BUY-INMUST BE PRESENT
FROM TOP TO BOTTOM.
B Y
R E I D S C H U L T Z
Reid Schultz (JD ’04) says his
Loyola international business
studies have “continuing
resonance to my career.”
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SPRING 2012
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LOYOLA LAW
