Guillermo Christensen Quoted in Anti-Corruption Report: "Deutsche Bank Nepotism Settlement Shows Policies Are Not Enough"

Ice Miller LLP partner Guillermo Christensen was quoted in the Anti-Corruption Report article, "Deutsche Bank Nepotism Settlement Shows Policies Are Not Enough."

The article included:

The fact that Deutsche Bank had these policies in place for the past decade is notable, as they predate the first U.S. settlements targeted at hiring practices, which began in 2015 with BNY Mellon’s settlement with the SEC, Guillermo Christensen, a partner at Ice Miller, observed. “There were many companies that in the past viewed this kind of activity as not implicating the FCPA – especially for low level jobs or unpaid internships,” he said. Thus, prior to the BNY settlement and the settlements with Qualcomm, JPMorgan and Credit Suisse that followed, hiring practices were not a high priority in most company’s compliance programs, “and certainly not as high as travel and entertainment risks for example,” Christensen said.

Deutsche Bank’s recognition of the risks of nepotism hires as reflected in its policies is in “sharp contrast to the reported activities and behavior of high-level bank employees,” Christensen observed. “That put the bank’s behavior in arguably a more negative light than if their policies had been less clear or ambiguous on regulating these types of hires.”

While Deutsche Bank employees were clearly trying to skirt internal policy by having the JV hire relatives and avoid direct liability, it was still on the hook for FCPA violations. A company cannot escape liability by relying on an affiliated entity, such as a JV, to carry out the conduct, Christensen explained. Doing so falls within the same broad category of third-party agency conduct on which most FCPA prosecutions and settlements focus. “The JV, by hiring the individual to provide a benefit to a government official would be doing the same thing, effectively, as giving something of value to the official on behalf of one (or both) of the companies constituting the JV,” he said. Therefore, JVs pose significant corruption risk and U.S. authorities expect minority JV partners to use their best efforts to control or mitigate risks. Additionally, a U.S. company with a controlling position in a JV must implement its internal controls on the JV, Christensen said.

However, “although the SEC settlement strongly intimates that the Commission viewed these as violations of the FCPA’s bribery prohibitions, it is significant that the settlement only addresses controls and books and records,” Christensen noted.

Click here to read the full article.