SCCE Higher Education Compliance Conference
June 5‐8, 2016
LAUREATE ETHICS & COMPLIANCE
FCPA & Higher Education SCCE Conference 2016
© 2016 Laureate International Universities®
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SCCE Higher Education Compliance Conference
June 5‐8, 2016
AGENDA • How do FCPA and UK Bribery Act risks arise in the unique relationships and partnerships universities enter into. • Aspects of an effective anti-corruption compliance program: including third party vendor due diligence, risk assessment, and on-going monitoring. • How to tailor training and increase effective communications across faculty, staff, and management.
© 2016 Laureate International Universities®
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Laureate is the Leader in International Higher Education 1,000,000+ students | 75+ institutions | 25 countries | 60,000+ employees Laureate institutions offer undergraduate, master’s and doctoral degree programs in architecture, business, education, engineering, hospitality management, law & medicine.
© 2016 Laureate International Universities®
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SCCE Higher Education Compliance Conference
June 5‐8, 2016
The History of Laureate •
Laureate began as Sylvan Learning Systems, a company dedicated to providing quality education and tutoring not available in the public sector to K-12 students.
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Universidad Europea (UE) became the first university in the network in 1999 and is now the largest private university in Spain.
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Laureate continues to build and interconnect its global network across Latin America, North America, Europe, Asia and Africa.
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In 2015, Laureate converted to a Public Benefit Corporation, a new type of corporation that is required to balance financial interests with its purpose to produce a positive effect for society.
© 2016 Laureate International Universities®
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A Certified B Corporation In 2015, Laureate passed a rigorous assessment by B Lab®, an independent non-profit organization that serves as a global movement of people using business as a force for good, and became a Certified B Corporation® – the largest corporation ever to become a B Corp™. B Corps are leading a global movement of people using business as a force for good. Laureate’s certification demonstrates that it meets the highest standard of verified, overall social and environmental performance, public transparency and legal accountability. B Lab’s performance standards are comprehensive, transparent and verified and measure our impact on all our stakeholders.
© 2016 Laureate International Universities®
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SCCE Higher Education Compliance Conference
June 5‐8, 2016
Laureate’s Network Includes Many Top Ranked Institutions Universidad Andrés Bello (UNAB) is recognized among the top 5 private universities in Chile according to the 2015 university ranking conducted by the magazine, América Economía Universidade Anhembi Morumbi is listed as one of the top universities in São Paulo, Brazil, by Guia do Estudante, a national student guide. Universidad Europea (UEM) is the only private university in Spain to receive an overall rating of 4 stars (out of 5) in its 2015 QS Stars rating, a prestigious international accreditation that measures university quality. UEM received 5 stars in Employability, Teaching, Facilities and Social Responsibility, reaching the same level as the University of Oxford (Teaching), Princeton (Facilities), and Harvard (Social Responsibility)
Universidad del Valle de México (UVM) was ranked fourth among the top public and private universities in Mexico in the 2015 Guía Universitaria published by Selecciones México, a Reader’s Digest publication. © 2016 Laureate International Universities®
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The FCPA & Anti‐Corruption Enforcement • Corruption is illegal everywhere in the world • U.S. law (Foreign Corrupt Practices Act) can reach bribery of government officials and inaccurate books and records anywhere in the world • International laws around the world prohibits bribery or government officials and commercial bribery • Extraordinary recent increase in enforcement actions around the world • Very large fines • Imprisonment
© 2016 Laureate International Universities®
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SCCE Higher Education Compliance Conference
June 5‐8, 2016
Foreign Corrupt Practices Act The FCPA prohibits U.S. persons and foreign persons acting in the U.S. from: • • • •
Offering or paying of any thing of value; To any foreign government official, foreign political party or official, or candidate; For the purpose of improperly influencing any act or decision by them; In order to obtain or retain business. – Accounting Provision requires adequate internal controls and accurate recordkeeping
Exceptions: • Facilitation payments to expedite or secure a non-discretionary routine government action. • Note: Facilitation payments not recognized by equivalent UK Bribery Act Affirmative Defense: • Good faith business expenses for promotion of business, “promotional expenses” Enforcement: • DOJ & SEC © 2016 Laureate International Universities®
Provision*
UK Bribery Act
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Under FCPA
Bribery of foreign public officials
Yes
Yes
FCPA
Private-to-private bribery
Yes
No
VS
Receipt of a bribe
Yes
No
Third party liability
Yes
Yes
UK BRIBERY ACT
*chart from FTI Consulting
Failure to keep books and
Covered by other legislation
Yes
records Promotional expenses
No specific provisions
Must be reasonable and directly related to the promotion
Facilitation payments
Yes
Allowed under certain circumstances
Extra-territorial application
Yes
Yes
Penalties
Unlimited Fines, Prison
Limited Fines, Prison
Applicable to Universities?
Yes –applicable to U.S. Universities and their worldwide activities
Applicable only to organizations that conduct some part of their business in England and their subsidiaries worldwide
© 2016 Laureate International Universities®
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SCCE Higher Education Compliance Conference
June 5‐8, 2016
Anything of Value • “Anything of value” means anything that may be of value to the person who is being influenced – examples include: – Offering a scholarship to the nephew of a government official to secure more favorable treatment from the official – Making a contribution to a charity sponsored by a government official to secure more favorable treatment from the official – Lavish entertainment of government officials to influence decisions
© 2016 Laureate International Universities®
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What can a bribe look like?
Lavish Meals
Expensive Gifts
Tickets to Travel Cash Sporting or or Events Scholarships Sponsored Training
Bribery can take many forms – “Anything of Value” Any of these items may be considered a bribe under certain circumstances. © 2016 Laureate International Universities®
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SCCE Higher Education Compliance Conference
June 5‐8, 2016
Risk Area: Gifts, Meals, Entertainment, and Other Business Courtesies • Can be a legitimate and valuable practice, but they also can create risks of improper appearance or violation of law • Should never offer or receive courtesies under circumstances where they could affect, or appear to affect, decision making • Universities should implement GME policy or guidelines. At the very least, should be contemplated by Anti‐Corruption Policy. 13
Who can be considered a Government Official? • Government employees • Political parties and party officials or candidates for political office • Employees of government-owned or government-controlled businesses • Employees of public international organizations • Private persons who serve as advisors or consultants to governments
University Context Examples:
Employees at Public High School
Heads of Public Hospitals
Ministry of Education Employees
© 2016 Laureate International Universities®
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SCCE Higher Education Compliance Conference
June 5‐8, 2016
Notable Recent FCPA Enforcement Siemens • $800 million in fines and disgorgement for widespread bribery of government officials to influence infrastructure contracts and inaccurate books and records in multiple countries
Tyco • $27 million in fines and disgorgement related to bribery of employees of government customers in various countries, including Turkey
UTStarcom Inc. • $3 million fine related to travel provided to employees of Chinese and Thai governments to attend “training” in Hawaii, Las Vegas, and New York City, where UTStarcom had no operations © 2016 Laureate International Universities®
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Where is the exposure for universities? Examples of international activities universities engage in that can present FCPA risks: •
Construction projects abroad;
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Exchange and affiliation agreements with foreign governments;
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Permitting and licensing abroad;
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Approval from local ministry of education for acquisition of a new campus;
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Visa solicitations for new students;
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Customs issues;
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Joint ventures with hospitals, residency or work-study agreements/exchanges;
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Obtaining “slots” in competitive government programs or residency programs;
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Recruiting students oversees directly or through third-party recruiting agents (public high school fairs hosted by local governments)
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Establishing academic programs overseas; and
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The accreditation process.
© 2016 Laureate International Universities®
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SCCE Higher Education Compliance Conference
June 5‐8, 2016
Universities have recognized this risk • Universities with Anti-Corruption/Anti-Bribery Policies:
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How do we measure the risk geographically? Transparency International Corruption Perception Index (CPI)
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SCCE Higher Education Compliance Conference
June 5‐8, 2016
Spotting the Risks: Hypothetical 1 •
You are a director of a clinical rotations program at your university. An administrator at the hospital with which we are partnering tells you that next year they can accept double the amount of students in the nursing program, but in return proposes that the university provide funding to purchase a new incubator for the pediatrics wing.
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What do you think about this situation?
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Consult legal counsel or your local compliance officer before making any decisions.
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Consider: •
Is the donation detailed in a legal agreement or contract? An invoice?
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Who is receiving the equipment? Who will make the purchase of the equipment? Has the hospital imposed some vendor in particular?
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Would any individual or official from the hospital benefit personally from this donation?
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Spotting the Risks: Hypothetical 2 A U.S. hospital affiliated with a U.S. university wishes to establish a joint venture to provide medical services in Nigeria. In order to do so, they will need to hire a consultant to obtain the necessary permits to operate in that country. • What are some of the risks?
© 2016 Laureate International Universities®
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SCCE Higher Education Compliance Conference
June 5‐8, 2016
How do we mitigate the risk | Effective Anti-Corruption Compliance Program
© 2016 Laureate International Universities®
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An Effective Anti-Corruption Program Corporate Policy: • Create a clear, concise corporate policy against violating the FCPA and other applicable international anti-bribery laws • Establish procedures that are reasonably likely to detect and reduce potential violations; Risk Assessment: • Identify of high-risk regions, countries, or departments • Perform of periodic anti-bribery audits of these operations Responsible Officers: • Assign senior officials with responsibility for compliance oversight, reporting directly to the Audit or Compliance Committees of the Board of Directors; • Communicate to all employees that they can come to this compliance resource for guidance on FCPA issue Training: • Regularly train all officers and employees involved in foreign projects and all intermediaries in the FCPA and other applicable foreign anti-bribery laws. • Have them sign annual compliance statements; Reporting Mechanism: • Establish a reporting system for officers, employees, agents, consultants, joint venture partners to report suspected FCPA violation • Helpline - best practices Accounting / Books: • Adopt accounting and other internal controls to ensure compliance with the books and records provision of the FCPA. Third Parties: • Adopt procedures to ensure that agents, consultants, and joint venture partners are not likely to engage in improper activities • Conduct reputational due diligence on potential JV partners, agents, board members, acquisitions. © 2016 Laureate International Universities®
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SCCE Higher Education Compliance Conference
June 5‐8, 2016
Laureate Anti – Corruption Program | At a Glance
© 2016 Laureate International Universities®
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Anti-Corruption Program Elements Training & Certification
Policies & Guidelines • • • • • •
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Anti-Corruption Policy GME Guidelines Third-Party Guidelines Reputational Due Diligence Guidelines U.S. Lobbying Guidelines Guidelines for Securing Clinical Rotations for Health Science Students
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Fraud & Corruption Risk Assessment
Web-Based Code of Conduct Training Web-Based Anti-Corruption Training In-Person Training Communication Pieces
Audit
Third-Party Program • •
Due Diligence Third-Party Training
The Anti-Corruption Program is designed to prevent, detect, and respond to corrupt behavior, and, ultimately, to encourage a culture where corruption does not occur.
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SCCE Higher Education Compliance Conference
June 5‐8, 2016
Anti-Corruption Policy Outlines Laureate’s commitment to compliance with anti-corruption laws around the world, and establishes basic standards and a framework for the prevention and detection of bribery and corruption in Laureate’s operations.
Policies & Guidelines Distributed Globally:
Guidelines on Gifts, Meals Entertainment, Sponsored Travel, and Other Business Courtesies (GME Guidelines) Describe certain baseline principles about giving and receiving courtesies, and establish presumptive monetary
Third-Party Guidelines Establish requirements for the engagement of all contractors, agents, and consultants who may interact with government officials on Laureate’s behalf.
limits on the value of courtesies that Laureate personnel may give or receive.
Guidelines for Securing Clinical Rotations for Health Science Students* Provide guidance on best practices arrangements
U.S. Lobbying Guidelines Applicable only in the U.S., address the provision of courtesies, contributions, and resources to local and
between Laureate institutions and hospitals or clinics for the purposes of securing clinical rotations.
federal government officials and organizations.
Reputational Due Diligence Guidelines Set forth the general criteria and process for securing and using due diligence upon entering into business relationships (e.g., joint ventures, investors, acquisition counterparties.)
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• Multi-stage process for engagement of third parties who may interact with the government on our behalf
Third-Party Program
• Software-based system for gathering information and performing due diligence on agents and consultants prior to engagement • Contract language, education, and other maintenance controls • Risk-based due diligence options
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SCCE Higher Education Compliance Conference
June 5‐8, 2016
THIRD PARTY PROGRAM PROCESS FLOW
Relevant Third Parties The following are examples of third parties that may be subject to the Program.
Construction •Agents engaged to help secure licenses or permits for construction or other purposes •Construction companies or similar firms whose obligations include securing necessary licenses and permits (The construction company should go through the due diligence process described in these Guidelines even if the construction company will engage its own agent to secure the licenses.)
Legal/Government Relations
Recruitment
•Agents or consultants engaged to assist with regulatory approvals who may interact with regulatory authorities
•Recruiting agents who may interact with public high school officials or local government agencies to help find students
•Agents or consultants engaged to assist with accreditation who may interact with accrediting authorities
•Recruiting agents who may attend government or state‐sponsored events or fairs
•Lawyers engaged to handle litigation or negotiation with the government
•Recruiting agents who may deal with governments regarding government‐ sponsored scholarships or students
•Agents engaged to help secure visas for international students or faculty •Customs agents engaged to assist with moving goods through customs •Tax consultants who may interact with tax authorities on Laureate’s behalf
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SCCE Higher Education Compliance Conference
June 5‐8, 2016
Third Party Program Challenges & Considerations •
Cost – who pays?
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Vendors (ex: due diligence providers)
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Availability of data
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Privacy issues (vary from jurisdiction to jurisdiction)
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Languages and cultural sensitivity
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Maintaining consistency across global operations
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Understanding your third party universe, and what types of red flags to look out for
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Ease of communication
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Relationship / bargaining power
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Training & Communication of Third Parties • Ensuring Third Parties understand your Anti‐ Corruption Policy and company values • Certifications • Identify the highest risk Third Parties, focus training resources on those groups • Web‐based Training (vendor, or internal using various platforms) • In‐Person Training (work with other business units to coordinate training as an add‐on) 30
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SCCE Higher Education Compliance Conference
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Practical Suggestions for your Anti- Corruption Program
Tone • Leadership should provide consistent reminders to employees that the University is committed to maintaining the highest level of ethical standards in the conduct of its business. – Provide routine training for relevant personnel – Monitor expenses, reporting, and use of petty cash
© 2016 Laureate International Universities®
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Practical Suggestions for your Anti- Corruption Program Be vigilant for “red flags”; for example: • • • • • • •
Allegations of unethical conduct Disproportionate entertainment expenses Vague expense reporting Use of unauthorized financial accounts Lack of invoices “Creative” financial arrangements that prevent expense tracking or accounting such as use of cash payments Providing funds to outside non-employees for travel (when providing travel expenses, always pay directly when possible)
Risk-based approach: focus on groups who are higher risk within the enterprise! •
Focus training: finance, construction, government relations, accreditation, etc. © 2016 Laureate International Universities®
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SCCE Higher Education Compliance Conference
June 5‐8, 2016
Practical Suggestions for your Anti- Corruption Program • How to Tailor Training & Effective Communications – Identify Populations – Partner with Local / Region / HR to make sure message is culturally relevant – Don’t let the message get lost – consistency is key – Build messaging into existing branding/communications, latch on to existing channels of communication – Where should the message come from? • CCO, Lawyers, HR, LCO network example, Ethics liasons? – Web‐based training vs. in‐person training • Leverage technology
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