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Cellini said one reason HP was concerned with gray market issues and anti-corruption enforcement was that the U.S. government has signaled that it will be focusing on high-tech companies for possible violations of the FCPA.
"Some smaller partners may be scratching their heads, but that just shows how much this is needed," he said. "The U.S. Department of Justice has targeted the high-tech industry on anti-bribery laws. Whether you're doing business for yourself or on behalf of a larger company like HP, you can't bribe anyone."
"Routing things in a certain way, to avoid taxes and duties, actually lands people in jail. Normally the DOJ squeezes individuals to get at companies. But the bribery guys want to put individuals in jail," Cellini said, adding that "98 percent" of FCPA violations brought to court involve distributors and resellers.
"It's essentially the 'reseller corruption act.' And it's not the wave of the future, it's the wave of the present," he said.
Cellini's interpretation of a tough new DOJ attitude towards FCPA violators was seconded by Hugh Quinn, principal at Washington, D.C.-based compliance consultant Quinn Forensics. Quinn said the DOJ was currently conducting about 120 open investigations into possible FCPA violations, a major increase in focus on the Carter-era law.
"They've had more enforcement of the FCPA in the past four years than in last 40 years," he said. "They've increased their staffing and the biggest area they're going after is third-party vendors. So anything a partner does, the liability could go to HP."
Quinn said that even the smallest of businesses ought to be as concerned with FCPA compliance as larger firms, pointing to the September conviction on federal bribery charges of Gerald and Patricia Green, a husband and wife who ran film festival and tourism businesses together in Los Angeles. The Greens face up to five years in prison for each of their FCPA violations.
"Most of the people getting hit with this FCPA stuff, they're your next door neighbor. They're not robbing banks," Quinn said. "And most of the FCPA cases never go to trial. They get settled because everybody's scared to death of it."
Participating in compliance programs like Integrity Interactive's can help protect individuals against FCPA charges if an employee or business partner violates the law, Quinn said.
"I don't think it's too much to ask," he said, referring to the $120 fee HP partners are required to pay for the program. "It's a nuisance fee, but if you want to play with the big boys, you've got to pay it.
"I'm pretty sure HP doesn't want to do business with somebody who's going to sink the ship. Look, the best thing in the world is that you get to be CEO of HP," Quinn added. "The worst thing in the world is if you're CEO of HP and the feds put you in handcuffs because one of your resellers violated the FCPA."
Some partners, however, say they might just walk away from their partnership with HP over the compliance initiative. Gabriel Phoenix Communications owner Derek Gabriel said his Kaneohe, Hawaii-based company already pays fees for other compliance programs independent of HP.
"If you want me to jump through an extra hoop to prove additional compliance for you, that's an expense you should be responsible for. By forcing my company to pay for your compliance efforts, you add additional costs to do business with you. This compounds the already high costs associated with training and certifications to do business as an HP partner," Gabriel told ChannelWeb.com in an e-mail exchange.
"Last I checked, Lenovo, Dell, Xerox, Lexmark and the myriad other major PC, printer and network equipment manufacturers don't charge partners for compliance schemes. So to continue to maintain a competitive stance with respect to my operating costs, I'll choose to strengthen my business relationship with these other vendors over paying to prove compliance with HP programs," he said.
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