FCPA - scalpel or chainsaw?

Ed Marsh | Mar 20, 2012

Broadening Enforcement

The Foreign Corrupt Practices Act (FCPA) is suddenly a topic on the minds of many international business people.  Relatively obscure for a number of years, recent Justice Department enforcement emphasis has raised awareness...and angst. 

This increase in investigations and charges against numerous companies and individuals has not only heightened awareness, but also raised concerns about overzealous pursuit of cases without merit. 

Business Impact

In a recent New York Times article1, Leslie Wayne explored opposing perspectives on the increased enforcement.  Citing a number of business organizations which argue that "the crackdown...has made it harder for companies to win legitimate business and that it has needlessly instilled fear among executives" she paints a picture of business executives cowed by concern for personal criminal liability. 

Settlements are frequent because potential penalties are draconian, and current regulations are so far-reaching that even actions for prior acts of acquired foreign companies can be prosecuted against the new American owner - potentially a company which had no interaction or business involvement, much less control over corrupt practices of the acquired business. 

Government resistance

Led by Assistant US Attorney General Lanny Breuer, the DoJ is opposing the recommendations proposed by the US Chamber of Commerce's Institute for Legal Reform (@legalreform) in conjunction with 30 trade associations. 

There seems to be little downside to a more specific deffinition of "foreign official", for instance, raising questions about the intent of the broadly increased staffing and enforcement of the FCPA. 

Breuer is quoted as saying "some of the people we accuse are fabulously rich."  Taken in context with the recent substantial overhaul of FBAR requirements and the overlay of FATCA onto existing reporting and compliance regulations, the government risks the appearance of chasing wealth for the revenue generation opportunity. 

Export Imperative

And yet as domestic markets continue to stagnate, US companies really have no viable alternative but to explore vibrant, rapidly growing overseas markets.  Sensible compliance is critical, but with a properly designed and managed plan (including regular training and documentation of program efforts) the likelihood of protracted investigation of a business remains low. 

Companies should engage competent and experienced advisors to identify risks and help craft procedures and programs to mitigate those risks.  They should have clear policies in place governing company and individual activities, and also outlining the conduct of partners and agents.  This is an important step, but shouldn't impede pursuit of exciting export opportunities. 

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1 - https://www.nytimes.com/2012/03/11/business/corporate-bribery-war-has-hits-and-a-few-misses.html?smid=url-share