Global Presents: Foreign Corrupt Practices Act Enforcement Is on the Rise. Here Is Some Advice to Ensure Compliance

By Marks, Jonathan | Risk Management, November 2009 | Go to article overview

Global Presents: Foreign Corrupt Practices Act Enforcement Is on the Rise. Here Is Some Advice to Ensure Compliance


Marks, Jonathan, Risk Management


In many countries, executives and public officials routinely exchange gifts, leaving little distinction between friendly gestures, political contributions and bribes. To better define those lines, the U.S. Foreign Corrupt Practices Act (FCPA) prohibits improper payments to foreign officials for the purpose of obtaining or keeping business.

Although enacted more than 30 years ago, the act has now re-entered the spotlight, as the number of FCPA investigations and prosecutions has skyrocketed in recent years. In 2008, the U.S. Department of Justice and SEC took in more than $924 million in fines for FCPA violations--an ninefold increase over the $100 million collected in 2007. Recent settlements have also included disgorgement of profits, debarment from federal procurement opportunities, the loss of export licenses and even prison terms for executives.

With the DOJ and SEC indicating that they will not scale back FCPA enforcement efforts any time soon, here are 10 suggestions to mitigate the risk of FCPA exposure.

1. Establish an FCPA compliance policy with anti-bribery language and include it in the corporate code of conduct. A written anti-corruption policy that addresses FCPA concerns affirms an organization's commitment to compliance and signals to employees that the highest ethical standards are required.

2. Ensure commitment and accountability from senior management. Tone at the top really does matter. A company's FCPA compliance policy can be solid, but if a C-level executive or the company's culture sends a different message, the policy will fail.

3. Articulate clear approval guidelines for gifts and entertainment for foreign officials. Provide examples of specific situations to supplement policies and solidify the staff's understanding of FCPA requirements. …

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