Foreign Corrupt Practices Act (FCPA) investigations growing – are you at risk?

Apr 25, 2008. These days, business is booming, as lawyers and other business service providers advise multinational companies on how to design and implement compliance systems meant to deter and ferret out corrupt practices.

An internal probe by Siemens, spearheaded by the New York law firm Debevoise & Plimpton, has already led to the dismissal of Siemens chief executive and the resignation of the head its medical equipment unit. More than US$ 2 billion in “suspicious transactions” in more than 60 countries have been identified, and criminal investigations are ongoing in at least 10 countries, including the United States.

The costs to the company are staggering. Siemens has already been fined nearly $300 million by German courts for bribes paid in Nigeria, Russia and Libya, and that figure is almost sure to reach into the billions. And as of September, the company reported that it had spent more than $500 million for outside advisers working on the matter.

There are as many as 70 investigations ongoing, not including the dozens of internal company probes.

Why is all this happening?

  • business has become more global, with more companies setting up in countries where bribery is accepted, if not legal.
  • increased enforcement, 38 cases brought last year, compared with fewer than 10 in most previous years. At the Justice Department, a team that used to have the equivalent of two people assigned to FCPA now has as many as 12 prosecutors, assisted by a new team of FBI agents
  • help from foreign governments since the signing of a global convention that made corporate bribery illegal in other countries and gave U.S. investigators access to secret bank accounts and foreign tax records
  • confessions from the companies: significantly reduced penalties if companies voluntarily disclose violations rather than cover them up.
  • Sarbanes-Oxley Act required corporate directors to pay particular attention to “internal controls” to protect themselves from legal liability and attacks on their reputations. Directors now are quick to order an outside investigation at any hint of bribery.

Read more …

Click here to see more Foreign Corrupt Practices Act (FCPA) News and Updates