U.S. Cracks Down on Corporate Bribes under the Foreign Corrupt Practices Act

WSJournal, May 26, 2009. The U.S. Justice Department is increasing its prosecutions of alleged acts of foreign bribery by U.S. corporations, forcing them to take costly steps to defend against scrutiny.

The crackdown under the Foreign Corrupt Practices Act, or FCPA, now extends across five continents and penetrates entire industries, including energy and medical devices. Among the companies currently under Justice Department review: Sun Microsystems Inc. and Royal Dutch Shell PLC, according to the companies’ disclosures.

The law prohibits U.S. companies from paying, or offering to pay, foreign-government officials or employees of state-owned companies to gain a business advantage. It covers nonmonetary gifts or offers in addition to cash payments, and is worded broadly enough that it’s spawning an army of consultants, some of whom once prosecuted bribery cases for the Justice Department, who offer to interpret the gray areas.

At least 120 companies are under investigation, according to Mark Mendelsohn, a deputy chief in the Justice Department division overseeing the prosecutions, up from 100 at the end of last year.

Mr. Mendelsohn currently has a team of eight Federal Bureau of Investigation agents working on overseas bribery cases, up from five last year.

Justice Department officials alleged that corruption at Siemens reached the highest levels of management. In its indictment in federal court in the District of Columbia, it accused Siemens of spending more than $ 1 billion bribing government officials around the globe to win infrastructure contracts in recent years. Munich-based Siemens, which didn’t admit to the bribery allegations as part of the settlement, said it had inadequate controls and kept improper accounts. U.S. law

A Siemens spokesman said in an email that it’s wise for a company “to have an adequate compliance system in place and a corporate culture that stands for clean business.”

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Foreign Corrupt Practices Act (FCPA): News, Updates and Important Links