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Avoiding FCPA Liability with a Robust Compliance Program
With crystal clarity, the U.S. Government has signaled its intentions regarding enforcement of the Foreign Corrupt Practices Act (FCPA): far greater resources devoted to FCPA investigations, and far harsher penalties for FCPA violations.
Last year, the Department of Justice (DOJ) brought a record 26 enforcement actions under the FCPA. The Securities and Exchange Commission (SEC) had its second busiest year for FCPA enforcement, with 14 actions, and has created a specialized unit devoted solely to FCPA investigations. Corporate fines have reached record levels ' $1.6 billion in global penalties in the case of Siemens A.G., and $579 million in penalties against Halliburton/KBR.
In a marked departure from the past, many of the recent prosecutions have been aimed at corporate executives as well as their companies, sending a pointed message that the corporate veil provides no protection. “Prosecution of individuals is a cornerstone of our enforcement strategy,” Lanny Breuer, Assistant Attorney General of DOJ's Criminal Division, proclaimed recently. “Put simply, the prospect of significant prison sentences for individuals should make clear to every corporate executive, every board member, and every sales agent that we will seek to hold you personally accountable for FCPA violations.”
That strategy was made dramatically apparent in January, when 22 executives and employees of companies in the military and law enforcement products industry were indicted for engaging in a scheme to pay bribes to a minister of defense for an African country. For the first time, the DOJ made large-scale use of undercover law enforcement techniques, involving approximately 150 FBI agents, to detect FCPA violations. It was also the largest action ever undertaken by the DOJ against individuals for FCPA violations in the Act's history.
What This Means to You
Corporate legal counsel as well are clearly on the DOJ's and SEC's radars. In the Halliburton case, that company's legal department was specifically faulted for failing to perform adequate due diligence on Halliburton's agents, and failing to thoroughly review the agency agreements.
In this environment of heightened FCPA scrutiny and bulked-up enforcement muscle, companies doing business overseas can hardly afford to be complacent. Yet some companies doing business overseas persist in brushing off any concern about coming under the heavy hand of an FCPA investigation and prosecution. “We don't bribe foreign officials!” they may protest. That dismissive attitude is quite dangerous, and betrays a basic misunderstanding of the scope and complexity of the FCPA. Corporate legal counsel owe it to their clients to shake them out of this complacency.
FCPA Myth vs. Fact
Consider a few of the many “myths” surrounding the FCPA:
Myth: The FCPA only applies to monetary bribes paid to foreign officials.
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