Although the Foreign Corrupt Practices Act was enacted by Congress over 35 years ago, many businesses continue to grapple with developing effective measures to comply with its guidelines. The FCPA regulates two areas: accounting and anti-bribery. While the legislation isn’t new, 44.6 percent of the executives surveyed by the Deloitte Forensic Center revealed they were not confident in their company’s anti-bribery programs. Those polled professed shortcomings in one of two areas: their businesses weren’t improving in their attempts to detect and prevent corruption or the executives had no knowledge of the establishment of anticorruption measures.
Those interviewed provided these reasons for suspecting the quality of their company’s anti-bribery programs:
1. Enforcement of the FCPA was not strongly stressed in the middle and lower levels of management.
2. Executives failed to create and fill a position for ensuring FCPA compliance throughout the company. The resulting lack of communication and oversight led to inadequate staffing and limited allocation of resources to follow FCPA guidelines.
3. Subsidiaries and business affiliates were not monitored as closely as the FCPA guidelines demand.
4. Those responsible for distribution and sale of products needed to be brought under greater scrutiny.
5. Cultural norms in foreign countries countered regulations. Practices in other countries deemed legal are prohibited under the FCPA. While executives may defend the practices as “the cost of doing business,” the FCPA bans such payments.
Ignorance of the law will not provide adequate defense should unethical practices be flagged by authorities. Regardless of size, companies engaged in business transactions with foreign entities should strive to comply with FCPA guidelines. Reflecting the increase in US corporations conducting business with with foreign companies, government scrutiny has increased. Evidence of enforcement of this legislation abounds. According to Bloomberg Law, the Security and Exchange Commission collected $895 million from four pharmaceutical companies, five technology companies, one casino operator and three citizens in 2016.
Concerned about your company’s protocols for combating bribery? The Department of Justice and the US Securities and Exchange Commission have published a review of the FCPA called “A Resource Guide to the US Foreign Corrupt Practices Act.” In it, the agencies delineate the requirements for compliance and explain how the agencies enforce the law.
Executives of companies conducting business abroad are recommended to seek the advice of a knowledgeable attorney to develop a plan that strengthens compliance of FCPA regulations.