Authorities have been escalating their campaign against corruption in the last few years, resulting in a sharp spike in enforcement actions in the United States and the enactment of a new anti-bribery law in the United Kingdom.

For years, the United States has led the way in the fight against corruption with the Federal Corrupt Practices Act, which prohibits companies with U.S. operations from engaging in corrupt practices overseas.

Although the law has been in effect since 1977, it is in the last few years that enforcement activity has skyrocketed. This comes at a time when other countries are also cracking down on corruption.

The U.K.’s Bribery Act, for instance, goes into effect in April 2011 and prohibits companies with U.K. operations from engaging in bribery. Germany and other members of the Organization for Economic Cooperation and Development also have increased investigations and are collaborating more with the United States.

As corporate business practices come under increasing scrutiny, U.S. companies that do business outside the country are more vulnerable than ever. The risk goes beyond their own internal operations.

Many companies that have solid policies in place for their own operations are vulnerable when it comes to their supply chains and past activities of entities that have been acquired in a merger or buyout.

Losses associated with this risk can be substantial. Businesses face the prospect of hefty defense costs as well as the possibility of fines and penalties if convicted. Individuals, including chief executives, chief financial officers and other executives can be charged with violations of the law and be sentenced to serve jail time. An investigation and negative publicity also can result in significant damage to a company’s reputation.

via Firms Vulnerable In Corrupt Practices Crackdown.