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.
Q+A – Professor finds flaws in U.S. anti-bribery enforcement – TrustLaw
Enforcement of the U.S anti-graft law, the Foreign Corrupt Practices Act (FCPA) is, “in certain cases, contrary to the statute itself,” says prominent FCPA commentator, Mike Koehler.
Koehler, an assistant professor of business law at Butler University in the United States and author of the popular blog FCPA Professor, spoke to TrustLaw about the FCPA, its enforcement and two high profile provisions within the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) which the U.S. government is expected to use in its fight against corruption.
WHAT OBJECTIONS DO YOU HAVE TO THE FCPA OR ITS ENFORCEMENT?
The FCPA is a fundamentally sound statute that was rightly passed by the U.S. Congress in 1977. Is the FCPA a perfect statute? No, I do not believe that it is. An issue deserving of serious analysis is the creation of an “adequate procedures” defence similar to the UK Bribery Act. Certain FCPA reform bills in the 1980s containing such a defence passed the U.S. House in 1988, and this is an issue that ought to be revisited.
That the FCPA is a fundamentally sound statute does not mean that FCPA enforcement is fundamentally sound. I, along with many others, have serious concerns about FCPA enforcement across a wide spectrum. On one end, many enforcement theories seem to be contrary to the intent of Congress in passing the FCPA and indeed, in certain cases, contrary to the statute itself. On the other end, the most egregious instances of corporate bribery are resolved
via Q+A – Professor finds flaws in U.S. anti-bribery enforcement – TrustLaw.