Take an Indian conglomerate preparing to acquire a Belgian company. The last thing it needs to worry about is US criminal laws, right? Wrong — and indeed, buying the Belgian concern without thoroughly analysing its compliance profile could mean buying tens of millions of dollars in criminal liability.

The compliance challenges posed by the vigorous pursuit by the US of alleged Foreign Corrupt Practices Act (FCPA) transgressors have been compounded as other countries, most prominently Germany and the UK, have adopted and begun active enforcement of anti-foreign corruption laws of their own.

On January 19, for example, the US unveiled 22 indictments of individuals, including UK citizen Pankesh Patel, as a result of an undercover operation with FBI agents posing as sales agents offering to corruptly facilitate foreign contracts. Patel and 20 other defendants were handcuffed in front of their peers right on the floor of a Las Vegas trade show.

In his allegedly corrupt pursuit of defence contracts in Africa, Patel had meetings within the US, and sent paperwork in furtherance of the underlying scheme to the US. His indictment is an application of FCPA provisions catching foreign persons that take steps within the US to further overseas corruption.

For Indian companies that are issuers of US securities , no such actions within the US would even be required.

For our hypothetical Belgian marketing company, though not directly subject to the FCPA, it might have FCPA liability if it had corruptly carried out business operations for US companies, or sent dollar-denominated wire transfers for corrupt purposes.

Another trend worth noting for non-US companies is the expectation of active supervision on the part of senior corporate executives.

US enforcers have held executives at headquarters responsible for misconduct occurring in the field, on the basis that the executives failed to supervise far-flung personnel or failed to design internal controls to prevent misconduct.

Other countries are also raising the bar to prevent bribery. In part, this is due to diplomatic pressure from the US but also the efforts of the OECD and the UN, both of whom have sponsored conventions that are now in place mandating that their signatories take certain actions in the fight against corruption. India is party to the UN convention.

The Siemens case in which it paid a record settlement of $800 million in fines and disgorgement of profits was mirrored by a fine of equal magnitude paid to the German regulator.

via Compliance comes calling-Opinion-The Economic Times.