Study Reveals Who's Most Likely to be Charged for FCPA Violation

The US Department of Justice, the Securities and Exchange Commission and the FBI have joined forces on a rigorous anti-corruption campaign, and they're cracking down on businesses that aren't compliant with the Foreign Corrupt Practices Act (FCPA).

Many have already felt the heat. Last year federal agencies initiated a record number of FCPA enforcement actions. Plus, the penalties associated with FCPA violations have become increasingly severe.

Who's the most at risk?

That's a tough question to answer, of course, knowing that the US government is targeting not only a company's employees, but also its agents, contractors, investors and suppliers. In my estimation, supply chain and procurement executives of all multi-national corporations now face distinct risks and business challenges.

If you're looking for an in-depth analysis of recent trends in anti-corruption enforcement, check out the new report from international law firm Chadbourne & Parke LLP.

The Chadbourne Compliance Quarterly Special Report, authored by partner M. Scott Peeler, reviews the circumstances surrounding 61 individuals who were the subject of government-initiated civil or criminal action alleging FCPA violations over the past six years. Interestingly, the study found that:

The majority of those studied who were charged with civil and/or criminal FCPA violations held the titles of President, Chief Executive Officer or Chief Operating Officer of their organizations.

Alleged bribes paid in Mexico, Central and South America were the areas most often linked to these prosecutions, accounting for 44 percent of the cases studied. The other regions in descending order were Asia (32 percent), Africa (21 percent) and Europe (3 percent).

While the risk of civil and/or criminal liability increased as the amount of bribes alleged paid increased, it was interesting that there were almost as many cases where the total amount of bribes were between $100,000 $500,000 and $500,000 $1,000,000 as there were between $1,000,000 $2,500,000.

Of the cases in which an individual had direct knowledge of and took action relating to the alleged bribe, 44 led to criminal charges, while two individuals with only indirect knowledge faced only civil actions.

As Mr. Peeler stresses, companies simply must become proactive and implement new policies and solutions to effectively manage FCPA compliance. The risks of non-compliance are just too high to be ignored.

"It is becoming clear that FCPA enforcement is not just limited to companies that fail to maintain the highest ethical and anti-corruption standards but to its executive management as well," he concluded. "Companies must put in place the strictest anti-corruption controls where they are needed most and train and keep training its employees, managers and high risk third party service providers so they fully appreciate the risks of non-compliance and truly take a zero-tolerance message to heart. The price of not doing so is just too high."

A comprehensive discussion of the study and its results is available here.

TAGS: Finance
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