Top FCPA Enforcement and Compliance Facts For Executives and Directors By JDsupra

Corporate directors as well as directors are finding huge hurdles when it comes to the FCPA. FCPA compliance is giving them real headaches. Abbreviated as Foreign Corrupt Practices Act, the FCPA is tasked with prohibiting bribes to foreign enterprises to retain or do business. In the past few years, FCPA activities have been rampant. Nowadays, businesses are required to conduct an adequate risk assessment and even implement strong compliance programs. They should also learn how to respond to those tiresome government investigations. Being a director of a company isn’t a joke. Remember, the fines resulting from non-compliance are skyrocketing—sending managers into the panic zone. However, this doesn’t have to scare you from running your company. All you need is to comply. Here is expert advice from JDsupra regarding the highly shifting FCPA compliance landscape.

Introduction

Over the past years, there has been a tremendous increase in FCPA (Foreign Corrupt Practices Act) activity. With the introduction of this compliance policy, it has now become essential for companies to perform adequate risk assessments, devise effective compliance programs, and understand how to respond to government investigations. Whereas a company might have paid a penalty of about $10 million in the past, fines have now increased significantly reaching hundreds of millions of dollars. Here are some of the things you need to know about the shifting FCPA landscape:

Allocation of More Resources To FCPA Enforcement

Together with the Securities and Exchange Commission (SEC), the DOJ (Department of Justice) is responsible for enforcing the FCPA. And it has now devoted more time and money into the investigation, as well as, prosecuting international corruption cases. Over the past years, there has been a strong effort to recruit professional prosecutors into the unit.

Most FCPA prosecutors now have numerous law enforcement agents at their disposal. There are currently about four FBI international corruption squads that work on a full-time basis. And they’re fully dedicated to investigating FCPA crimes across the globe.

Anti-Corruption Fights Have Become A Global Affair

Over the past years, cooperation between the American and foreign authorities has grown much stronger. In fact, most of the FCPA settlements nowadays involve coordinated cross-border investigations. Previously, it was only the DOJ plus the SEC struggling to enforce these types of cases. And this really limited their boundaries in terms of what they could do. But today, there’s a concerted effort by the American law enforcement department to work closely with foreign prosecutors.

The U.S government is striving hard to cultivate relationships and referral networks with foreign authorities. It’s incentivizing foreign countries to cooperate by charging them huge fines. The training of prosecutors from across the globe also remains a top priority.

Introduction Of New Guidelines

Last year, the DOJ released a new version of its FCPA anti-corruption policy setting better standards for what would be considered a sound compliance program. Generally, the guidance focuses on how well the compliance program is designed, whether or not it’s implemented effectively, and how it actually works in practice.

Companies are required to focus on implementing new guidelines to prevent corruption and promote a culture of transparency. Plus, they should ensure that relevant authorities are aware of their compliance practices.

Acquirers Can Easily Self-Report Your FCPA Crimes

The current FCPA policy offers new incentives for companies to self-report misconduct. Acquirers in M&A business deals now have the opportunity to decline criminal charges without publicity or disgorging profits, which initially were required.

Caveats are also available for companies that self-report and fully cooperate with government investigations. If your company deals with selling assets, you need to know that the DOJ plans to weaponize acquiring companies so as to build new cases against predecessor entities, their executives, shareholders, as well as, directors. This increases the risk for companies, as well as, individuals who sell items that are tainted by corruption.

It’s therefore important for private equity companies that tend to purchase or sell businesses within short windows of time to pay close attention to this policy change. If you owned a company that indulged in gross misconduct and then sold it to a private equity firm, for instance, there’s a great chance that the same problem will still follow you. What this means is that corruption has no escape route. So, it’s always better to stay on the right side of the law. Formulate an effective FCPA compliance program and train your employees to strictly adhere to its guidelines.

Company CEOs Aren’t Immune To Prosecution

Both the SEC and the DOJ are fully committed to prosecuting individuals who violate the FCPA anti-corruption law. Sure enough, the number of prosecutions has been on the rise nowadays. In 2018, for instance, the DOJ charged over thirty people with FCPA-related crimes.

With more prosecutorial power at its disposal, the American government is increasingly charging senior business executives. And these include company CEOs, directors, as well as, general counsels.

Key Takeaway

FCPA compliance shouldn’t scare you. As a manager or director, you can employ the right strategies and avoid FCPA compliance-related issues. You have a duty if ensuring that your company complies. Remember, not complying can result in heavy fines and even complex lawsuits.  Keep yourself updated as far as FCPA compliance regulations are concerned. Join seminars. Attend training. Join forums that advocate for FCPA compliance.

The Bottom-Line

Owning a company is good. It can bring you huge success. Being a director or an executive can be an exciting adventure. However, there is a monster in waiting: FCPA compliance. This thing is giving many directors headaches. It has drained the accounts of many businesses. It has fined numerous business owners. Remember, FCPA doesn’t find you a few dollars. You will have to part with millions to billions of dollars if they find out that you are not FCPA compliant. However, does that mean business won’t go on as usual? No. Things must run. All you need is to comply. The above are key things executives and directors should know regarding FCPA compliance.