April/May 2010 / Features
Beware FCPA Violations
The authors highlight recent enforcement activity under the federal Foreign Corrupt Practices Act and suggest the FCPA will remain a priority for the foreseeable future. They identify some recent enforcement trends, including paying special attention to certain industries, targeting of individual executives as well as corporations and increased cooperation among regulators from more than one country.
Companies can run afoul of the FCPA in any conduct that involves foreign officials, including tax, customs and patent matters, and not just through sales.
Terms of the FCPA are now being interpreted broadly. Employees of entities partly owned by governments may qualify as “foreign officials,” for example.
To address the risk of FCPA violations, authors advise prioritizing potential problem areas and concentrating on those. Doing business in certain countries, e.g. China, Brazil, Nigeria, Indonesia, India and the former Soviet republics is proving to be a risk factor, as are certain industries, including pharmaceuticals, oil and gas, and finance.
Companies are advised to carefully monitor and control travel and entertainment expenses and pay special attention to distributors and other subcontractors. “A company,” they write, “cannot avoid liability by turning a blind eye to actions of third parties acting on its behalf.”
They also suggest that overseas operations screen prospective new hires carefully, especially in high-risk areas.
