Foreign Corrupt Practices Act: Are you in compliance?

The Foreign Corrupt Practices Act (FCPA) prohibits companies from bribing foreign officials. While it’s been in place since 1977, the Securities and Exchange Commission and the Department of Justice have accelerated the pursuit of companies in violation. Consider the recent Biomet case that resulted in a $30 million penalty — and they’re not the only company under the microscope. At the close of 2016, there were 81 companies subject to ongoing and unresolved FCPA-related investigations. This begs the question, is your company in compliance?

Although avoiding bribes may seem like a common-sense measure, as U.S. companies increase their worldly influence, the U.S. government has expanded the definition of what can be considered bribery. In addition to obvious violations, companies can be penalized for activities like filling prestigious positions with unqualified candidates who are related to government officials or purposefully doing business with known prohibited foreign companies.

With a lot of room for interpretation, if your company has middle-market operations abroad, it’s important that you make FCPA monitoring a high priority. At minimum, companies should have a written FCPA policy that’s shared and explained to employees. This is particularly important in countries with state-owned enterprises that acquire private businesses. FCPA compliance has also become a concern in M&A due diligence, since legal liability for violations will be inherited by the buyer.