If you are a U.S. - based company and you conduct business overseas, or if you are planning to conduct business internationally in the interest or expanding your company's market reach, you should be certain that you are familiar with the Foreign Corrupt Practices Act (FCPA). The essence of this law is summarized below:
This article [which appears courtesy of the Chief Executive Newsletter] addresses the direction that enforcement of FCPA is taking as of the date of this writing. In sum, we're seeing fewer cases being prosecuted, but staggeringly increasing penalties for 1) failure to obey the law, and 2) failure to enforce the law where your company or its employees are concerned. The Department Of Justice (DOJ) not only demands compliance with the law; they are outright demanding that you see to it that all of your employees obey the law as well. Your responsibility and liability are personal. Please read further:
The SEC and DOJ Aim to Stop Mid-Market Firm Corruption
Two members of national law firm Dykema Gossett LLC report that the federal government plans to increase its Foreign Corrupt Practices Act investigations into mid-market companies.
Posted by: Chief Executive February 24, 2015
Watching the handling of Fortune 500 firm cases, Jonathan S. Feld and Kara B. Murphy have posted a few lessons that mid-market firms can learn from these examples on the Association of Corporate Council website. In fact, the authors note that in announcing the settlement with Smith & Wesson, the U.S. Securities and Exchange Commission’s FCPA Unit chief, Kara Brockmeyer, warned: “This is a wake-up call for small and medium-size businesses that want to enter into high-risk markets and expand their international sales.”
In light of this increased risk, the first lesson is not to let your guard down. While the number of overall cases has declined, the average fines, Feld and Murphy report, have actually gone up dramatically. Between 2012 and 2014, they say the average penalty increased sevenfold.
Second, ignorance of the law will not get you out of trouble. In fact, it could make things worse, as failure to detect and stop a misconduct will trigger increased penalties. Merely having a compliance program, they say, is not enough. More than ever the authors report, the DOJ looks behind the “paper” compliance program to determine how it is being implemented and monitored by senior management.
Finally, they are going after individuals. If the buck stops at your desk, you could be held liable for criminal wrongdoing.
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Here's some insight into the relative positions of specific multinational industry sectors with respect to which ones spend the greatest amount (purportedly) on bribery:
The take away? Do not, in any way, shape, manner or form, ever even attempt to bribe any official of any foreign government. And going further, don't encourage a foreign entity or its employees or representatives act as your company's proxy in engaging in an attempt to bribe an official at any level of any foreign government.
As always, thank you for reading me.
Douglas E. Castle for The Internationalist Page Blog
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