Dionne Searcey has an interesting article in the Wall Street Journal today regarding the dramatic increase in FCPA investigations. Companies like Sun Microsystems and Royal Dutch Shell are among the 120 companies that have found themselves under current review of the U.S. Justice Department.
In her article, Ms. Searcey highlights the fear that the Justice Department’s increased enforcement of the FPCA has caused companies. Specifically, many companies are finding themselves surprised by the fact that certain actions are in violation of the FCPA, and these companies are having to scramble to increase FCPA compliance measures while also trying to stay in front of investigations and come clean before a formal investigation is begun.
From the WSJ article on the increasing number of FCPA investigations:
“When you have a law that can result in criminal sanctions and jail time and that you can violate without actually realizing you’re violating it, that’s terrifying,” said Alexandra Wrage, president of Trace International Inc., a Washington-based nonprofit specializing in antibribery compliance.
The gray areas of the law sometimes apply to actions — for example, the giving of seasonal gifts — that can be common in some countries. This has left corporations concerned about other practices, such as picking up the cost of trips or meals for foreign officials.
Companies like Siemens AG and Halliburton have been forced to pay hefty fines for FCPA violations. CCI featured author Thomas Fox wrote last week about the tone that FCPA enforcement appears poised to take in 2009 and beyond. Certainly, the FCPA is among the most important hot button topics for compliance departments across the United States. The Justice Department’s commitment to investigating and enforcing violations is inspiring increased vigilance for the rules outlined by the FCPA.
Perhaps the best advice can be gleaned from a spokesman from Siemens cited in the above referenced WSJ article:
A spokesman at Siemens, which paid the largest foreign-bribery fine to date, said the cost of addressing its own corruption allegations was nearly as much as its total fine of €1.22 billion ($1.7 billion), including fines to the German government. The company is spending more money now on compliance programs and a government-mandated monitor.
A Siemens spokesman said in an email that it’s wise for a company “to have an adequate compliance system in place and a corporate culture that stands for clean business.”
There is no doubt that companies everywhere who do not have such a system or culture in place would be wise to begin the process of implementation. Otherwise, the large fines levied against Siemens and many others could be on their horizon as well.
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