This article was reprinted with permission
from FCPA Professor
It is a common FCPA Inc. marketing device.
Pluck any FCPA-related item from the news and use
that news as the hook to write about FCPA compliance services.
Profile any recent instance of FCPA scrutiny and use that scrutiny as the
hook to write about a supposed new trend and how that new trend of course
indicates the need for FCPA compliance services.
It seems as if everything now-a-days is a "sobering
reminder," that there is constant speculation as to which industry "is going to
be the next target," and that every company is warned to ask
itself will it be prepared when the "government knocks on the door."
Previously on his Corruption, Crime & Compliance
Michael Volkov observed as follows.
The FCPA Paparazzi has done a great disservice to
the business community. Call it a complete lack of credibility.
Legal marketing has become confused in this day and age - marketing has now
been turned into the "Fear Factor," meaning that lawyers need to scare potential
clients into hiring them. That is flat-out wrong. Each week,
new client alerts, client warnings and other cries of impending disaster are
transmitted through the Internet to businesses. If I were a general
counsel, I would have them on "auto delete." Talk about a waste of time
A bit harsh and I don't know that I would go that far,
but marketing of the FCPA is indeed a topic worthy of
exploration and this post profiles recent FCPA marketing activity.
There was a recent FCPA enforcement action
against bond traders Tomas Clarke and Alejandro Hurtado (see here
for the prior post).
Why of course that was an "unprecedented
FCPA wake-up call for U.S. broker dealers" and caused one law firm to ask
"has the perfect FCPA storm finally arrived for U.S. financial
markets?" The law firm stated that "this case demonstrates that Wall
Street is not immune to the concerns and risks of other industries and global
companies, large and small" and that "this case may be the catalyst that
jump-starts a government FCPA sweep of Wall Street that has been predicted
since 2011, but not realized."
The alert concluded as follows.
In the event that there was previous uncertainty, U.S.
financial markets are now on notice that the FCPA is an obligation and
that the U.S. government has reason to ask more questions. It appears
worthwhile for companies to be prepared and have their house in order to potentially
avoid problems later. There is no excuse now for medium- to small-broker
dealers, companies and funds to avoid looking into these matters, as it may end
up being a worthwhile endeavor in the end.
Another law firm alert focused on the oil and gas
industry and concluded as follows.
Oil and gas companies operate in a dynamic
anti-corruption risk landscape. Recent FCPA prosecutions and developments
in related U.S. law have added to the burdens and potential traps facing the
industry. Developments in foreign law signal additional evolutions in
prosecution risk. Moreover, major changes in the oil and gas industry itself
could expose businesses to local prosecution under anti-corruption laws in the
states where they operate. Oil and gas firms are accordingly advised to develop
comprehensive compliance programs specifically tailored to their unique
business activities. History is a useful guide, but evolutions in law and the
industry itself require careful assessment and regular updates.
Another law firm alert began as follows. "No industry is
immune from corruption." It then used two examples of clean-energy
companies in the news to launch into the following. "These reports
serve as a sobering reminder for companies of the risks and consequences of
international corruption and of the importance of implementing compliance
programs to reduce the risk that improper conduct will occur in the first
A lawyer authored article stated "that the
pharmaceutical and medical device industries remain subject to increased
anticorruption scrutiny by regulators around the world, largely because of
their business models."
The article further stated as follows.
The number of global enforcement actions and the size of
fines and monetary settlements have increased exponentially in recent years.
Coupled with the increasing potential for simultaneous liability under foreign
anticorruption laws, companies are at greater risk for devastating financial
and reputational consequences.
The pharmaceutical and medical device industries remain
subject to elevated scrutiny. But as a result many industry players now have in
place best-practices anticorruption compliance programs that are tailored to
the now well-known and industry-specific risks. There's no time like the
present to make sure that your company's compliance programs are among those
rising to a higher standard.
Another law firm alert focused on Hollywood and
the film industry. It stated as follows.
Companies and individuals across the entire film
industry could be at risk and should react accordingly. This risk is not
limited to major movie studios, as the FCPA applies to a broad range of
entities and individuals. Indeed, the recent uptick in FCPA enforcement
actions against individuals, including the convictions of two film executives
[...], suggests that the Government may eventually seek FCPA charges
against individuals involved in the alleged illegal activity as well as the
companies. In addition to disgorgement, fines, and penalties faced by both
individuals and companies, individuals can face lengthy prison sentences for
violating the FCPA.
Companies can take various steps to ensure that they are
prepared if and when the Government comes knocking on their door. While it is
always advisable to have a robust and effective FCPA compliance program in
place, it is even more important now for companies in the film industry to
ensure that their compliance programs are up-to-date and being properly
implemented so that they can gain credit if the Government launches an
investigation. This is especially true for film companies with dealings in
China, as these companies are on the SEC's radar. To this end, film companies
should consider a privileged review of their FCPA compliance programs by
outside counsel to ensure that they include all the components that the
Government deems necessary, including anti-corruption policies and procedures,
training and communication, third-party due diligence, anti-corruption contract
clauses, internal accounting controls, auditing of program effectiveness, and
response to improper conduct and remedial action.
At-risk companies should also consider a privileged
internal review by counsel to determine whether any FCPA issues exist and, if
so, decide whether to disclose the issues to the Government. While companies
can earn cooperation credit for self-disclosing potential violations, the
question of whether and what to voluntarily disclose to the Government is a
complex decision involving both risks and rewards for the company. Irrespective
of whether a disclosure is made, however, launching a preemptive internal
review will allow the company to stay ahead of the Government and be best
prepared in the event that the Government initiates its own inquiry.
Another law firm alert focused on "financial
institutions" and stated as follows.
It is clear from U.S. regulators' pronouncements and the
increase in investigations involving financial institutions that U.S.
enforcement authorities will continue to carefully scrutinize financial
institutions to evaluate their compliance with the FCPA. Financial institutions
are well-advised to devote resources to creating compliance programs designed
to address anti-corruption risks, and to providing training to personnel to
assure that compliance expectations are understood throughout the
Another law firm alert was titled "Agribusiness: The Next
Frontier for Enforcement of the Foreign Corrupt Practices Act?"
It began as follows.
In recent years, the Department of Justice (DOJ) and the
Securities and Exchange Commission (SEC) have aggressively enforced the
anti-bribery and accounting provisions of the Foreign Corrupt Practices Act
(FCPA), targeting industries as wide-ranging as energy, health care and
Hollywood. The results of these efforts have been staggering. With senior
government officials indicating that robust enforcement of the FCPA will
continue for the foreseeable future, the natural question to ask is: which
industry could be the next target for FCPA regulators? If recent
events are any clue, it may be the agribusiness industry. In light of
this recent development, companies in the agribusiness industry may wish to
consider taking some of the steps described below to minimize risks of running
afoul of the FCPA or, in the alternative, to maximize their bargaining power
when negotiating a settlement with DOJ and the SEC. Given the risks
discussed above and the possibility that the agribusiness industry could be a
future target of the government's continued commitment to aggressive
enforcement of the FCPA, companies in this industry should consider taking
proactive steps to minimize their potential liability, particularly if they
have significant overseas business.
The recent Griffiths Energy International Inc.
enforcement action in Canada under Canada's Corruption of Foreign Public
Officials Act (see here for
the prior post) was used to market FCPA compliance services as well. A
law firm alert stated as follows.
[The enforcement action] certainly has compliance with
the CFPOA at the forefront for those Canadian companies engaged in
international business. Importantly, compliance should not end there, as many
Canadian companies must also comply with the Foreign Corrupt Practices Act
The alert concluded as follows.
Given the use by Canadian companies of U.S. agents and
partners in business and the number of Canadian companies listed on US
exchanges, the potential for FCPA applicability is quite high. As a
result, it is important for any Canadian company that is required to comply
with the FCPA to consult with a lawyer who is familiar with the U. S. anti-corruption
As noted in this recent post,
in-house counsel list the FCPA as the second most "specific
regulatory area" seen as a threat.
But is the fear rational?
After all, in any given year there are 10-15 core
corporate FCPA enforcement actions. Compare these numbers to the
universe of business organizations subject to the FCPA.
Further, as noted in this post,
just three unique historical events served as the foundation for 35% of all
corporate FCPA enforcement actions between 2007-2011 and resulted in 55% of
settlement amounts during that period.
Read more articles on the FCPA by Mike
Koehler at FCPA
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