The federal government hasn't been shy about telling us it's ramping up enforcement efforts in the areas of antitrust requirements and securities fraud, but we haven't heard quite as much about the Foreign Corrupt Practices Act. Until now.
Writing for CFO.com on Tuesday, David McCann points out that the continuing globalization of business means that the government is also increasing its FCPA enforcement activity. And according to administration officials, that activity won't be slowing down any time in the foreseeable future.
Among other things, the FCPA prohibits the payment of bribes to foreign officials (through intermediaries or directly) to obtain business. The act also includes an exception for payments made to "facilitate...routine governmental action" such as obtaining permits or licenses or processing official paperwork.
Anyone accused of an FCPA violation also has an affirmative defense if the payment made was legal in the foreign country, was made to meet contractual obligations, or was made to enable demonstration of a product, but the Department of Justice cautions that proving such a defense is difficult at best.
So if the government is increasing enforcement efforts, CFO's McCann says companies need to take compliance to the next level as well. Besides increasing scrutiny on potential bribery violations, their compliance program should also include the following:
formulating a code of conduct for employees, suppliers, and agents; conducting compliance training; developing effective internal controls; creating record-keeping systems to properly account for all overseas transactions; and providing a hotline for whistleblowers to anonymously report possible violations.
He notes that "facilitating payments" should be recorded and reported with the utmost transparency to enable easy proof that the exception applies in those instances. It also makes sense to voluntarily disclose potential violations of the FCPA when they are discovered.