A closer look inside the FCPA world

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We came across some interesting web sites on the way to publishing our story on the US government’s pursuit of two American tobacco companies accused of violating Foreign Corrupt Practices Act limits by allegedly bribing officials in several companies to secure favorable trade deals and legislation.

In our reporting, we searched through the robust field of legal expertise on the FCPA – a fast-growing business given the government’s increased reliance on the act to keep in check the practices of US firms operating abroad: Through the first quarter of 2010, one count puts at 28 the number of FCPA enforcement actions brought up, mostly by the US Department of Justice. That’s on pace to beat the record number of enforcements, 40, in 2009. By comparison, between 2004 and 2006 there were about 10 cases a year. This is according to an analysis published earlier this year on Martindale.com by Nathan J. Hochman and Jee Young You of the Bingham McCutchen law firm.

Among the interesting items we found in our run through the FCPA world:

  • A thorough history – through spring of 2010 – of FCPA cases.
  • Links to interesting, real-time trackers of suspected or proven cases of bribery by U.S. and European prosecutors, sites that recently described, for example, the case of MacMillan publishers, now barred from receiving World Bank contracts after it was caught in a corruption scheme in Sudan.
  • And a good primer on what makes an FCPA violation, from accounting expert Chris Mondini of Deloitte Financial Advisory Services LLP.

One bit of advice: Mondini suggests some “red flags” to look out for. These are tactics of foreign governments and officials that may trip the FCPA wire. They may seem like no brainers in the US, but in countries with weaker institutions or so-called “gift-giving cultures, some government officials might see these as normal steps to doing business:

  • Specific recommendations by officials that you employ an agent or representative
  • Requests for payment in third countries or to other parties
  • Unusually large commission
  • Unusually weak qualifications
  • Family or business ties to foreign officials

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