Preface

• Author: Robert W. Tarun
• Pages: 23-26

PREFACE

Enforcement of the Foreign Corrupt Practices Act (FCPA) in the past five years

has increased dramatically. The United States Department of Justice (DOJ) and

the Securities and Exchange Commission (SEC) are conducting over 140 investiga-

tions of U.S. and foreign companies,1 their joint ventures, employees, and third-

party contractors for alleged improper payments around the world. There is no

reason to believe this trend will subside in the United States or elsewhere. Indeed,

there is now clear momentum and a clear incentive among foreign governments to

investigate bribery and related conduct under various international conventions.

The era of mysterious “one man” consultancies, extravagant behind-the-curtain

gifts to foreign officials, minimal due diligence of foreign agents, and willful blind-

ness to the conduct of joint venture partners is coming to a close. Corporate direc-

tors and officers can no longer ignore or rationalize unusually large foreign sales

budgets, lucrative consultancies, or extravagant entertainment with shadowy or

unknown figures with the words, “This is the way it is done in that part of the

world.” While there remain some lax foreign states that knowingly permit their citi-

zens to engage in corrupt practices in distant countries, they are a minority, their

world is shrinking, and they will likely have to reform if they wish to remain mem-

bers of an increasingly transparent international business community. Transpar-

ency is becoming the governing watchword in multinational mergers, acquisitions,

joint ventures, and corporate transactions and it is all the more critical in challeng-

ing economic times.

Increased FCPA enforcement means increased responsibilities for boards of

directors, general counsel, and transactional lawyers—and new and uncharted

waters for white-collar criminal prosecutors and defense lawyers. “Preventative

law” in the form of proactive counseling and director, officer, and employee train-

ing is the smart way for corporations to manage risk in an area where missteps

can be very costly. Quality anti-bribery and recordkeeping training along with

comprehensive, recorded due diligence on the front end of mergers, acquisitions,

joint ventures, and third-party contracts and follow-on due diligence can minimize

criminal liability and avoid lengthy investigations, serious fines, substantial legal

fees, and damage to corporate and executive reputations. There is no substitute for

live anti-bribery training of senior officers and employees responsible for foreign

sales, finances, and accounting. As important, thorough pre-acquisition due dili-

gence may be the most compelling defense and route to avoid expensive successor

criminal liability.

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