Treasurers, Bribery, and the FCPA: Is There a Better Way?

Published date01 November 2013
AuthorDavid M. Shapiro
Date01 November 2013
© 2013 Wiley Periodicals, Inc.
Published online in Wiley Online Library (
DOI 10.1002/jcaf.21906
David M. Shapiro
Treasurers are responsible for assessing and
mitigating corruption risk. And with the rise of
globalization, the problem of bribery has become
wider. However, the U.S. Foreign Corrupt Prac-
tices Act (FCPA)—designed to fight bribery—
actually puts U.S. companies at an unfair
disadvantage. Is there a more rational alter-
native to the flawed FCPA that would work?
© 2013 Wiley Periodicals, Inc.
Treasurers, Bribery, and the FCPA:
Is There a Better Way?
In the course of
performing risk man-
agement and treasury
operations and controls
processes, treasurers
should assess and miti-
gate corruption risk.
With globalization, the
problem of bribery—a
species of corruption—
has become wider.
However, laws such as the U.S.
Foreign Corrupt Practices Act
of 1977 (FCPA, 15 U.S.C. Sec-
tions 78dd-1, et seq.) present
obstacles that may be under-
appreciated. The absence in
the FCPA of a statutory due
diligence defense for corpora-
tions available where their
employee(s) commits or offers
to commit bribery notwith-
standing the design and operat-
ing effectiveness of a sound set
of internal controls subprocess
specifically addressing this spe-
cies of corruption risk (herein,
“adequate procedures defense”)
in the FCPA puts U.S. corpora-
tions at an unfair disadvantage
in two respects: (a) corporations
not subject to the FCPA need
not dedicate excessive labor
control costs to address bribery
risk and, other things being
equal, maintain an unfair com-
petitive advantage; and (b) cor-
porations subject to the FCPA
need to compete to attract
lawyers, accountants, and other
consultants expert in the FCPA
in a sellers’ market for internal
controls guidance and, other
things being equal, persist in
buying seemingly unending
and escalating labor control
consultation to address FCPA
bribery risk. This commentary
urges a more rational approach,
suggesting simple, cost-effective
measures to control bribery
risk, as well as forecasting the
likely development of bribery
risk in an increasingly competi-
tive global economy.
Making, offer-
ing, or promising
special consideration
(e.g., cash kickback)
in return for favor-
able influence in
negotiating for the
procurement or sale
of goods/services is
usually a violation of
law and ethics under
most regimes, political and cor-
porate, tainting and corrupting
not only the prospective offeror,
offeree, and layers of intermedi-
ary parties but the transaction.
Thus, verifying the bona fides
of the parties to the transaction
and the legitimacy of the trans-
action itself are required. This
demands due diligence.
Difficulty arises from con-
sideration of the quantum of
due diligence to apply under
attendant circumstances. Inde-
pendent organizations such as
Transparency International (see survey
and measure corruption and
bribery risk, relying on percep-
tions and publishing longitudi-
nal indices, including making
available tools to mitigate these

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