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

• DOI: http://doi.org/10.1002/jcaf.21906
• Published date: 01 November 2013
• Author: David M. Shapiro
• Date: 01 November 2013

39

© 2013 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI 10.1002/jcaf.21906

C

o

m

m

e

n

t

a

r

y

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?

OVERVIEW

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.

BRIBERY RISK

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

http://transparency.org/) survey

and measure corruption and

bribery risk, relying on percep-

tions and publishing longitudi-

nal indices, including making

available tools to mitigate these