In recent years, there has been a big jump in the implementation of compliance programs in US as well as in many EU countries.
The most probable reason for that is that the Foreign Corrupt Practices Act (FCPA), grants the U.S. Department of Justice (DOJ) and U.S. Securities and Exchange Commission (SEC) jurisdiction to enforce its prohibition against bribery of foreign government officials basically everywhere in the world.
The DOJ and SEC may execute its jurisdiction over following persons:
- U.S. or non-U.S. issuers which are required to file reports under FCPA, and U.S. citizens, nationals, residents, and entities, for:
- any use of interstate commerce in furtherance of a corrupt payment to any foreign official (e.g. e-mail, text message to U.S., basically any contact with U.S. can be problematic);
- corrupt payments, or acts in furtherance of such payments, committed anywhere in the world;
- foreign entities and individuals if they engage in any act in furtherance of a corrupt payment in the United States
The boundaries for this broad jurisdiction have not been comprehensively tested yet, because the majority of investigated entities settle rather than try their luck in front of courts. Therefore, if a company while doing its business has any connection to U.S., the DOJ or SEC may start investigation.
The consequences of such investigation can be severe, either for company as well as individuals. The latest developments in DOJ and SEC show that their aim is changing from companies to individuals. They will be going after individuals involved in the corporate misconduct. „We have revised our policy guidance to require that if a company wants any credit for cooperation, it must identify all individuals involved in the wrongdoing, regardless of their position, status or seniority in the company and provide all relevant facts about their misconduct.“, said Deputy Attorney General Sally Quillian Yates.
The DOJ and SEC want to investigate individuals immediately from the start of an investigation, and afterwards start also a corporate investigation. The focus though must be on culpable individuals.
The consequences for companies include paying large fines to U.S. (Siemens – 800 Million USD, Avon – 135 Million USD), costs of the investigation, loss of productivity, and the loss of reputation and share price dropping. Next to civil law consequences, individuals may also face criminal charges (prison charges include non-American citizens).
The broad jurisdiction of FCPA over foreign entities and individuals is therefore serious, and can cause huge problems, so you had better prepare and forearm yourself.