Tuesday, May 26, 2009

White Collar: DOJ Turns to FCPA

The Department of Justice is turning to a Watergate era statute to battle international business corruption. In 1977 the Foreign Corrupt Practices Act became law. The law responded to the fact that many companies maintained off shore funds about which they kept inadequate informaion. Investigations at the time revealed that companies used such slush funds to funnel money to former President Richard Nixon's 1972 re-election campaign. Additionally, companies used these funds to influence business decisions made by foreign officials, in other words for bribery.

The Congress responded to the problems by enacting the Foreign Corrupt Practices Act. The FCPA makes unlawful the paying of value to foreign officials or business executives in foreign state owned businesses to obtain a business advantage. Additionally, the act requires a company to maintain adequate books and records to fairly disclose the financial activities of that company.

DOJ has recently begun to actively use the FCPA to combat foreign bribery by American businesses. Currently, a number of large companies are under investigation by the Department and the Federal Bureau of Investigation for possible FCPA violations. Additionally, companies are engaging consultants to ensure that their practices do not run afoul of the FCPA.

In my experience at the Department of Justice and the SEC, developing FCPA cases consumes significant resources. Nevertheless, once a commitment to the investigation occurs the cases can be successfully brought by employeeing investigative audit procedures.

For an in depth look at the Justice Department's recent efforts, please see The Wall Street Journal, "U.S. Cracks Down on Corporate Bribes," May 26, 2009, page A1.

1 comment:

Benjamin Wright said...

Watch this trend, Richard. Electronic records like e-mail and text messages are revolutionizing white collar investigations and defense. What do you think? --Ben