over ten years of compliance experience, at big and small firms,
representing companies around the world. He is in frequent contact
with the Department of Justice and Securities Exchange Commission
attorneys investigating and prosecuting the Foreign Corrupt Practices
Act and stays abreast of all the latest compliance developments.
1150 Connecticut Ave. NW Ninth Floor
Washington, District of Columbia 20036
202.862.4306 Phone
202.828.4130 Fax
jlebowitz@bode.com
www.bode.com
we had to explain to companies and
executives what the U.S. Foreign Corrupt
Practices Act (FCPA) was and what it
prohibited. Those days are mostly gone.
It is a hot compliance topic and should
already be on the radar of every com-
pany, regardless of size whether a U.S.
company or a foreign company that does
business in the U.S. Now the conversa-
tion usually starts with what do we need
to do and how much will it cost. These
are both good questions that more and
more companies have been asking in the
past five years. What has changed is the
urgency for smaller companies to start
asking those questions and the need for
a cost-effective solution.
A new survey by Deloitte shows
smaller companies are almost four times
more likely (23 percent) than larger
companies (6 percent) to have no writ-
ten policy addressing anti-corruption.
Smaller companies are also almost three
times as likely (37 percent) as larger
internal audits of each of their foreign
operations to identify potential corrupt
activity. The two most common explana-
tions from these smaller companies for
their lack of compliance is that they
don't need it because of their size and
limited international operations or that
they can't afford it. Neither reason is
justifiable anymore as the risks, costs
and severity of prosecutions increase.
The first excuse, we don't need it,
and the first question, what do we need,
go hand in hand and have evolved over
the years as compliance enforcement has
increased. The FCPA prohibits bribery of
foreign officials by U.S. companies and
their foreign representatives and requires
such companies to maintain accurate
books and records. It also extends to
foreign companies that have a sufficient
nexus with the U.S. The Act was passed
in 1977 but was not seriously enforced
until the last decade and did not become
a serious compliance worry until after
rate boards to certify company financial
reports. A company can face fines in the
tens or hundreds of millions of dollars for
FCPA violations. Company employees
and agents can also be fined individu-
ally (with the company prohibited from
paying the fine on behalf of the employee
or agent, or reimbursing the employee
or agent who pays the fine), and can
be imprisoned for up to five years for
violating the FCPA. Additionally, and of
potentially dire consequence to a small
company, a company can be banned from
contracting with the U.S. government.
Why do smaller companies need an
FCPA compliance program? Most execu-
tives will tell you they know their inter-
national operations and they don't bribe
anyone, so they should be fine. That,
unfortunately, is not the case. The Act
does not just prohibit bribes as the lay-
man understands them. It prohibits pay-
ments of "anything of value" to foreign
officials or other prohibited recipients
with the corrupt intent to have such of-
ficials or recipients use their influence to
assist that person obtain, retain, or direct
business. The anti-bribery provisions ex-
plicitly prohibit not only payments made
directly to a foreign official, but also to
Compliance for Small and Mid-Sized Companies
in an Era of Increased Anti-Corruption Vigilance