Prudent senior executives are well aware of the potential pitfalls of doing business overseas. The US Foreign Corrupt Practices Act in particular has led to huge fines and costs. The Wall Street Journal recently reported that in 2010 twenty three companies paid a total of US$1.8 billion in fines.
Highlighting this trend, three companies are currently under investigation (Avon, Weatherford International and Wal-Mart); collectively they have already paid over US$450 million in legal and other professional fees; no decision on charges has yet been reached in these investigations. The US Department of Justice is shortly to issue new guidelines to businesses on how to comply with the FCPA.
Senior executives should also be familiar with the Americanisation of the UK’s response to Bribery which includes civil settlements, plea negotiations, compliance monitoring, self-reporting and now proposals for deferred prosecution agreements. In particular, companies and individuals must contend with the Bribery Act which has been hailed by the Serious Fraud Office as an important new weapon in extending its jurisdictional reach and in bringing to book both companies and executives.
The SFO has just published new guidance on self-reporting, corporate hospitality and facilitation payments which increases the prospects of criminal charges under the Bribery Act. You can read the new SFO Guidance here.
Senior executives will wish to ensure that their compliance systems reflect increasingly aggressive international enforcement, especially from the UK and the US. Risks include reputational damage, shareholder lawsuits, multi-million dollar fines, huge legal bills and prison sentences for employees.
Senior executives may also wish to take advice personally to ensure that they do not fall foul of investigation and prosecution. The interests of the business and senior executives will not always be identical.