To say that enforcement of the US Foreign Corrupt Practices Act during 2010 was robust understates the current prosecutorial climate and tone within the United States and abroad. 2010 surpassed prior years of enforcement activity by virtually any measure. And if you think the worst is yet to come, you are probably right. This trend shows little sign of abatement in the near future.
In 2011, we expect to see increases in the following areas:
- Concurrent Justice Department criminal prosecutions and Securities and Exchange Commission civil enforcement actions;
- Corporate whistle-blowing based on provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 allowing whistle-blowers to recover up to 30 percent of the total monetary penalty assessed;
- Higher fines;
- Incarceration of individuals;
- Targeting of senior management, board members, and counsel;
- Use of aggressive theories of successor liability to penalize companies that do not conduct pre-acquisition due diligence and remediate past violations;
- Targeting of non-US companies and individuals based on aggressive theories of liability;
- Parallel enforcement proceedings in the United States and foreign jurisdictions;
- Implementation and enforcement of non-US anticorruption laws, notably the UK Bribery Act 2010; and
- Increased compliance expectations.
In short, the risks of non-compliance are rising. To address these risks, every company transacting business internationally should develop and implement an effective anticorruption compliance program that is tailored to its evolving risk profile and contains the requisite elements on the government’s ever-longer wish-list. To the extent your company already has such a program, you should ensure that it is up to date and functioning as intended. Benchmarking programs is becoming a key issue these days, especially with the latest rounds of settlements: both Justice and the SEC are requiring more robust internal controls, more detailed due diligence of third parties, and greater accountability for anticorruption efforts.