FCPA Violations Expected To Increase In Coming Years

When asked the leading reason some companies might not have a comprehensive FCPA compliance program, 23 percent cited an unawareness of the severity and consequences of FCPA violations.

 

“When it comes to FCPA, corporate ignorance is not bliss,” said Ed Rial, principal, Deloitte Financial Advisory Services LLP and leader of its FCPA consulting practice. “FCPA enforcement activity is rising dramatically. Recent cases have seen penalties in the hundreds of millions of dollars — a twenty-fold increase over prior cases.”

 

Respondents anticipate global corruption violations are most likely to arise in the foreign subsidiary of a U.S. company (35 percent), the agent/consultant relationship (28 percent) and in joint ventures or strategic alliance partnerships (18 percent).

 

“With the economic downturn, the intensified competition for contracts increases the likelihood that competitors may resort to bribery to get deals done. Moreover, with hundreds of billions of dollars tied to stimulus funding, the risk of corruption and fraud rises exponentially,” said Nancy Boswell, President and CEO of Transparency International–USA. “It is now more important than ever for foreign governments to close what is perceived as the enforcement gap with the U.S. and for the private sector to be even more vigilant.”

 

More than half (59 percent) of respondents expect the increased enforcement activity to deter FCPA violations in the next two years.

 

“All industries are under greater scrutiny, including those not previously the focus of enforcement efforts such as insurance and financial services. Regardless of the industry or country where a U.S. company or issuer is conducting business, an organization should have a well-documented and communicated FCPA compliance program in place, with monitored controls to prevent and detect potential violations,” said Rial.

 

More than 1,090 business professionals from the financial services; consumer and industrial products; technology, media and telecom; banking and securities; energy and resources industries and other industries responded to the survey questions.