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Some Data to Chew On

It’s been a while (see here) since I passed along what seems like a constant stream of FCPA survey results.

This morning in my inbox were the results of the Dow Jones State of Anti-Corruption Compliance Survey which I pass along (here).

The survey included responses from 182 company executives worldwide and among the more interesting survey results is that “51% of companies delayed key business plans such as new business partnerships and entry into new or developing markets and another 14% abandoned them completely because of legal questions arising from unclear anti-corruption regulations.”

The managing director of Risk & Compliance at Dow Jones & Company noted that the “findings appear to indicate improvements should be made” including that “regulators must provide clearer guidance to help companies better understand and comply with current laws.”

Today is U.N. International Anti-Corruption Day.

In observance of this day, the U.S. government agencies which enforce the FCPA (the Department of Justice and the Securities and Exchange Commission) should commit to providing those subject to the FCPA clear guidance, reasoned rationale and legal support for certain of their FCPA prosecution theories. As reflected by the Dow Jones survey results, such clarity and transparency is greatly needed.

FCPA … the “Law Version” of Baseball

October is a month for baseball – the playoffs are under way and the World Series is right around the corner. Baseball aficionados are found of their statistics, and with good reason, there are a ton of baseball statistics to digest.

Well, the FCPA is quickly becoming the “law version” of baseball when it comes to statistics. Every few weeks it seems (see here for a prior post) FCPA aficionados have new statistics to digest.

The latest FCPA statistics come courtesy of Fulbright & Jaworski’s 6th Annual Litigation Trends Survey (see here for download).

According to a survey of over 400 corporate counsel in the U.S. and the U.K.:

(1) “the percentage of companies that has engaged outside counsel in the past 12 months to assist with a corruption or bribery investigation (i.e., FCPA and U.K. equivalent) has nearly doubled …” (see p. 37) and;

(2) “the incidence of due diligence for bribery or corruption relating to mergers, acquisitions or other transactions in foreign countries has more than doubled …” (p. 38).

These statistics should come as no surprise to followers of this blog who well know that FCPA compliance is a hot topic given the current aggressive enforcement climate.

Yet, the Fulbright survey (much like the prior Deloitte survey – see here) also shows that very few companies address FCPA risks on a pro-active basis. For instance, even though Fulbright’s survey found that the incidence of FCPA/bribery due diligence in M&A transactions has doubled, the number of companies engaging in such due diligence remains below 20%.

As to the “big picture” issue of whether perceived levels of corruption in a foreign country result in a company doing less business in that country, the survey shows that “only about half as many respondents as last year say their companies, at some point in the past, have decided against doing business in a country due to the perceived degree of local corruption.” (see p. 38). The one exception appears to be in the manufacturing sector “where 39% have made that decision v. 27% last year.”

The Results Are In …

A couple of survey/poll results that may be of interest to FCPA followers.

The first survey is courtesy of Deloitte which obtained over 1,000 on-line survey responses from business professionals in various industries in connection with a recent webcast titled “Global Anticorruption: Risks and Strategies for Today’s Global Enterprise.”

Results of interest:

Only 31% of respondents indicated that their company had in place a “comprehensive FCPA compliance program.” When asked why some companies might not have a comprehensive FCPA compliance program, 23% of respondents cited an “unawareness of the severity and consequences of FCPA violations.” Clearly more people need to read this blog (and others) and follow FCPA news!

Only 32% of respondents indicated that their company addresses FCPA risks “proactively.”

Respondents are most nervous about FCPA issues arising from: foreign subsidiaries (35%), agent/consultant relationships (28%) and joint venture/strategic alliances (18%).

And finally, 40% of respondents either said “no” or “don’t know” to the question of whether the increased FCPA enforcement activity will deter future FCPA violations. You have to wonder what goes through the minds of Mark Mendelsohn and others at DOJ when they read a response like that?

The second survey (see here to download) was sponsored by Integrity Interactive Corporation and Compliance Week. The survey (which covers a wide range of compliance and ethics topics – not just the FCPA) collected approximately 230 responses from executives at global public companies and large private entities. Pgs. 38-39 of the survey contain FCPA data and indicate that executives are most concerned about payments to third parties, followed by inappropriate gifts and entertainment, direct bribes, company-financed “business trips” and unlawful political or charitable contributions.

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