- FCPA Professor - http://fcpaprofessor.com -

FCPA Inc. And The Business Of Bribery

On March 2nd, the Indiana International & Comparative Law Review will present its annual symposium titled “Recent Developments in the War on Corruption:  The U.S. Foreign Corrupt Practices Act and Beyond” (see here [1] for more information).  The event, to be held at Indiana University Robert H. McKinney School of Law in Indianapolis, features panels of U.S. and international scholars and practitioners and I am pleased to be participating.  CLE credits are available for the event and I hope FCPA Professor readers in the Indianapolis area and region are able to attend.

The title of my talk (and work in progress) is “FCPA Inc. and the Business of Bribery.”

This new era of FCPA enforcement has meant many things, including the emergence of “a thriving and lucrative anti-bribery complex.”  (See here [2] from Forbes).  The Wall Street Journal Law Blog has asked (here [3])  whether the FCPA is “just a full-employment act for the private bar?”  Others have noted (see here [4] “Scare The Crap Out Of Them” that those in the industry “vastly overstate the risk that the FCPA brings to companies” and that “the degree to which the industry that has popped up around the FCPA has an inherent interest in puffing up the underlying risk creates at the least an apparent bias”).  The Wall Street Journal has noted (here) [5] that “from this wellhead of anxiety, a gusher of compliance lawyers, trainers and FCPA navigators has flowed.”

Even back in 2008, this [6]Washington Post article titled “Cashing in On Corruption” observed, among other things as follows:  “FCPA business is booming, a welcome growth area for Washington law offices …”;  “sharing in the bonanza [are] accounting firms, forensic computer specialists and a growing army of compliance consultants.”  The Post piece concludes with this “… don’t think law firms aren’t playing off those fears by aggressively marketing their services as investigators, risk mitigators and compliance counselors” and the article notes that “the result is [a] sudden flood of labor-intensive legal work for both partners and associates, particularly in the local offices of big international firms.”

Others have noted (see here [7]) as follows.  “It is getting pretty crowded these days out in the Anti-Corruption Compliance space.  There are more and more companies, consultants, software providers and other entities offering to provide the right mix of information and data needed to support a due diligence review of a third-party, joint venture partner or acquisition target.  These companies, consultants and investigators are at the infancy of this new and sophisticated industry.  Just look on the Internet for information and you will be overwhelmed.”

What does this all mean?  What events contributed to these market conditions?  Are these market conditions short-term or long term?   Which people contributed to these market conditions and what are they doing now?

“FCPA Inc. and the Business of Bribery” will categorize the participants in this “new and sophisticated industry” which includes:  law firms; accounting firms; compliance and consulting companies; insurance companies; conference and training providers; and document retention and translation companies among others.   How does one measure the growth and profitability of the FCPA market?  There are a few publicly traded companies in FCPA Inc., but the vast majority are not.

This project will analyze the services each industry participant provides and how industry participants market their services.  Do market participants engage in fear-based marketing?  For instance, how often is the Siemens FCPA enforcement action (the largest in terms of fines and penalties in FCPA history – $800 million) used in marketing materials?  Do marketing materials inflate the number of FCPA enforcement actions?  For instance, and sticking with Siemens, is that 20 enforcement actions (DOJ enforcement action against Siemens AG, Siemens Argentina, Siemens Bangladesh and Siemens Argentina as well as DOJ enforcement actions against 8 individuals; SEC enforcement action against Siemens AG as well as SEC enforcement actions against 7 individuals) or 1 enforcement action based on the same core set of facts?  Is the Africa Sting case 22 enforcement actions or 1 enforcement action based on the same set of facts?  How one answers this basic question matters in analyzing the number of FCPA enforcement actions and the number of FCPA enforcement actions is a key marketing tool.

How do industry participants in the same sector seek to differentiate their services to establish a niche?  Do law firms tout having former DOJ or SEC FCPA enforcement attorneys as part of their FCPA practice group?

Do participants in the FCPA compliance industry promise more than they can deliver given that pre-existing FCPA compliance policies and procedures – while perhaps lessening the impact of FCPA exposure – do not reduce FCPA exposure?

How has FCPA Inc. impacted, both positively and negatively, FCPA enforcement and FCPA compliance?  For instance, is one reason for the increase in FCPA enforcement the result of the industry itself?

“FCPA Inc. and the Business of Bribery” is very much in its early stages and I would value input from readers as to additional issues worthy of exploring.  I can be reached at mjkoehle@butler.edu [8] or you can leave a comment on this post below.