In house counsel and other compliance professionals are often looking for additional ways to stress the importance of Foreign Corrupt Practices Act compliance to corporate leaders. A common way to do this is forwarding to corporate leaders the latest multi-million dollar settlement with the message “this could be us” if we don’t invest in and implement FCPA compliance best practices.
This common method however often fails to resonate with corporate leaders. Moreover, settlement amounts in an actual FCPA enforcement action are often only a relatively minor component of the overall financial consequences that can result from FCPA scrutiny or enforcement in this new era.
To be most effective in communicating with corporate leaders regarding the need for pro-active FCPA compliance, in house counsel and other compliance professional need to speak to corporate leaders in business terms that matter such as liquidity, market capitalization, cost of capital, lost or delayed business opportunities and the like.
My new article, “Foreign Corrupt Practices Act Ripples” (available for download here), recently published in the American University Business Law Review, assists in house counsel and compliance professionals stress the importance of FCPA compliance by highlighting issues that matter most to corporate leaders.
The article abstract is as follows.
An obvious reason to comply with the Foreign Corrupt Practices Act (“FCPA”) is that non-compliance can expose a company to a criminal or civil FCPA enforcement action by the Department of Justice (“DOJ”) and/or the Securities and Exchange Commission (“SEC”). However, this Article highlights that settlement amounts in an actual FCPA enforcement action are often only a relatively minor component of the overall financial consequences that can result from FCPA scrutiny or enforcement in this new era.
By coining a new term of art – the “three buckets” of FCPA financial exposure – and through various case studies and examples, this Article demonstrates how FCPA scrutiny and enforcement can impact a company’s business operations and strategy in a variety of ways from: pre and post-enforcement action professional fees and expenses; to market capitalization; to cost of capital; to merger and acquisition activity; to impeding or distracting a company from achieving other business objectives; to private shareholder litigation; to offensive use of the FCPA by a competitor or adversary to achieve a business objective or to further advance a litigating position.
This Article thus shifts the FCPA conversation away from a purely legal issue to its more proper designation as a general business issue that needs to be on the radar screen of business managers operating in the global marketplace. By highlighting the many ripples of FCPA scrutiny and enforcement, it is hoped that more business managers can view the importance of FCPA compliance more holistically and not merely through the narrow lens of actual enforcement actions.
Help shift the FCPA conversation by sharing the article (available for download here) with your clients, corporate boards, audit committees and other corporate leaders.