When pondering the future locus of Foreign Corrupt Practices Act enforcement actions, one has to ask where are companies likely to be doing business in the future?
Although all companies doing business in the global marketplace have FCPA risk, resource extraction companies face greater risk in that they are often, pursuant to local law, forced into a marriage with foreign governments.
Thus, the more precise question when pondering the future locus of FCPA enforcement actions is where are the resource extraction companies likely to be doing business in the future?
There are only so many spots on the globe, but the future of the resource extraction industry – because of advances in technology and global warming – frequently points north.
Way north. As in 66 North – the Arctic Circle.
For instance, this recent Wall Street Journal article (“Mining for Gold at Minus 45 Celsius”) notes:
“As the world warms, miners dream of unlocking trillions of dollars in diamonds, gold, nickel and other metals in the Arctic, a treeless cap that spans northern parts of Canada, Alaska, Russia and Scandinavian countries.”
“For … arctic miners, the biggest problem is the lack of ports, road and rail links.”
It is really a recipe for FCPA risk. Difficult and harsh working conditions, narrow windows of opportunity to get things accomplished, heavy reliance on public infrastructure, etc.
Same issue with this additional Wall Street Journal article “Energy Companies Try Arctic Shipping Shortcut Between Europe and Asia” which states:
“Japanese and South Korean energy companies have begun shipping oil products through the Arctic’s melting ice—adding credibility to a route that could slash costs while avoiding risks associated with ferrying cargo through the Suez Canal. The ships are taking the so-called Northern Sea Route, traders and shipbrokers in Singapore said, a shortcut between Asia and Europe along Russia’s Arctic Ocean coast. This marks the first time oil-derived products have been moved in such large volume through what maritime explorers of centuries past dubbed the Northeast Passage.”
“Using the Northern Sea Route could shave as much as 10 days, creating savings to offset such costs as additional insurance and the hiring of ice breakers, ships often needed to clear the path for vessels.”
Travel through the Northern Route is subject to the approval of the Russian Northern Sea Route Administration (“NSR”), established in 2013 by written order of the Russian Government to – among other things – issue required permits to shippers to travel the Northern Route.
Given the enforcement agencies’ theories on licenses and permitting issues, the FCPA risk is rather obvious.
FCPA enforcement actions often follow business trends (think China).
Thus, it is possible that the locus of FCPA enforcement actions in the future may move north and possibly 66 North.
Much of the territory in the Arctic is owned or controlled, at least in part, by First Nation tribes and other non-traditional government bodies. Thus, while awaiting firm approval to open up that branch office in Yellowknife, you might want to read this article by Perkins Coie attorneys Barak Cohen and Markus Funk titled “Assessing the Ambiguous Status of Tribal Leaders and Other Traditional Authorities under the Foreign Corrupt Practices Act.”