One FCPA reform proposal is to amend the law to provide a period of repose following an acquisition. Championed by George Terwilliger (here – an FCPA practitioner at White & Case and former Deputy Attorney General) the idea, as Terwilliger explains in this piece “is that US companies, with notice to US enforcement authorities, would have a defined period after an acquisition in which to perform a rigorous FCPA compliance review of the acquired entity. If FCPA compliance issues were uncovered, the acquiring company would remediate them, and disclose both the existence of the problem and its remediation to the government. The acquiring company would be immune from civil or criminal enforcement as to matters uncovered during the review period, which could be on the order of 90 to 120 days.”
I was reminded of Terwilliger’s reform proposal when reading ABM Industries Inc. recent disclosure. Before getting to the disclosure, a bit of background. In December 2010, ABM Industries Inc. (a leading provider of facility services) announced its acquisition of The Linc Group LLC (“TLG”). (See here). ABM President and CEO Henrik Slisager described the acquisition as a “game changer” in that the transaction, among other things, would bring ABM “into the $70 billion government marketplace, where TLG brings broad experience and deep client relationships.”
According to the ABM, substantially all of its operations are conducted in the United States, but it does do business internationally through joint ventures. In ABM’s annual report filed last week (see here) the company disclosed as follows. “During October 2011, the Company began an internal investigation into matters relating to compliance with the U.S. Foreign Corrupt Practices Act and the Company’s internal policies in connection with services provided by a foreign entity affiliated with a Linc joint venture partner. Such services commenced prior to the Company’s acquisition of Linc. As a result of the investigation, the Company has caused Linc to terminate its association with the arrangement. In December 2011, the Company contacted the U.S. Department of Justice and the Securities and Exchange Commission to voluntarily disclose the results of its internal investigation to date. The Company cannot reasonably estimate the potential liability, if any, related to these matters. However, based on the facts currently known, the Company does not believe that these matters will have a material adverse effect on its business, financial condition, results of operations or cash flows.”
