There are some narratives in the Foreign Corrupt Practices Act space that seem to take on a life of their own without a factual basis (see here, here and here for instance).
Six years ago, the early stages of COVID began.
The narrative seemed to be that COVID was going to increase FCPA scrutiny and thus enforcement because a crisis like COVID presented desperate times for certain companies and thus perhaps an opportunity to skimp on companies and/or a willingness to secure business improperly.
During a 2020 webinar, a lawyer stated:
“We know that DOJ and SEC – their enforcement is going to remain robust and in fact we know it is going to expand, we learned that from the 2008-2009 financial meltdown crisis, that the DOJ expanded after that crisis, there is really no reason to believe that there won’t be an expansion of their enforcement coming on the heels of this crisis.”
Likewise, a publication titled “Financial Crime Impact: COVID-19 (Corona Virus) Bribery and Corruption Risks” stated:
“Companies that may fall within the jurisdiction of the U.S. Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act should be vigilant in their anti-corruption efforts. Indeed, the financial crisis of 2008 increased FCPA enforcement. As companies faced pressure to obtain business and even maintain operational status during the crisis, their focus on compliance decreased and companies decided to quickly merge and consolidate. The speed of these consolidations resulted in the discovery by some acquiring companies of questionable payments and accounting practices both pre-and post-merger, resulting in increased compliance risks. The U.S. Department of Justice and Securities Exchange Commission brought FCPA enforcement actions with significant fines.”
A law firm alert was titled “Bribery and Corruption Expected to Increase in Wake of COVID-19 Pandemic” and stated:
“The Organization for Economic Cooperation and Development (OECD) has joined enforcement agencies in the U.S. and across the globe in warning of bribery and corruption risks in connection with the COVID-19 pandemic. The worldwide outbreak has created unprecedented demand for products and services in the medical device and healthcare industries, as well as many others, which, coupled with new severe financial pressures on companies, is likely to create incentives for corrupt practices. At the same time, corporate compliance departments might also struggle to monitor their employees who are working remotely, leading to lapses in otherwise functional compliance programs.
Forecasting a resulting rise in bribery and corruption in the coming months, the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have warned companies that federal prosecuting agencies are not on vacation during the lockdown and will be pursuing new investigations despite logistical difficulties.”
A consulting group publication stated:
“Financial and economic crises, such as the current conditions caused by the Covid-19 pandemic, generally increase corruption. Given the new administration and economic backdrop, we expect a continued increase in FCPA enforcement in the coming years.”
Well, here we are six years later (an appropriate time to revisit the issue given that FCPA scrutiny tends to last approximately four years).
Did COVID lead to increased FCPA scrutiny of companies?
Did COVID lead to increased FCPA enforcement?
