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FCPA Enforcement Poses a Growing Threat to Companies - Is Self-Reporting A Smart Move?
White Collar Litigation Alert
Authors: Steven D. Feldman

"Companies can find themselves getting extorted in foreign lands, only to get extorted again in Washington," says a recent article in Forbes magazine. The Justice Department is ratcheting up enforcement of the Foreign Corrupt Practices Act (FCPA) to crack down on corporate bribery.  In 2004, the Justice Department brought only three FCPA criminal cases.  Last year, there were 34, and this year, there are over 150 open FCPA investigations.  In a preemptive strike against a crippling federal indictment, many companies consider reporting their own FCPA violations to the DOJ in the hopes of leniency. 

But does self-reporting really make sense? Even where the company takes the initiative to conduct a robust internal investigation and self-reports the bad conduct to DOJ, the result is often a hefty fine or settlement.

As recently reported, some policy makers are proposing that the federal government waive criminal prosecutions of companies that voluntarily disclose FCPA violations.  Specifically, one former Deputy AG, pointing out the current uncertainty associated with self-disclosure, highlighted the current disincentive for companies to disclose based on the harsh treatment they receive when self-reporting. Instead, some advocates are seeking a system that gives a favorable presumption against criminal prosecution to those who voluntarily disclose - a system they believe will incentivize companies to reveal the wrongdoing.

If your company is involved in international business dealings with foreign governmental officials, you need to be cognizant of the FCPA.  Consider contacting your legal counsel to discuss how to create a compliance program to lower the risk that your agents may cross the line into improper conduct, or that your company may be accused of violating the law. If potential wrongdoing is discovered, you should consult closely with counsel to determine the best strategy to minimize the harm to your company. To read the entire Forbes article, click here.

For more information on this issue and other White Collar matters, please contact:
Steven Feldman at (212) 592-1420 or sfeldman@herrick.com.