Much has been written in recent years about the steep rise in U.S. Foreign Corrupt Practices Act (FCPA) enforcement in the wake of high profile fines in the hundreds of millions of dollars. In response, the past decade has seen companies around the world implementing more robust compliance programs to address potential FCPA issues. More recently, companies with an international footprint have encountered a new compliance challenge: an increasing number of anti-corruption statutes similar to the FCPA that have been enacted or newly enforced in other countries. This globalization of anti-corruption statutes creates difficulties – and opportunities – in terms of best practices and compliance for international companies.
Since its passage in 1977, the FCPA has served as the model for anti-bribery and anti-corruption legislation. And in the past decade, with high-profile cases and steep fines targeting large organizations, the US has become the model for enforcement as well. With the track record of the FCPA in mind, some 26 other countries have enacted their own legislation in response to international conventions such as the Organisation for Economic Co-operation and Development’s (OECD) Anti-bribery Convention and the United Nations Convention Against Corruption. The result is an escalation of legislation creating a global quilt work of aimed at curbing corruption and complicating the prospect of doing business around the globe. Of these laws, the FCPA and the UK Bribery Act are perhaps the most well-known and written about, but they now have a great deal of company. We’ve seen new laws governing corruption emerge from important economies like Brazil, Russia, India and China (BRIC).
Although enforcement activity related to anti-corruption laws outside the U.S. pales in comparison to that of the FCPA, we are beginning to see increased enforcement of these laws in Europe and in a few developing countries such as China and Russia. Whether the increase in enforcement of the new anti-corruption laws in these countries will continue remains to be seen. The so-called “BRIC” countries garner the lion’s share of anti-corruption attention worldwide. Each presents its own unique challenges and endemic risk factors. As emerging markets, the scrutiny is warranted. Companies, accordingly, must be aware of the regulations and requirements.
Trying to give global advice across such a varied landscape is by necessity extremely fact-specific and risk-based. However, we can identify trends and issues facing organizations and point out issues that, if you are with an organization with an international presence, you should be focusing on.
It is critical in today’s global enforcement landscape that companies and their counsel are aware of all anti-corruption statutes in the jurisdictions in which they do business, and design compliance policies to conform accordingly. At a general level, this seems to be common sense, but in practice companies relying on a uniform global compliance policy could be exposed in some local markets. Where gaps exist, companies need to supplement their global policies with local policies that address unique local requirements. Some examples are helpful to illuminate these fact-intensive issues.
In Russia, for example, Federal Anti-Corruption Law No. 173 came on the heels of the country’s signing onto the OECD Anti-Bribery Convention, and has increasingly been a subject of focus given the number of countries doing business in Russia, as well as the Winter Olympics and future hosting of the World Cup. For the first time, companies doing business in Russia must implement internal anti-corruption compliance measures. In the past, this was only a consideration during the punitive phase of a prosecution. The law also compels businesses in Russia to conduct due diligence and assess corruption risks, spelling out specific requirements for such activities. If a company complies with the requirements of the Russian statute, it can potentially avail itself of a form of safe harbor. In short, companies that have business interests in Russia need to be aware of its anti-corruption statute and compliance safe harbor, and implement local policies to ensure that their compliance programs meet these requirements.