WHAT RECENT FCPA ENFORCEMENT ACTIONS TEACH COMPANIES ABOUT ENHANCING ANTI-CORRUPTION COMPLIANCE PROGRAMS
Studies continue to show that corruption risk remains high on the list of concerns expressed by the directors and officers of global companies. These companies struggle to identify and implement effective compliance controls, which require the commitment of significant resources across a variety of challenging emerging markets, each with its own corruption issues. The challenge of effective anti-corruption compliance seems only to intensify as the US Department of Justice and the Securities and Exchange Commission (SEC) press in their enforcement actions to broaden and extend the application of the Foreign Corrupt Practices Act (FCPA).
Two recent high-profile SEC enforcement actions against Oracle Corporation and Eli Lilly and Company illustrate aggressive FCPA enforcement and instruct global companies on the challenges of keeping their anti-corruption compliance programs at a level that will meet the expectations of US regulators.
The first lesson reminds companies not to limit their focus solely to transactions involving payments to foreign government officials. In August 2012 the SEC charged Oracle with violations of the books and records and internal controls provisions of the FCPA based on Oracle’s failure to oversee properly its Indian distributor. The SEC alleged that Oracle’s Indian subsidiary structured transactions with government-owned customers through third-party distributors to enable the distributors to accumulate substantial funds. Oracle India then instructed those distributors to make payments to suspicious Indian vendors from which there was little evidence of legitimate services being performed.
Jan-Mar 2013 Issue
Baker & McKenzie LLP