Asian Companies Playing With FCPA Enforcement Fire

less- the midst of all this hullabaloo about the FCPA Guidance, an important survey was recently released by Kroll which confirmed my worst fears – despite all of the enforcement actions, all of the FCPA Paparazzi fear mongering, the implementation of the UK Bribery Act, and the global anti-corruption movement, Asian companies are not implementing anti-corruption compliance programs.  In the words of John McEnroe, “You have got to be kidding!”

The Kroll survey found that less than half of Asian countries had even assessed their business operations for risks of an FCPA anti-corruption enforcement action.  (It is hard to make the case for a risk assessment of the UK Bribery Act given the twists and turns of the SFO and its enforcement capabilities).  A large percentage of Asian businesses surveyed in the Kroll report acknowledged that their internal controls were insufficient to respond to such risks.

Compounding this problem is the fact that Asian companies rarely, if ever, know how to handle whistleblower allegations or any allegation of impropriety.  Several significant enforcement inquiries started from whistleblower allegations lodged by Asian employees who contacted United States enforcement agencies.  This phenomena demonstrates that risks for Asian companies is rising and confirms a growing trend – Asian companies are likely to fall under FCPA enforcement.  For FCPA prosecutors, this will be like shooting fish in a barrel.

All of this is amazing to me, especially in light of the fact that at least one-third to slightly less than half of all FCPA enforcement actions involves corruption in Asia, especially China.  How is it that Asian companies can ignore such a significant risk?

Japanese companies have fallen under the FCPA hammer – in 2011 and 2012.  JGC and Marubeni settled significant FCPA enforcement actions.

In addition to anti-corruption risks, Japanese companies are often the focus of antitrust enforcement, especially criminal enforcement in the United States.  One of the more significant criminal antitrust actions involved global auto parts enforcement, leading to several large settlements and individual prosecutions. 

Some have suggested that Asian businesses have corporate cultures which are years behind in ethical values.  Others have argued that Asian companies deliberately ignore compliance as a “wasted” effort and cost center.  Competition can be a cut-throat business and cost reduction can sometimes lead to compliance ignorance. 

These criticisms ignore the obvious ability of Asian companies to organize and implement effective compliance programs as part of an overall business strategy. 

Whatever the explanation for compliance deficiencies, the dangers are very clear – Asian companies need to take a deep breath, devote more resources to corporate governance and allocate time and attention to compliance, with an obvious focus on anti-corruption (and antitrust). 

Written by:


The Volkov Law Group on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.