There are several law firms which put out annual, semi-annual and quarterly reports on the Foreign Corrupt Practices Act (FCPA). One recent report is the Compliance Quarterly, Spring 2012 Report by Chadbourne & Parke LLP. Rather than compiling a list of cases with highlights and lessons learned for the compliance practitioner, Chadbourne focuses on one, or a few issues, with some depth. The spring report continues this trend with an article entitled “Are You Paying Too Much? How Smart Companies Use FCPA and UK Bribery Act Due Diligence to Ensure their Deals are Valued Correctly” by Scott Peeler.
The article begins with a review of the FCPA and Bribery Act and then moves into some of the costs for a FCPA investigation. The costs can include a drop in stock value after the announcement of an ongoing investigation; the cost of the internal investigation, including both legal and forensic accounting costs, and the tremendous amounts which companies have been fined. Further, if a company bases its deal value on sales which have been obtained through bribery and corruption the actual value of the company may be far less than paid for by an acquirer.
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