Message To Companies from DOJ and SEC: Take FCPA Compliance Seriously


Federal regulators have been particularly aggressive in enforcing the Foreign Corrupt Practices Act (FCPA), making it crucial for companies to take anti-corruption training seriously.

Beauty products giant Avon recently reached a $135 million agreement with the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) to settle alleged FCPA violations. This is in addition to the $300 million Avon spent on its own internal FCPA investigation.

Another example is a big-box store chain that spent $109 million in the last year implementing a comprehensive global anti-corruption program — after spending over $500 million on a bribery scandal that is yet to be settled.

Monetary sanctions imposed by the SEC in its fiscal year 2013 averaged $80 million — four times the 2012 average — for a record $3.4 billion. Monetary sanctions, however, are often relatively minor compared with the overall financial consequences of aggressive FCPA enforcement measures.

Professional fees and other costs to investigate and defend FCPA allegations can be significant. A company's stock can be negatively impacted by the reaction of consumers and investors. And companies can face separate FCPA-related civil litigation. FCPA scrutiny can cast a cloud over an organization that can linger for years before claims are settled.

Organizations can avoid the costs and headaches of increased regulatory scrutiny of potential FCPA violations by implementing policies that take into account the following considerations:

Culture of Compliance

Companies should establish clear guidelines for acceptable and prohibited behavior to foster a corporate culture committed to preventing corruption. Policies should explicitly prohibit anyone acting on behalf of the company from engaging in corrupt behavior, provide for disciplinary action for violations of the policy and include a system for reporting and investigating allegations of violations that may arise.

Internal Controls

Internal processes should be in place to detect and prevent corrupt activity and to ensure that transactions are properly documented and approved. This should include a monitoring system that allows for early detection of potential issues, along with periodic, independent evaluations to assess that policies are continuing to work effectively.

Globalization May Increase Risk

Companies seeking to expand in emerging markets should be aware of corrupt behavior that may be endemic in local business cultures. Global organizations can prevent local employees from behaving in ways that are inconsistent with their policies and values by implementing measures that increase transparency and oversight at the local level and reflect knowledge and understanding of the local business culture.

Watch Out for Third-Party Agents

Many companies use third-party agents to help establish new operations, handle local business transactions, interact with government officials or act as sales agents. However, as recent settlements illustrate, regulators will take action against the principal company — even where it had no direct involvement or knowledge of corrupt activity — if it benefits from the corrupt activity of third parties. Companies can avoid such risk exposure by implementing appropriate risk assessments and due diligence on third parties, establishing oversight procedures for third-party activities and using anti-corruption-related contractual provisions when hiring such parties to act on their behalf.


Anti-corruption training of all associates, third-party intermediaries and business partners is a critical component of an effective anti-corruption program. Training creates an awareness and understanding of the law, the personal and organizational consequences of corruption and the internal controls in place to prevent and detect illegal activity. Anti-corruption training also covers the standards of conduct required for those who interact directly or indirectly with government officials on the company’s behalf.

Changes in enforcement tactics and more stringent regulation of anti-corruption measures around the world make it crucial for companies to take anti-corruption training seriously.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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