How to protect your FCPA blind side
OAK BROOK, Ill. (Oct. 27, 2010) — Recent media coverage has focused on a few huge multi-national conglomerates that violated the Foreign Corrupt Practices Act (FCPA). But the scope of FCPA—and the fines and jail time associated with violating it—applies to companies of all sizes, including not only direct personnel, but also third-party agents and the distributors they use to navigate the global economy. Crowe Horwath LLP, one of the largest public accounting and consulting firms in the U.S., offers some tips on what companies should watch for to help minimize their FCPA risk.
According to Jonathan Marks, a partner and leader in Crowe’s Risk practice who specializes in anti-fraud, business practices and ethics, the following red flags may mean a company is at risk for violating FCPA:
- Using third-party agents, consultants, intermediaries or distributors when performing business overseas
- Third-party agents acting on the company’s behalf who come in contact with foreign officials (customs agents, business licensing officials, government employees and local political officials)
- Doing business in a high-risk FCPA industry such as aerospace and defense, telecommunications, oil, pharmaceuticals or manufacturing
- Conducting business in high-risk countries such as Brazil, Russia, India, China, Nigeria, Afghanistan, Venezuela or the United Arab Emirates
- Lack of a well-communicated anti-corruption policy that specifically addresses FCPA concerns to not only company personnel, but also third-party agents
- Ineffective or lack of procedures in place to monitor employees, third-party agents and distributors for compliance with FCPA, anti-bribery laws or the company’s code of conduct
- Poor or lack of due diligence to scrutinize third parties who secure international contracts on the company’s behalf. Due diligence can also assist in identifying potential conflicts of interest and other adverse relationships
“A red flag in any of these areas can quickly show the blind spots of an organization that likely requires follow-up and possible investigation,” Marks said. “Once a third party shows the possibility of being ‘high risk,’ the company should increase its scrutiny. Companies need to make sure they provide training on FCPA and its applications, not just for their personnel, but also for third-party agents and distributors. Being proactive about FCPA compliance may save companies from fines and their employees from civil and criminal sanctions.”
About Crowe Horwath
Crowe Horwath LLP (www.crowehorwath.com) is one of the largest public accounting and consulting firms in the United States. Under its core purpose of “Building Value with Values®,” Crowe assists public and private company clients in reaching their goals through audit, tax, advisory, risk and performance services. With 26 offices and 2,400 personnel, Crowe is recognized by many organizations as one of the country's best places to work. Crowe serves clients worldwide as an independent member of Crowe Horwath International, one of the largest networks in the world, consisting of more than 140 independent accounting and management consulting firms with offices in more than 400 cities around the world.