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“You Cannot Be Serious!!!!” — John McEnroe

FCPA practitioners assume that businesses are familiar with the risks of foreign bribery violations and are focused on compliance programs and practices.  That assumption may be just that — an assumption.

Would it surprise you to learn that many businesses around the globe are aware of foreign bribery incidents, are aware that prosecutors are aggressively enforcing anti-bribery laws, and readily admit that their company does not have a specific procedure in place to prevent foreign bribery or even to identify whether or not certain individuals are connected to foreign officials.

With all the press attention given to foreign bribery and corruption, everyone assumes that companies are aware of the risks and responding to the risks.  Recent surveys call into serious question these assumptions.

Reviewing some of the recent surveys, let’s look at some of the interesting findings.  Ernst and Young surveyed 1200 senior executives in 33 countries around the world.  Dow Jones surveyed over 300 businesses from 40 countries.

Ernst and Young found that:

  • 1 in 4 respondents experienced a bribery incident involving their company in the last 2 years
  • Almost 70 percent believed that corruption enforcement had increased in their area in the last year
  • One-half of the respondents thought that internal auditing controls would detect any bribery
  • 43 percent admitted the company had no specific procedures for dealing with government officials
  • 44 percent did not have procedures for identifying parties related to government officials

Dow Jones found that:

  • Less than one-third of the respondents monitor business partners for integrity and corruption
  • Almost half of the companies do not believe in the integrity of their due diligence process
  • Resource constraints have lead to increased centralization of compliance functions

These findings are almost shocking in today’s world — or do they reflect what is the reality in the global marketplace: that businesses have a long way to go in designing and implementing compliance programs.  It is hard to accept that in today’;s aggressive enforcement environment, a number of businesses are ignoring corruption risks.

These findings raise serious policy concerns — is aggressive enforcement and deterrence a sufficient motivator for businesses to increase compliance?

Are there other tools or incentives to increase anti-corruption compliance?

These are weighty questions which need to be examined carefully by policy makers.

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