Companies engaging in international business should have a clear understanding of the corruption perceptions of each country where they engage in business.  A telling report by Transparency International ranked 174 countries according to how corrupt the public sector is perceived to be in each of the participating countries.  The report is an invaluable tool to help assess the risk of running afoul of the Foreign Corrupt Practices Act (“FCPA”) when doing business abroad.

The Foreign Corrupt Practices Act is a federal statute that, in essence, prohibits bribery of foreign officials by U.S. companies, individuals and others to obtain or retain business.   There are criminal and civil penalties for violations.  The FCPA covers a broad spectrum of actors and activity:  large and small companies, individuals, joint ventures, multiple forms of contractual relationships, as well as multinational operations.

Accurate risk assessment must include the corruption reputation of each target country.   A country may appear to be a great target to sell a product based on economic, demographic, regulatory, and industry factors, but if the country ranks low on transparency and reputation, then the company must take special measures to ensure compliance with the FCPA.

A FCPA compliance program generally includes the following topics:

  • Risk Assessment
    • Understanding the target country’s corruption reputation
    • Understanding the types of foreign officials likely to be encountered in completing the transaction or operation (customs, import permits, government contracts)
    • Understanding the target country’s’ local culture and practices
    • Becoming familiar with any history of FCPA violations in the target country by competitors
  • Strong Commitment to Compliance
    • Ensuring that the company adheres to a FCPA compliance program and trains its employees (and other participants) locally and abroad on its requirements
    • Analysis and investigation of business partners abroad (brokers, sales and field personnel, joint venture participants, freight operators and others), requiring them to certify compliance with the FCPA
    • Conducting regular internal investigations to ensure ongoing compliance with the FCPA
    • Maintaining accurate records of all transactions to comply with the accounting provisions of the FCPA

If the company will engage in business in a country regarded as highly corrupt, then it must take the initiative to subject the transactions and operations to a more stringent FCPA compliance program.  This may involve more oversight of specific individuals, more personnel training, and even software that tracks specific activities and expenditures.

To review the corruption rankings, click here.

Awards and Highlights

SuperLawyer InternationalLaw badge-lawyerdistinction JourneyAwards RadioLuz GDHCC