Global Presents

In many countries, executives and public officials routinely exchange gifts, leaving little distinction between friendly gestures, political contributions and bribes. To better define those lines, the U.S. Foreign Corrupt Practices Act (FCPA) prohibits improper payments to foreign officials for the purpose of obtaining or keeping business.

Although enacted more than 30 years ago, the act has now re-entered the spotlight, as the number of FCPA investigations and prosecutions has skyrocketed in recent years. In 2008, the U.S. Department of Justice and SEC took in more than $924 million in fines for FCPA violations-an ninefold increase over the $100 million collected in 2007. Recent settlements have also included disgorgement of profits, debarment from federal procurement opportunities, the loss of export licenses and even prison terms for executives.

With the DOJ and SEC indicating that they will not scale back FCPA enforcement efforts any time soon, here are 10 suggestions to mitigate the risk of FCPA exposure.

1. Establish an FCPA compliance policy with anti-bribery language and include it in the corporate code of conduct. A written anti-corruption policy that addresses FCPA concerns affirms an organization's commitment to compliance and signals to employees that the highest ethical standards are required.

2. Ensure commitment and accountability from senior management. Tone at the top really does matter. A company's FCPA compliance policy can be solid, but if a C-level executive or the company's culture sends a different message, the policy will fail.

3. Articulate clear approval guidelines for gifts and entertainment for foreign officials. Provide examples of specific situations to supplement policies and solidify the staff's understanding of FCPA requirements.

4. Conduct periodic training for relevant employees and third parties. Under the FCPA, U.S. companies are liable for the actions of employees of their foreign subsidiaries as well as all consultants, agents, distributors and brokers.

5. Review FCPA-related internal controls to ensure that you are properly flagging high-risk areas of your business. Internal controls can help pinpoint the company's exposures.

6. Establish comprehensive monitoring and reporting procedures. Designate an FCPA compliance officer to be a point of contact for employee questions and any issues that arise.

7. Develop language, including a right-to-audit clause, and termination rights in all contracts and agreements that could give rise to FCPA concerns.

8. Perform a companywide anti-bribery risk assessment considering, among other factors, specific countries where business is being conducted. Conduct a compliance assessment to ensure that controls are operating effectively. Consult with legal counsel abroad who understand the business environment and nuances of local business dealings.

9. Perform due diligence on investments, business partners, mergers and acquisitions. It is crucial for companies to understand how local cultural contexts could cause FCPA compliance issues. Simply claiming that business is "always done this way" in other parts of the world exposes the organization to noncompliance penalties and regulatory scrutiny.

10. Investigate when red flags or bribery allegations arise. Do not wait to act. And give strong consideration to self-reporting any violations to the DOJ or SEC rather than being caught later.