Previously we introduced you to the FCPA and provided updates about the positive international trends in anti-corruption legislation; efforts to punish and deter bribery; the Organization for Economic Cooperation and Development (OECD); U.S. policy regarding prosecution of individuals in corporate corruption investigations; and the increasing value of corporate surrender and penance. In this final part of this series, we discuss whistleblowers, international corruption ratings, and the importance of compliance in mergers and acquisitions.
Whistleblower protection policies are rapidly becoming key elements of FCPA compliance protocols. Whistleblower hotlines allow employees to anonymously report violations which could place companies at risk of prosecution, thereby giving affected companies opportunities to assess and address the alleged conduct.
Companies should also be prepared for the inevitable increase in incidents requiring investigation, such as allegations of corruption and bribery. Having protocols in place to anticipate and promptly respond to such investigations can: (1) help maintain the integrity of the company’s findings; (2) avoid corporate prosecution for obstruction of justice; and (3) minimize potential damage to the company’s reputation.
2018 international corruption ratings
Drawing on 13 surveys and expert assessments to measure public sector corruption in 180 countries and territories, the 2018 Corruption Transparency International Corruption Perceptions Index provided scores for each country from zero (highly corrupt) to 100 (very clean). At the top of last year’s list was Denmark with a CPI score of 88 out of 100, though it dropped somewhat from a score of 91 in 2015.
Following closely as anti-corruption leaders were New Zealand, Finland, Singapore, Germany, the UK, Australia, Hong Kong and Japan. The United States and France scored 71 and 72, respectively, with the U.S. having dropped from 76 in 2015. At the bottom of the list were Nepal (31), Mexico (28), Russia (28), Lebanon (28), Tajikistan (25), Venezuela (18), Afghanistan (16) and Somalia (10).
The increasing importance of anti-corruption compliance in corporate mergers and acquisitions
In Butler Snow’s active and growing FCPA/International Anti-Corruption practice, we continue to see an increasing demand by companies considering a merger or acquisition to demonstrate that they have effective, robust anti-corruption compliance programs firmly in place. This trend is consistent with the global proliferation of laws aimed at combating international bribery and related offenses used to gain unfair business advantages.
The demand for vigorous compliance policies arises in response to the FCPA and those laws modeled on it which continue to proliferate globally. The FCPA imposes criminal and civil liability following a merger or acquisition if the predecessor company has legal exposure for actual, perceived, suspected or charged violations. Stated simply, the successor company does not want to risk inheriting the sins of the seller. It is therefore desirable, if not essential, that a company considering a merger or acquisition take diligent steps to avoid these risks.