Enforcement of Anti-Corruption Act in Current Economic Times

According to the authors, "President Barack Obama's strong position on transparency in government and multilateralism, together with his attorney general appointee's experience with corruption investigations in public and private practice, strongly suggests that Foreign Corrupt Practices Act [FCPA] enforcement—with its promise of substantial fines and publicity—will be a greater Justice Department priority under the new administration. This stepped up enforcement comes at a time when the current economic climate is increasing pressure on companies to take aggressive steps to develop business, which may expose companies that have sustained productivity through corrupt payments and pressure executives at struggling companies to consider such off-the-books practices to maintain profitability. This unique dynamic may result in companies caught between an aggressive Department of Justice agenda and one of the worst economic recessions in history."

The authors go on to provide a brief history of the FCPA, including its three major provisions, and note that, "the single largest impact on FCPA enforcement will come from President Obama and Attorney General Eric Holder who will determine priorities for allocating the Justice Department's investigative and enforcement resources. While the former administration saw a reduced number of white collar prosecutions, the new administration will place significantly more emphasis on white-collar crime generally and the FCPA specifically, resulting in more cases, and possibly larger fines" and "the new administration will be looking for a variety of ways in which the U.S. can work with other governments to resolve common problems, and collaborative law enforcement in the FCPA arena provides a full framework to foster international cooperation on shared terrorism and other global concerns."

Resnick, Esser and Carney's article also addresses the changing economic conditions that can serve to reveal flaws and irregularities that already exist in our economic systems and provide insight into which industries they believe will be a major focus of FCPA enforcement activity in 2009.

The article concludes with the advice that "stopping improper conduct is the best defense to an alleged FCPA violation." A well-designed and fully implemented FCPA compliance program incorporates the following elements, according to the authors:

• Policy: A policy that prohibits conduct that would violate the FCPA, including an unambiguous statement from management that corrupt payments to foreign government officials to obtain, or maintain, business is illegal and will be cause for immediate termination of employment.
• Internal Controls. A system of internal accounting controls designed to identify "red flag" suspicious payments and requires senior management's authorization to disburse funds related to high-risk transactions.
• Training. A mandatory, interactive, periodic education program for all officers, employees, consultants and venture partners concerning the requirements of the FCPA with enhanced requirements for employees in particularly high-risk jobs.
• Reporting. A confidential reporting system for officers, employees, consultants and venture partners to escalate questionable transactions.
• Responsibility. Designating senior officers as FCPA compliance watchdogs.
• Diligence. A robust vetting procedure for agents and consultants who will represent the corporation when negotiating foreign contracts, including signed attestations by agent or consultants that they will comply with the requirements of the FCPA.