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Jul 02
2010

Corrupt practices enforcement ramps up

Posted by Karen1 in UKSecurities and Exchange CommissionFCPADOJ

Karen1
According to the Global Enforcement Report 2010, the US leads the rest of the world when it comes to enforcing what are known as outbound bribery cases. These are instances in which corporate execs based in a particular country try to bribe foreign officials in order to gain business. In fact, the US could claim credit for 76 percent of the 515 cases pursued between 1977 and 2010. The UK, which was next line, accounted for only 4 percent of total cases. The report was prepared by TRACE International, a non-profit association that provides anti-bribery compliance solutions.
 
Given these numbers, it may seem surprising for the US to actually be stepping up its efforts in this area. However, that's exactly what's happening. "The Department of Justice's appetite for pursuing these types of cases is only increasing," says Jeff Taylor, Ernst & Young's leader in fraud investigation and dispute services for the Americas. The DOJ is adding several prosecutors dedicated to pursuing violations of the Foreign Corrupt Practices Act, or FCPA, Taylor adds.
 
Similarly, the SEC created a new unit focused on FCPA cases, headed by Cheryl Scarboro. The primary mission of the unit is to be more proactive in enforcing the provisions of the FCPA, Scarboro said earlier this year.

Several goals are driving the intensified efforts behind FCPA enforcement, Taylor said. For starters, the agencies' past efforts have largely succeeded. That, in itself, is providing the motivation to build on the record.
 
Moreover, the efforts send a message that there is a proper way to do business, no matter where in the world a transaction may take place. That's not to say that business practices don't vary from one area to another - obviously, they do. However, the practice of, for instance, paying officials to perform an administrative task, can easily morph from a legitimate transaction to one that seeks special treatment for the company. "There are some exceptions, but they're fraught with peril," Taylor notes.
 
Perhaps most importantly, the US is trying to use its dominant role among world economies to foster an environment in which most companies and governments play by the rules. That way, those who do follow the rules aren't left at a disadvantage and those that would stray are more leery of getting caught by the FCPA or similar regulation in another country. In the long run, all benefit.
 
While progress is slow, momentum is heading in the right direction. One sign: in April, the United Kingdom passed the Bribery Act 2010. Among other goals, the Act will "help tackle the threat that bribery poses to economic progress and development around the world," according to this summary by the UK's Ministry of Justice.

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