Conducting Corporate Investigations for FCPA Compliance

  • Former Federal Agents
  • 100 Years of Combined Experience
  • Investigations, Compliance & Defense
Chris Quick

Former Special
Agent (FBI & IRS)

Roger Bach

Former Special
Agent (DOJ-OIG & DEA)

Timothy Allen

Former Special Agent
(U.S. Secret Service & DOJ-OIG)

Ray Yuen

Former Special
Agent (FBI)

Michael S. Koslow

Former Special
Agent (DOD & OIG)

Tim Allen

Internal Audit Team Lead – Timothy E. Allen | Former Special Agent (U.S. Secret Service & DOJ-OIG)

International and domestic companies that do business with foreign parties need to come into compliance with the Foreign Corrupt Practices Act (FCPA). Failing to do so can expose the company to serious risks of law enforcement investigations, which can carry substantial liabilities for the company.

Once implemented, though, these FCPA compliance measures should not be treated as final in any way, shape, or form. Companies need to audit them to ensure that the compliance measures are being followed and that the business dealings that they cover have not evolved into transactions that could be seen as corrupt.

These corporate investigations of FCPA compliance measures can detect ongoing problems so the company can take corrective actions and, in many cases, report them to the appropriate authorities to mitigate the damage to the institution. They can also deter wrongdoing by signaling to internal bad actors that the corruption is not worth the effort.

Corporate Investigation Consulting is a firm that helps companies, large and small, review their FCPA compliance measures, find any hidden problems with them, take appropriate corrective actions, and protect the company from liabilities that can result.

An Overview of the FCPA

The Foreign Corrupt Practices Act (15 U.S.C. § 78dd-1 et seq.) is a federal law that forbids companies and individuals from bribing foreign officials in order to get new business or to keep existing business. In furtherance of this goal of punishing and deterring companies from engaging in schemes of international corruption, the FCPA also requires companies to create and maintain adequate internal controls, including books and other records, so that violations can be detected.

Both the U.S. Department of Justice (DOJ) and the U.S. Securities Exchange Commission (SEC) enforce the FCPA. Within the SEC, the agency’s Enforcement Division is solely responsible for investigations under the FCPA.

Unfortunately for companies, the kind of conduct that can run afoul of the FCPA is not limited to the act of handing over money in exchange for a business opportunity. If the beneficiaries of a business transaction are foreign officials, it can create the perception of corruption and trigger an investigation. This is the case even if the foreign officials are only indirect beneficiaries or if they are using an intermediary – possibilities that are extremely difficult for businesses to detect.

Put our highly experienced team on your side
Roger Bach

Former Special Agent (OIG)

Timothy E. Allen

Former Senior Special Agent U.S. Secret Service

Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Maura Kelley

Former Special Agent (FBI)

Ray Yuen

Former Supervisory Special Agent (FBI)

Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

Marquis D. Pickett

Special Agent U.S. Secret Service (ret.)

The Penalties of Violating the FCPA

FCPA investigations can lead to either civil or criminal claims. Criminal charges can only be pursued by the DOJ, not the SEC. Civil claims can be brought by the SEC if the target of the claim is a securities issuer or one of the issuer’s agents and the alleged violation is for the accounting or anti-bribery provisions of the FCPA. The DOJ can pursue other civil claims.

Criminal charges under the FCPA carry substantial penalties if a conviction is secured. For corporate defendants, each anti-bribery violation carries up to $2 million in fines, while accounting violations carry fines of up to $25 million. For individual defendants, the potential penalties are up to $100,000 in fines and 5 years in prison for violating anti-bribery provisions of the FCPA, and up to $5 million and 20 years for violating accounting provisions of the law.

To make matters even worse for defendants, criminal FCPA violations are subject to the Alternative Fines Act (18 U.S.C. § 3571(d)). Under this law, judges can impose a fine of up to twice the amount that the defendant stood to gain from the corrupt transaction.

The penalties for civil allegations are less severe, but by no means trivial. Each violation of anti-bribery provisions in the FCPA carry up to $16,000 in fines, while accounting violations carry a range of between $75,000 to $725,000 for corporations and between $7,500 and $150,000 for individuals.

Note that the fines are for each violation. In many cases, a single course of business conduct involves numerous such instances. If these fines seem steep, it is important to know that they are often exponentially higher as they multiply upon themselves.

Compliance and Self-Reporting Violations Can Mitigate Those Penalties

Because detecting FCPA violations is extremely difficult for law enforcement to do, and because the companies themselves are in the best position to find FCPA wrongdoing, the DOJ has long taken the stance that penalties will be drastically reduced if the conduct is self-reported. So long as companies voluntarily report the FCPA violation, cooperate fully with the resulting investigation, and appropriately and timely enact remediation policies, there will be a presumption that the DOJ will decline to press charges. This presumption will be overcome if there are aggravating circumstances regarding the offense or the offender, like:

  • The company pocketed a significant profit from the violation
  • The executive management of the company was involved in the violation
  • This is not the first FCPA violation committed by the individual or company
  • FCPA issues are pervasive within the organization

Even if criminal charges are filed against a company that has self-reported and fully cooperated, the DOJ will often recommend a light sentence and will not require a compliance monitor for the company.

In addition to the company’s conduct after finding the FCPA violation, the DOJ and the SEC will also take into account the company’s FCPA compliance measures when deciding how to proceed.

Self-Policing FCPA Violations is Essential

Given the reliance that federal law enforcement has on companies to find and voluntarily report FCPA violations within the organization and the drastic reduction to the consequences of the violation – in many cases, self-reporting and cooperating all but eliminate the penalties – it is crucial for companies to have FCPA compliance measures in place and to conduct corporate investigations to find violations within their ranks.

Not taking these measures increases the risks that it is a law enforcement agency that first discovers your company’s connection to corrupt business practices abroad. Once this happens, self-reporting and cooperating with the subsequent investigation will not help. Additionally, the negative publicity that comes with being linked to foreign corruption will tarnish the company in ways that are difficult to quantify, but are almost always severe. By self-policing and reporting potential violations, the nature of those FCPA violations can be kept from much of the publicity that they would otherwise be met with.

Frequently Asked Questions About Corporate Investigation Consulting and the FCPA

When Should a Company Conduct an Internal Corporate Investigation for FCPA Compliance?

Corporate investigations for FCPA compliance should be a regular event, particularly for large organizations that have numerous business dealings with foreign nationals or abroad. By regularly conducting FCPA compliance investigations, it can deter wrongdoers within the company from acting on the thought that they can benefit from corrupt deals abroad.

However, there are several things that should trigger an internal FCPA investigation, or at least make company stakeholders and decision makers consider one:

  • There has been instability in the region where the company has a business venture
  • Business partners have changed without a good reason
  • Other enforcement agencies have initiated investigations into parties to the foreign contracts
  • Money in certain foreign deals has gone missing
What is a Compliance Monitor?

If the SEC or DOJ pursues an FCPA investigation and uncovers weaknesses or shortcomings in the firm’s compliance mechanisms, the agencies will often require the company to take on a compliance monitor. This person will work within the corporation to bolster the compliance protocols until they are satisfactory to the agency that appointed him or her to the job.

The presence of this monitor can be a hassle to corporations, as they can demand that certain measures be adopted that are inefficient or more costly than acceptable to the business.

Why Should I Hire Corporate Investigation Consulting?

Because our team of compliance and auditing specialists have extensive experience with FCPA issues. Many of our professionals are retired agents and investigators from the SEC, DOJ, and Federal Bureau of Investigation (FBI). We have an intimate understanding of how FCPA investigations work on the inside. That background has helped us provide stellar compliance and investigation assistance to the companies that rely on us to insulate them from liability under the FCPA.

Why Doesn’t Corporate Investigation Consulting Call Itself the Best FCPA Investigators?

We prefer to let our clients say these things about the services that we provide. It means far more coming from them than it would from us.

Corporate Investigation Consulting Has Extensive Experience with FCPA Compliance Protocols

Companies that want to create or audit their FCPA compliance strategies need to conduct internal investigations regularly in order to detect and report violations and other misconduct. Doing so can insulate the rest of the company from the repercussions that any bad actors within the organization face for their corrupt dealings. It can help the corporation avoid some severe fines and the reputational hit that comes with being connected to corrupt business ventures.

The professionals at Corporate Investigation Consulting have helped numerous corporations, large and small, internally investigate their domestic and foreign business dealings to ensure that none of them could potentially be in violation of the strict terms of the FCPA.

Contact us online or call us at (866) 352-9324 to get started at your company.

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