One-third of companies have no FCPA controls

More than a third of respondents to a survey said their companies had no compliance programme to detect or prevent violations of the US Foreign Corrupt Practices Act.

The online survey by Deloitte Financial Advisory Services of 1,090 executives found that 34 per cent of respondents said their companies had no comprehensive compliance plan dealing with the FCPA. This is despite the fact that 72 per cent of respondents said they expect the US government, through the Securities and Exchange Commission and the Department of Justice, to up its enforcement of the act, which bars Americans from bribing foreign officials.

When asked where they expected FCPA violations to most likely occur, 35 per cent responded that they imagine it would be from a US company’s foreign subsidiary, 28 per cent said from an agent or consultant, and 18 per cent said joint ventures or strategic partnerships.

Just under a quarter (23 per cent) of respondents attributed the lack of attention to the fact that many companies are unaware of the harsh penalties meted out for breach of compliance.

Ed Rial, Deloitte Financial Advisory Services principal, noted that FCPA enforcement is increasing significantly, even in industries not traditionally targeted such as insurance and financial services. “When it comes to FCPA, corporate ignorance is not bliss,” he said.

“Regardless of the industry or country where a US company or issuer is conducting business, an organisation should have a well-documented and communicated FCPA compliance programme in place, with monitored controls to prevent and detect potential violations,” he added.

The survey, which polled professionals from a cross-section of industries, also found that 59 per cent expected the increased enforcement activity to deter some FCPA violations in the next two years.