For directors of public companies with foreign operations, “FCPA” is a dreaded acronym. In recent years, compliance with the Foreign Corrupt Practices Act has become a key area of focus for boards and management. Enforcement of the FCPA has increased markedly since 2004, and the U.S. Securities and Exchange Commission and the Department of Justice have made it clear that they intend to prosecute individuals as well as public companies. The stakes can be enormous for companies, with penalties reaching hundreds of millions (or billions) of dollars, and they are frightening for individuals, who face the possibility of multi-year prison sentences along with substantial financial penalties.
Overseeing FCPA compliance is no easy task. It is time-consuming, expensive, challenging, and essential. As a legal matter, boards are required to create and follow procedures designed to ensure compliance with applicable laws. Directors succeed in this task by fostering a culture of high ethical standards, by prioritizing compliance oversight, and often by personally investing time and effort in the company outside the boardroom.
Culture of Ethics
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