FCPAméricas Blog
D&O and FCPA: What underwriters should know about assessing corruption risk
4.13.2012
Increasingly, the insurance industry is exploring the possibilities of extending directors and officers (D&O) liability insurance to costs associated with investigations of potential U.S. Foreign Corrupt Practices Act (FCPA) violations. Earlier this week, the FCPA Professor published a helpful interview with one broker who now offers a policy that funds certain costs resulting from any regulatory investigation by any regulator in the world concerning alleged bribery of a government official.
Underwriters, because of the very nature of their profession, are experts in risk management. As they venture into this new market, they should know that tools exist to provide a helpful degree of certainty in assessing corruption risk.
What is covered by the policies? Though FCPA liability coverage does not extend to fines, penalties, and disgorgement that result from FCPA enforcement actions, the reach can still be considerable. In the case of Marsh’s FCPA Corporate Response, its coverage extends not only to attorneys ... Read more
“Remedial Due Diligence”: Handling third party backlogs
4.10.2012
A recent survey conducted by Deloitte found that companies’ FCPA due diligence on business partners remains low. A considerable number of respondents said they typically only conduct anti-corruption due diligence and risk assessments on up to a quarter of their business partners. Five percent of respondents conduct no third party due diligence at all.
Third party due diligence can create a real challenge for global companies. It is not uncommon for some companies to work with, and have to vet, thousands of third parties. Tyco had to build its due diligence program to cover more than 32,000 resellers, distributors, and other partners. Twelve percent (12%) of the companies surveyed by Deloitte said they work with more than 10,000 business partners.
The more third parties that a company uses, the higher the company’s exposure to FCPA liability. More third parties also means more time and expense necessary... Read more
Why Secretary Clinton’s FCPA Remarks Are Notable
4.06.2012
On March 22nd, U.S. Secretary of State Hillary Clinton, speaking on behalf of the Obama administration, forcefully joined the debate on whether FCPA-related burdens should be reduced.
In her remarks at Transparency International-USA’s Annual Integrity Award Dinner, where she accepted the award as an international leader in anti-corruption advocacy in government, business, and development assistance, Secretary Clinton said:
We are unequivocally opposed to weakening the Foreign Corrupt Practices Act. We don’t need to lower our standards. We need to work with other countries to raise theirs. I actually think a race to the bottom would probably disadvantage us. It would not give us the leverage and the credibility that we are seeking.
Her comments are a sharp rejoinder to the reforms proposed by the U.S. Chamber of Commerce. Those reforms would, among other things, limit companies’ liabilities for the corrupt acts of their subsidiaries and the prior corrupt acts of the... Read more
