Internal corruption investigations are expensive. Case in point: a Deutsche Telekom subsidiary in Hungary has paid more than $3 million so far this year on a U.S. Foreign Corrupt Practices Act (FCPA) internal probe. This is before the company has even reached a settlement with the U.S. Department of Justice (DOJ) (a settlement with the U.S. Securities and Exchange Commission has reportedly been reached already). How much more might expenses climb after the German authorities get involved, or the Hungarian authorities (Hungary is a signatory to the OECD Anti-Bribery Convention)? What if the company gets a monitor?
Maybe Avon Products can offer lessons learned on managing internal investigations. Avon has reportedly spent over $150 million on its own internal probes and compliance efforts over the last three years. Some predict this amount will eventually climb to $250 million. Avon has not yet settled its issues with the government.
Given the high stakes of internal investigations, companies have built-in motivations to pay whatever is needed to get it right. Not only can a faulty investigation leave a company exposed, it can also lead to additional penalties. See Alcatel-Lucent, where the DOJ noted that the i... Read more
In his August 12, 2011 article entitled “Recent Disclosures Raise Many FCPA Questions,” the FCPA Professor Mike Koehler asks whether increased FCPA enforcement has done anything to deter future violations. This question is timely, especially given that the FCPA is under fire by major organizations (such as the U.S. Chamber of Commerce) for the burdens it places on U.S. businesses.
The Professor’s query also raises a broader question—how can levels of corruption even be measured? In an attempt to measure corruption, Transparency International gathers expert assessments and opinion surveys for its Corruption Perceptions Index. The World Bank’s Worldwide Governance Indicators project measures corruption in a similar manner by combining the views of numerous enterprise, citizen, and expert survey respondents in industrial and developing countries. Ultimately, these methods rely on subjective criteria and are limited by the inherent difficulties of applying consistent measures across countries. Assessing levels of corruption is not easy to do.
As a practitioner who has lived, worked, and conducted corruption investigations throughout Latin America for several years, I have developed my own perspective on the que... Read more