FCPAméricas Blog
Mitt Romney, Private Equity, and the FCPA
1.10.2012
I admit it. Latin America is not my only passion. I am also a political junkie. Four years ago, I took a month’s leave from my Washington, DC law firm to trudge through the New Hampshire snow in support of my chosen candidate. I went door to door, sat in strangers’ living rooms, and stuck yard signs in thick ice. Like many, I watch today’s New Hampshire primary with great interest.
Mitt Romney’s bid has brought attention to the private equity industry. Romney’s supporters say that this background proves he understands the private sector and job creation. His opponents criticize him for getting rich off of others’ failures. The industry’s trade association yesterday released a statement in defense of its work: “While the business model has evolved over time, the fact of the matter is private equity provides capital and operational expertise to companies that are often underperforming or on the brink of failure.”
In the FCPA world, there has also been much written recently about private equity. The foreign bribery risks associated with this line of work are high. As New Hampshire voters go to the polls, it is a fitting time to add to this discussion. I highlight an issue of increasing importance that I have... Read more
The Aon Case: Lessons from the Latest FCPA Action Involving the Americas
1.05.2012
The latest FCPA enforcement action to involve Latin America is against Aon Corporation. It ended in a $16.2 million settlement with the DOJ and SEC for bribes paid in Costa Rica, Panama, and other developing countries throughout the world. Another oil and gas case? Maybe defense or telecommunications? No, this one involves insurance. Foreign bribery risk in the reinsurance industry is more common than one might think.
FCPA Exposure in Reinsurance. Aon Corporation is a reinsurance broker. The business of reinsurance provides insurance for insurance companies. Reinsurance brokers have a particular interest in working for state owned-insurance companies that have monopolies in developing countries. The companies control considerable market share and are therefore highly exposed when a catastrophic event occurs. A volcano, earthquake, or hurricane can cause widespread damage in a country like Costa Rica. Thus, companies need reinsurance policies to spread the risk. These policies are brokered by a few international outfits, like Willis Re, Marsh... Read more
Third Party Red Flags and Latin America
1.03.2012
Looking back at FCPA enforcement actions in 2011 that involved Latin America, all but one included risk created “indirectly” by third parties. And that one, Tyson Foods, involved payments to spouses of Mexican officials, a potentially odd twist on the concept of “third party risk.” The kind of third parties used in these cases included customs agents, consultants, sales agents, and deal brokers.
It is clear that actions by third party intermediaries remain one of the greatest sources of corruption risk for U.S. companies operating in the region. A company seeking to maximize its compliance spending would be well-advised to focus on third party risk.
The DOJ says that when third party “red flags” are present, companies should “exercise due diligence” and “all necessary precautions.” Government authorities have provided guidance on what constitutes a red flag. The DOJ provides examples of third party red flags, like a history of corruption in the country, unusually high commissions, apparent lack of quali... Read more
