US intensifies enforcement of anti-graft law

Washington is claiming an increasing number of scalps under FCPA in stepped-up global effort

PUBLISHED : Tuesday, 20 August, 2013, 12:00am
UPDATED : Tuesday, 20 August, 2013, 5:02am

Washington is stepping up its pursuit of US and non-US companies around the world under the Foreign Corrupt Practices Act (FCPA), say analysts.

"US authorities have, for a number of years, signalled their intention to vigorously pursue any parties subject to their jurisdiction that are shown to have engaged in corrupt conduct around the world," said Mark Pulvirenti, an executive director of AlixPartners, an international business advisory firm.

The current US investigation into JP Morgan for hiring children of Chinese officials in Hong Kong could be a potential FCPA case, Pulvirenti said.

"Hiring children of such officials can violate the FCPA if, by doing so, the official receives a benefit and JP Morgan was attempting to obtain or retain some type of business," he said.

Rebekah Poston, a partner at US law firm Squire Sanders, said the US Department of Justice (DOJ) was investigating more than 120 companies around the world for potential violations of FCPA.

"For the past several years, the DOJ has not been shy about targeting particular industries in its FCPA investigations. The Wal-Mart investigation is the perfect example. It started in Mexico and has spread to other countries, costing the company millions of dollars in investigative costs," Poston said.

A few days ago, Wal-Mart said the FCPA investigation had cost the US retail giant US$312 million by the middle of this year, more than it had forecast. Wal-Mart has expanded its investigation of FCPA violations to Brazil, China and India, the retailer announced in a filing with the US Securities and Exchange Commission.

Microsoft said in March that the DOJ and the SEC were investigating a whistle-blower complaint on alleged bribes paid by its business partners to officials in China, Italy, and Romania.

In addition, the US authorities were investigating Australian mining giant BHP Billiton for possible violation of FCPA linked to the 2008 Beijing Olympics and in other countries, Pulvirenti said.

Non-US companies were subject to FCPA if they had some US connection such as US-listed securities, or were paying bribes in US dollars, he said.

Prior to the case of German conglomerate Siemens in 2008, fines paid under FCPA were small, typically in millions or tens of millions of dollars, said Pulvirenti. In 2008, Siemens paid the US government US$800 million for its corrupt practices worldwide, the biggest fine paid under the Act.

"Since that time, we have seen many more large matters investigated and prosecuted and settlements reached," said Pulvirenti.