13 Mar Your Clients’ Compliance Obligations regarding Foreign Corruption
Think for a moment about the international business opportunities that Georgia companies already are realizing. Just last year, according to recently-released data, Georgia exports were a record high: nearly $39.4 billion in goods and services, representing an increase of 4.9% over the previous year, making Georgia the 11th largest exporting state in the nation. (Georgia Department of Economic Development, “2014 Georgia Global Trade Summary,” Feb. 5, 2015.) And that’s just exports.
Georgia companies interact with foreign parties in numerous other forms of international commerce as well – whether the direct investments of Georgia manufacturers, partnerships with foreign companies, activities of franchisors and distributors, and other activities. Much of our region’s international business is focused on emerging markets in developing countries: whether China, India, Brazil, Mexico, Indonesia, or Nigeria, as examples; where growth rates are soaring and demand for US business is high. Our agribusiness products – pecans, peanuts, wood pulp, to cite just a few local examples – and related machinery and intellectual know-how, are in high demand.
While business in these economies is growing, it often is concentrated in industries where fraud and bribery are prevalent. Significant foreign government involvement in business transactions, complicated regulatory frameworks, and lack of transparency compound these risks. As a consequence, US companies that conduct business across borders, whether a simple export transaction or something more complex like an acquisition or other investment in a foreign entity, need to have measures in place that reduce the risk of running afoul of anti-corruption laws such as the US Foreign Corrupt Practices Act; or similar foreign laws such as, for example, Brazil’s recent Clean Companies Act, Law 12.846/13.
The Department of Justice and Securities Exchange Commission, and their foreign counterparts, have stepped up anti-corruption enforcement activities. Criminal and civil sanctions for violations can be very steep, so companies that ignore or neglect compliance do so at their extreme peril. Laws like the Dodd-Frank “whistleblower program” provide financial incentives to employees to report their employers’ corrupt acts. In summary, it now is more important than ever for US companies that conduct business outside our borders to develop programs that ensure compliance with anti-corruption laws and to incorporate them into their business models.