Corruption crackdown*

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Foreign Corrupt Practices Act (FCPA) investigations and enforcement actions have spiked in the last several years. Penalties have grown appreciably, with the largest settlement to-date reaching $1.6 billion and criminal prosecutions landing executives in jail. This new anticorruption era is forcing companies to change their behaviors to adapt to greater financial and reputational risks. How well companies prepare for geopolitical risk and anticorruption compliance could make or break the viability of doing business in a desired region. Companies that commit to competing internationally need to build in aggressive and thorough anticorruption compliance measures, especially in monitoring contracts, M&A due diligence and budgets -- thus guarding against risks of unpredictable employee behavior in all corners of the world where companies do business.

With cross-border business becoming more integral to the growth of US companies, there is much that companies can and should do to mitigate risks, particularly when carrying out due diligence before entering into business combinations and hiring third-party agents, consultants and suppliers. Also, companies need to prepare so that if corruption issues do arise, they are able to act swiftly and collaborate openly with regulators to minimize the potentially devastating effects that full-blown prosecutions can cause.