Boom Times For The FCPA Business
Friday, April 25, 2008 at 2:19AM
Richard L. Cassin in Compliance Week, Effective Compliance Program, Washington Post

Washington Post business columnist Steven Pearlstein writes in today's paper here about the boom for law firms, accountants, investigators, computer forensics specialists, compliance consultants, conference organizers, "risk mitigators" and others triggered by the recent increase in enforcement activity, internal investigations and self-reporting under the Foreign Corrupt Practices Act.

For most of the past 30 years, the FCPA was a legal backwater, he correctly reports. That's now changed.

"[T]hese days," he says, "FCPA business is booming, a welcome growth area for Washington law offices just as work on mergers and securities offerings has begun to wane. You can't go into a business class lounge at the international terminals at Dulles Airport without running into at least one lawyer headed to Europe or Asia to conduct an internal investigation of a possible bribe or kickback for a corporate audit committee. And law firm Web sites now boast entire practice areas devoted to advising multinational companies on how to design and implement compliance systems meant to deter and ferret out corrupt practices."

Pearlstein says the Justice Department and the Securities and Exchange Commission think there are as many as 70 investigations ongoing -- not including "dozens of internal company probes that haven't been reported to the government, and may never be." [A story in the April 22, 2008 issue of Compliance Week by Melissa Klein Aguilar reports that Gibson Dunn & Crutcher identified about 100 companies at the start of the year that are the subject of open FCPA investigations. We're quoted in the article as well. It's available by subscription here.] Each FCPA case, Pearlstein says, typically costs the company involved between $1 million and $20 million.

The DOJ used to have the equivalent of two people assigned to FCPA cases, according to Pearlstein, but "now has as many as 12 prosecutors, assisted by a new team of FBI agents dedicated to these cases." He says the DOJ and SEC are also being helped by foreign governments who are members of the OECD antibribery convention. That, he says, has given U.S. investigators access to secret bank accounts and foreign tax records.

Pearlstein concludes by saying FCPA-related work, along with the coming flood of subprime mortgage litigation, "should be enough to keep Washington's legal industry humming, even as the rest of the economy slips slowly into recession." All of which proves again that preventing FCPA problems through an effective compliance program is a lot cheaper than dealing with violations after they occur.

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