Parental controls: Anti-corruption compliance programs for joint ventures, subsidiaries and franchisees (Part 8)
Thursday, February 27, 2014 at 3:28AM
Jeffrey M. Kaplan and Rebecca Walker in Alcoa, EI duPont Nemours et Cie, Joint Ventures, Ralph Lauren Corporation, Smith & Nephew, Tyco International, agency theory, franchisees

Over the course of the prior posts in this series, we examined various approaches to what we call "parental controls," meaning compliance measures aimed at joint ventures and other affiliated entities that a company might employ. In this final post, we will review a few FCPA prosecutions to issue a note of caution.

(You can read Parts One, Two, Three, Four, Five, Six and Seven of this Series here.)

As a general matter, we come down on the "more is better" approach to the challenge of implementing compliance controls at joint ventures (JVs) and other affilaited entities. (But we are mindful of the dangers of compliance "overkill" too.)

Based on some recent case law, a note of caution must be taken before taking such a "more is better" approach.

That is because:

The logic of this aspect of Alcoa is troubling from a policy perspective, to say the least, and may be without precedent, at least in the United States.

But in the 2012 case of EI du Pont de Nemours et Cie v. Commission, the fact that a parent company and subsidiary shared a compliance program was, along with other factors, used as basis for holding the parent liable for the subsidiary's competition law violation.

We hope that the Alcoa and DuPont cases –- as unfortunate as they are -– do not drive companies to take a "hands off" approach to compliance in their JVs, subsidiaries and franchisees. 

While they make the job of a "parent" a bit more difficult, a far greater risk to most companies than piercing the corporate veil is all the harm that can come from inadequate compliance in the many other members of the "family."


Jeffrey M. Kaplan and Rebecca Walker are partners in Kaplan & Walker LLP.

Article originally appeared on The FCPA Blog (
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