Most multinational U.S. companies have programs to meet Foreign Corrupt Practices Act (FCPA) guidelines, but many executives surveyed by the audit, tax and advisory firm KPMG LLP acknowledge they still may not know enough about those with whom they do business in other countries.
Of 103 executives surveyed, 85 percent said their company had a formal FCPA or anti-corruption compliance program. Yet, key challenges remain:
• 82 percent of respondents said they still wrestled with performing effective due diligence on foreign agents and third parties,
• 78 percent said they had trouble identifying and assessing FCPA risk,
• 76 percent said they couldn't adequately audit third parties for compliance, and
• 73 percent of respondents said their mergers and acquisitions due diligence was subpar.
The U.S. Congress enacted the FCPA in 1977 and revised it in 1988 to address accounting-transparency issues and bribery of foreign officials. Recently, the Department of Justice (DOJ), the Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC) have heightened their enforcement activities. In 2008, approximately 80 companies were under investigation for potential FCPA violations, up from 29 in 2007 and as few as nine in 2003.
Only 32 percent of the KPMG survey respondents, all executives with day-to-day FCPA responsibility from across industries, said their organizations employed an FCPA compliance officer, while just 37 percent said their organizations had a committee responsible for overseeing compliance.
Moreover, the survey found that about half of the respondents (49 percent) reported having protocols for conducting FCPA compliance risk assessments, while just 45 percent said their programs contained continuous-monitoring protocols focused on anti-bribery and anti-corruption issues.