Come Together: The Benefits of Cooperation in FCPA Cases

April 2013

IN THIS ISSUE

— Strategic Approach: Cooperation Versus Confrontation in FCPA Probes
— Turning Over Stones: A Holistic Approach to FCPA Cooperation

GREETINGS!

Welcome to the April edition of our newsletter! In this issue, we’ll examine how working with prosecutors can help your company through Foreign Corrupt Practices Act (“FCPA”) inquiries, and discuss some of the best avenues for cooperation.

STRATEGIC APPROACH: COOPERATION VERSUS CONFRONTATION IN FCPA PROBES

Investigations and prosecutions of U.S. companies under FCPA have risen in the last decade, and an increasingly global marketplace suggests that the proliferation of these efforts will continue. While the initial response of many accused companies has been (and still continues to be) to issue a press release stating that they will vigorously defend themselves against the charges, some are taking a more cooperative tone — and mitigating potential damage in the process.

Ralph Lauren Corp., for example, recently announced that it would pay more than $880,000 in criminal fines, plus forgoing more than $700,000 of profits obtained, prosecutors alleged, by the bribing of Argentinian customs officials. Ralph Lauren reportedly went further than the U.S. Securities and Exchange Commission (which brought the case with the U.S. Justice Department) sought in the non-prosecution agreements, voluntarily closing its Argentinian operations after the allegations came to light.

TURNING OVER STONES: A HOLISTIC APPROACH TO FCPA COOPERATION

Efforts to cooperate with FCPA will require levels of due diligence that may not have been undertaken prior to the questioned transaction. When dealing with current or former government officials in a foreign country, for example, a company’s principal concern is often what these people can do for them in-country. After allegations surface, however, the need to identify patterns and practices emerges. Has this person been accused of accepting bribes (or other corrupt activity) in the past? What is, and has been, his reputation? Coupling a public records-driven investigation with interviews and a review of internal controls and practices (to identify how widespread the alleged behavior may be) are critical steps every company should take, whether they choose to share that information or not.

Given the substantial cost of litigation involving witnesses and parties in multiple countries, fighting the good fight in a court — or courts — of law may not always be your company’s best option. A well-prepared investigation and set of recommendations for improvement of internal controls and practices can be extremely persuasive as part of trying to present your company in the best light to often zealous prosecutors.