By Rania Shoukier and Louis G. Adolfsen
Many businesses and other organizations have been forced to rely on an exclusively remote workforce. Consequently, conducting in-person interviews and on-site visits, as well as access to original documents, is more challenging, including in anti-bribery and/or anti-corruption matters. While navigating a business a through slowing economy, it may be tempting to “tap the brakes” on activities related to compliance with the Foreign Corrupt Practices Act (FCPA), believing there may be decreased regulatory enforcement or scrutiny as the result of the Covid-19 pandemic. That is unlikely to be the case. Using the financial crisis as a barometer, FCPA enforcement activity continued (and even increased).
FCPA enforcement may have increased during the pandemic. The SEC and DOJ have announced several enforcement actions and settlements over the past few months. 2020 brought the largest penalties in FCPA history: Goldman Sachs paid the DOJ $2.3 billion in criminal penalties and the SEC $400 million with disgorgement of $606.3 million.
Does the current COVID-19 environment present new anti-corruption risks?
The answer is Yes!
There are a number of reasons why the current COVID-19 environment presents new anti-corruption risks.
First of all, scarce supplies of products that governments, private companies, and individuals seek to buy, means buyers seeking products, at times desperately, and often with deep pockets. Government officials and private-sector gatekeepers may seek bribes, the amount of which may rise base along with the scarcity of the product.
Another effect of the pandemic is that rules that govern trade, import/export and transport of goods that slow delivery are trade “chokepoints” and require approvals. These rules can be abused, and officials can seek illicit payments for approvals or prioritization. Examples include Customs officials or import/export control regulators.
Still another reason is that national government and multilateral organization procurement programs are both (i) sourcing at higher levels than ever and under pressure, and (ii) dispensing aid to businesses, local governments and individuals in huge quantities. As a result, there are substantial opportunities for misallocation, false profit margins, graft and other corrupt activity.
Thus, companies and individuals operating during the COVID-19 pandemic will find an environment of crossfire. Not only do they need to watch their back for U.S. enforcement risk, but from other countries as well. These unprecedented times do not mean that the government will turn a blind eye to illicit conduct. In fact, the SEC and DOJ have continued to announce enforcement actions and settlements over the past few months with no signs of slowing down. Thus, it is important to ensure that your company’s compliance practices, and internal controls are sufficient for the current environment.
Companies need to adapt to a remote (“virtual compliance”) world. When allegations of potential bribery arise, companies may no longer be able to rely on their traditional approach to investigating such allegations, which often rely on physical collection of data, emails, and other information, travel for site visits, and in-person interviews. They will need to adapt their investigative strategies so that they can productively and proactively investigate potential misconduct remotely. They may need to re-think the ways in which devices are imaged, documents and other data are collected/analyzed, financial transactions are tested, and interviews are conducted. Adapting your investigative approach for a “virtual compliance” world can better position your company to respond to allegations of potential wrongdoing more quickly and efficiently.
The bottom line is that, as COVID-19 has caused personal changes in how things are done, protecting against FCPA and Patriot Act compliance is more important than ever. The pandemic is no excuse for any lack of vigilance in compliance.