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About one-third of companies report having no Foreign Corrupt Practices Act compliance program despite rising FCPA enforcement, according to a new Deloitte Financial Advisory Services online poll of 1,090 executives. Both the U.S. Securities and Exchange Commission and the U.S. Department of Justice prosecute violations of the FCPA, which bars U.S. citizens and residents — along with certain categories of foreign securities issuers — from bribing foreign officials. Seventy-two percent of executives anticipate more FCPA enforcement over the next two years, yet 34 percent have no comprehensive compliance plan. The respondents cited three areas where they expect most FCPA violations to originate: 35 percent in the foreign subsidiary of a U.S. company; 28 percent in a company’s relationship with an agent or consultant; and 18 percent from joint ventures or strategic alliance partnerships. Nearly a quarter, or 23 percent of respondents, believe compliance is lagging because some companies are unaware of the severe penalties that can follow FCPA violations. FCPA enforcement is rising dramatically, including in industries not traditionally targeted in FCPA investigations, such as insurance and financial services, said Deloitte Financial Advisory Services principal Ed Rial in a written statement. Rial, who also leads the division’s Foreign Corrupt Practices Act Consulting practice, added, “When it comes to FCPA, corporate ignorance is not bliss.” The SEC has particularly stepped up enforcement this year, in part by bringing cases against individuals, not just companies, said Mary Andrues, a Los Angeles partner in Washington-based Howrey‘s securities litigation, government enforcement and white-collar defense groups. The agency is also filing cases when the alleged illegal payments involve a relatively small amount of money, such as tens of thousands of dollars, she said. “They’re not going to be ignoring small amounts of payments,” she said. Although companies are carefully watching compliance spending, such costs have to be weighed against the risk of facing DOJ and SEC charges and follow-on shareholder litigation, she said. Companies also frequently end up facing steep costs, such as in a worldwide investigation of people that have been subpoenaed. Andrues said preventive programs are more cost-effective: “[For] companies that do business abroad…any part of their business that touches the foreign government, they have to be concerned that they have an FCPA compliance program in place.” The poll included more than 1,090 executives and professionals who responded during a Deloitte Web cast about the risks of corruption in global enterprises and prevention strategies. Respondents came from a variety of industries, including financial services; consumer and industrial products; technology, media and telecom; banking and securities; and energy and related sectors.

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