Commentators broadly and accurately highlight intensified enforcement of the Foreign Corrupt Practices Act and acquiring companies’ FCPA hazards in mergers and acquisitions. One might infer that an acquirer should, when buying a business, deploy limitless resources to identify and resolve all anti-corruption compliance risk. Since resources are not unlimited, effective management of anti-corruption exposure in an M&A context requires informed, transaction-by-transaction judgment and protections that are tailored to and commensurate with risk profiles of target companies.
Acquirers’ concerns about anti-corruption risk are well-founded. The U.S. Department of Justice and Securities and Exchange Commission do not hesitate to pursue alleged FCPA violations on a "successor liability" basis. Recent settlements for preclosing activities of target companies include Vetco International Ltd. ($26 million in fines), InVision Technologies ($1.8 million) and Latin Node Inc. ($2 million). "Three Vetco International Ltd. Subsidiaries Plead Guilty," DOJ press release (Feb. 6, 2007); "SEC Settles Charges Against InVision Technologies," SEC litigation release No. 19078 (Feb. 14, 2005); "Latin Node Inc. Pleads Guilty," DOJ press release (April 7, 2009). The Latin Node FCPA enforcement action resulted in eLandia International Inc. writing off the totality of its acquisition of Latin Node.
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