"Lavish Travel May Be Subsiding as Foreign Bribery Tactic, While Risks Rise for Smaller Companies"Main Justice
James Tillen and David Resnicoff were quoted regarding increased risks for enforcement actions as government officials find more creative ways to enrich themselves. In light of recent settlements and actions with the Securities and Exchange Commission (SEC) and Department of Justice (DOJ), some government officials are combining improper activities with otherwise legitimate business to remain under the agencies' radar. According to Tillen, the spate of cases involving sightseeing trips indicates that the DOJ and SEC are sensitive to the issue. "That leads to two things: They know to look for it in their own investigations, and responsible companies add in that testing component into their audits or investigations, and then report those issues to regulators," he said.
Regarding violations involving vacation travel, "This conduct is less common now than it used to be," and "[m]any companies, especially more established multinationals, have been well aware of these practices for some time," Resnicoff said. "I think historically in China you see a lot of it, but now a lot of the conduct has morphed into much more clandestine ways of obtaining money, such as the collaboration agreements found in the Bruker case."
The recent SEC resolution with Avon Products Inc. provides another example of the enforcement trend favoring the use of the FCPA's books-and-records provision. Tillen said it's much easier to establish an accounting violation than an anti-bribery violation. "Here you see the SEC expanding beyond what you think of as accounting controls toward pure compliance activity. That's not something you would think of as an accounting control ... instead it's lumped into the internal controls definition. That's interesting," he said.
"You're talking about relatively low absolute value of payments and activity [vacation travel] that was traditionally discussed as an ancillary issue to much bigger issues," Resnicoff said. "Time and time again you see small companies who are looking for lots of growth outside the United States, and their business platforms quickly outpace and out-scale their compliance programs. An ounce of prevention would be worth a pound of cure."