Matt Reinhard Quoted in Business Insider Regarding FCPA Risks to Companies
"The Rise and Rise of FCPA"Business Insider
Matt Reinhard discusses the increase in FCPA enforcement and the risks faced by companies. FCPA judgments, like Siemens' $1.6 billion penalty in 2008, can be costly – and because the penalties are so severe, companies often feel the need to settle even if the allegations don't have merit, says Reinhard. "Because the figures get so big so fast, companies really don't have much of a choice but to settle," Reinhard explains. "There's very little judicial checking; they're collecting tremendous penalties and, frankly, they're raising a lot of money for the Treasury."
Reinhard points out that third-party relationships are always a huge risk factor, and that when considering a deal, companies need to conduct thorough due diligence to ensure the target doesn't have any lurking violations. "An acquiring company that buys a target company that has violated the FCPA could be inheriting a massive liability," he says. "You have to go out and look at these things." Reinhard further cautions that it may not always be the best idea to simply walk away from a deal, describing this as a possible "kneejerk reaction" that may not always be prudent. "Sometimes the problem is so big and so material that it guts the value of the transaction," he explains. "I think cases like these are rarer than people believe, however, and if you have good counsel and you are smart and savvy, you can generally salvage a lot of those transactions."