The Intercontinental Reach of US Anti-Corruption Efforts

Private Equity International Private Fund Dispute Resolution

In this chapter, Matthew Reinhard discusses increased enforcement of the Foreign Corrupt Practices Act (FCPA) and the impact its global reach has on private fund managers, regardless of location. "Enforcement trends over the last decade (2004 to 2014) indicate that the US Department of Justice (DOJ), which is the law enforcement body primarily tasked with enforcing the FCPA's criminal anti-bribery provisions, can and will reach beyond the borders of the US, and to private companies and individuals, to pursue corrupt business conduct." Reinhard said.

He outlines the three key FCPA elements and trends that private fund managers should be aware of, including the broad extraterritorial reach of the FCPA and related US laws, the increase of the "industry sweep" as an enforcement tool and the significant cooperation and coordination among global regulatory agencies in anti-corruption law enforcement. Given these three key elements, "private equity fund managers face substantial risks both to their capital and to their liberty should they choose to ignore the FCPA and engage in corrupt transactions with foreign officials," Reinhard said. "While increased risk for increased returns may make private equity funds an attractive investment opportunity, the criminal consequences of corrupt activity make the risks associated with violating the FCPA ones no rational investor should accept."

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