Robust Due Diligence of Overseas Business Ventures is Key to Avoiding FCPA Sanctions

Reuters recently reported that the large pharmaceutical company, AstraZeneca, will pay $5.52 million to the U.S. Government to resolve a foreign bribery probe. The SEC and the DOJ investigated AstraZeneca for alleged improper payments made by its sales and marketing staff to state employees in China and Russia. The company denied any wrongdoing in the settlement.

AstraZeneca was investigated for violations of the Foreign Corrupt Practices Act (the FCPA), which basically prohibits companies that operate in the United States from bribing foreign government officials to gain access to those countries’ markets. As this settlement makes clear, the FCPA has sharp teeth. The payment of settlements, fines, sanctions, and the cost of conducting investigations and litigating FCPA violations can run well into the millions, even without any actual convictions or judgments.

So how can companies seeking to tap into lucrative foreign markets protect themselves from misconduct by their overseas employees or agents? Many companies hire local consulting firms or business agents to act as their representatives in foreign markets in order to keep their costs down. How can these companies be sure that their foreign representatives act in a way that complies with U.S.-based legal and ethical standards? And how can they do it in a cost-effective way?

As with many challenges, preparation is key. In this case, preparation involves conducting robust legal, practical, and reputational due diligence focusing on these prospective local agents and employees. For this type of due diligence investigation to be most effective, it must combine two parts. First, it must utilize local, “boots on the ground” resources that know the culture, systems, and policies of the country at issue. Second, it must have an objective, third-party perspective that blends the local know-how with an understanding of how those issues may affect U.S. companies’ risk exposure, liabilities, and reputation. The process is not a simple one, but a robust due diligence investigation, conducted by seasoned, objective professionals, can save businesses millions in legal fees, fines and penalties, and settlement costs – not to mention the potential damage to reputation and brand.

The article reporting AstraZeneca’s FCPA settlement can be found at:
https://www.channelnewsasia.com/news/business/astrazeneca-to-pay-us-5-5/3087376.html

For more information on conducting international due diligence and background investigations, contact Radius Investigations at 631-351-6473 or info@RadiusInvestigations.com