How to tackle a Foreign Corrupt Practices Act investigation

26 February 2020 3 min. read

As a growing Foreign Direct Investment (FDI) drives up the need for investigation under the Foreign Corrupt Practices Act (FCPA), FTI Consulting has released a detailed report on how best to internally tackle a FCPA investigation. The firm recommends a clear and comprehensive approach.

FDI inflows are growing rapidly in India, primarily as result of targeted government policies such as regulatory leeway and anti-corruption. Corruption has been among the central factors impacting the ease of doing business in India's business environment, with growing regulatory focus being introduced to curb illegitimate financial behaviour.

Where Anti-Bribery & Anti-Corruption (ABAC) regulations have traditionally applied to domestic businesses, they are now being stretched to incorporate multinational corporations (MNCs)

However, the ABAC’s scope is limited when dealing with cases in the FDI space, and an increasing number of cases are falling within the FCPA ambit. While most organisations have the capabilities to handle cases of malpractice, many at the same time struggle with meeting FCPA stipulations.

How to tackle an Foreign Corrupt Practices Act investigation

For these companies, experts at FTI Consulting have now drafted a set of recommendations. To start, the consultants advise to gain a clear understanding of an investigation’s scope, often made possible by identifying the origin of the investigation itself.

FCPA investigations could be in response to external allegations or red flags during an internal assessment, and a clear idea of this origin can help lay down an appropriate framework for the investigation.

Once the scope is established, the consulting firm recommends another step of groundwork before starting the investigation. Consulting with an internal legal team is crucial to obtain legal context for the investigation, after which a plan can be drawn up of the resources and technology required to see it through.

Factors that play into this step include whether the investigation is open-ended or specific, dealing with an individual or an organisational segment, etc. Once the investigation starts, organisations are advised to hold detailed discussions with various stakeholders, in order to align with special provisions in FCPA stipulations.

Finally, once the investigation is closed, a detailed report should ideally be compiled to reveal the initial scope, procedures, findings and conclusions. “Often companies identify additional issues during the course of the investigation which could be other FCPA violations or other issues,” state FTI Consulting's experts.

“In this instance, it is important to segregate these issues and deal with them accordingly. Depending on the nature and stage of an investigation, the company which is working with the legal teams needs to determine the disclosure of information to regulators and/or the remediation of the same before reporting,” they added.