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 the 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 the 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
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