Three quarters of executives in a recent survey by Deloitte reported increased concern over violating anti-bribery laws such as the Foreign Corrupt Practices Act.
As a result of FCPA concerns, 42 percent of survey respondents indicated their companies had renegotiated or cancelled a planned business relationship or acquisition.
Increasingly, nations are working together to crack down on inappropriate payments in an effort to combat bribery, terrorist financing, money laundering, drug trafficking and the like, said Wendy Schmidt, national leader of the business intelligence services practice for Deloitte. Without doing due diligence and background checks to help identify potential violations, companies could face a higher risk of FCPA fines and incalculable reputational damage in the future.
As a result of background checks, more than half of the executives polled said they renegotiated (59 percent) or pulled out (55 percent) of a potential investment. The most common reasons for renegotiations and deal withdrawals were lack of transparency in contracts (61 percent), unusual relationships with third parties (48 percent) and use of agents to obtain business (38 percent).
The survey of 216 senior professionals found that the most common bribery schemes were subcontractors who dont add value (48 percent), fraudulent training and travel expenses (46 percent) and third-party foreign payers (45 percent).
Nearly one third (31 percent of survey respondents) of companies do not always conduct background checks before committing to transactions outside the U.S. The regions of highest concern among the executives polled were Russia and other former Soviet republics (94 percent), China (92 percent), Africa (91 percent) and the Middle East (91 percent).
To help maintain FCPA compliance, survey participants reported having clear corporate policies and procedures in place (72 percent), using appropriate financial and accounting procedures (60 percent) and appointing officials responsible for FCPA compliance in the organization (56 percent).
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