Indeed, ask Valverde about such scenarios and he starts referring to the government’s $100 billion TRIEA “ceiling” as a “floor.” Of course, at that point, insurance would probably be way down on the list of concerns. As Ulrich points out, “If a nuclear bomb goes off, there are a lot bigger things to worry about than whether your company is still in business.” — Tim Reason
Foreign Corrupt Practices Act: Dungeons and the Dragon
So you think it’s easy to stay out of jail? John MacLellan doesn’t. The regional finance director of Microsoft Corp. in Asia, MacLellan is responsible for ensuring compliance with the U.S. Foreign Corrupt Practices Act (FCPA), a law that exacts strict penalties for giving or taking bribes at overseas operations. While the software giant boasts a robust internal-compliance program, recent FCPA enforcements (including actions against Titan Corp. and InVision Technologies) suggest a new urgency in the U.S. government’s enforcement of the law.
Complicating MacLellan’s job: in the People’s Republic, it’s not always clear who you’re dealing with. A U.S. executive might treat a customer to a business dinner without ever knowing that one of the guests is a low-level ministry official. “We face a large number of very complex deals in China,” MacLellan says. “Because of the size and influence of the government, we’re exposed [to the FCPA] from the start.”
While more attention has been paid to intellectual-property theft and trade issues, the FCPA may prove to be equally vexing to business managers in China. Since the law was enacted in 1977, it has yielded just four convictions. But Owen Pell, partner at law firm White & Case LLP, says the dearth of FCPA convictions can be misleading. Most cases, he notes, are resolved through plea agreements and settlements. The total number of investigations into possible FCPA violations in all countries has increased since 2002, with 22 new inquiries (both in-house and governmental) launched between 2004 and 2005. That’s considerably more than the number of inquiries triggered by the Organization for Economic Cooperation and Development’s (OECD) Convention on Bribery, a law signed by 36 countries that ties into each nation’s own antibribery statutes.
China has yet to sign the OECD convention, and observers say the country’s tough antibribery laws are underenforced. That’s a volatile combination. While the FCPA has uncovered violations in scores of other countries — notably, Indonesia and Nigeria — the size of the China market may provide the greatest temptation of all. BearingPoint Inc., for example, recently disclosed that the company faces “potential exposure to liability” under the FCPA because of payments and gifts to current and former officials at state-owned companies in China. In 2004, an internal audit at Lucent Technologies smoked out a possible kickback scheme in the company’s China operation. Following a company inquiry, four high-level executives, including a finance manager, were dismissed.