The initial response to the global spread of COVID-19 has led to unprecedented changes in how we do business globally. There was a chaotic rush for supplies. As households struggled to find goods such as toilet paper and hand sanitizer, essential businesses similarly sought personal protective equipment (PPE) wherever it could be found, at almost any price. Businesses with overseas plants and other facilities sought to keep those factories operating in the face of confusing and ever-changing local policies. These exigent circumstances have created new and different risks under the Foreign Corrupt Practices Act (FCPA).
Consider two examples that will be familiar to many multinational companies:
These types of problems may be here to stay, at least for a while. With fears of a second wave of infections this fall and the persistent spread of the virus globally, these and other FCPA risks will not dissipate any time soon. Multinational businesses should be prepared to address the compliance risks created by the new and rapidly changing business climate.
To manage these COVID-19-specific risks, we strongly recommend that companies thoughtfully revisit their global bribery risk profiles. We recommend that multinational companies conduct a COVID-19 bribery risk assessment to figure out where their new pressure points might be. This process should, among other things, attempt to identify vulnerable links in the supply chain (e.g., a new supplier in Argentina, a well-connected customs broker in China, or a factory in Mexico previously under audit by the Mexican labor department).
With an appreciation of the current risk profile, companies should consider enhanced, potentially temporary COVID-19-related controls and procedures targeted to mitigate those risks. Here are some suggestions:
U.S. enforcement agencies have made it very clear that they expect compliance to be risk-based. This is critically important, now more than ever. The expectation from authorities is not that companies eliminate the risks entirely but that they take appropriate and reasonable steps to mitigate their specific risks. Companies who act promptly to address their changing risks are more likely to be given leniency if they discover and disclose an issue or if an enforcement action arises in the future. Thus, companies that take specific steps now to understand and mitigate the unique bribery risks presented by COVID-19 will save themselves from trouble down the road.