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John F. McKenzie recently authored an article entitled “Foreign Corrupt Practices Act Compliance Issues for Import/Export Operations” which was published in The International Trade Lawyer.
Abstract
A leading issue in international corporate compliance is the Foreign Corrupt Practices Act (“FCPA”) and related anti-corruption legislation in various countries. Based on press reports of celebrated cases and compliance investigations, most of the attention devoted to FCPA compliance on the part of corporate counsel, compliance officers, enforcement authorities and legal scholars and commentators has been directed to the compliance challenges presented by contracting with foreign government agencies and departments, and with state-owned enterprises. Relatively little attention has been devoted to the FCPA compliance challenges presented by import and export operations. Especially in emerging markets with relatively high levels of official corruption, such import and export operations present a “perfect storm” of FCPA compliance risk, involving the confluence of: (i) interactions with government officials (often poorly compensated); (ii) dependence upon third parties (customs brokers, freight forwarders, consultants and import/export agents) who may subscribe to very different (and lax) business ethical principles and standards; (iii) relatively high rates of customs duties and import and export taxes; and (iv) a lack of transparency in international trade laws, regulations and procedural requirements. This article, therefore, identifies the key FCPA compliance issues and challenges arising in connection with import and export operations, and presents a series of warnings and recommendations to mitigate the compliance risks associated with those operations.
Especially in emerging markets with relatively high levels of official corruption, such import and export operations present a “perfect storm” of FCPA compliance risk, involving the confluence of: (i) interactions with government officials (often poorly compensated); (ii) dependence upon third parties (customs brokers, freight forwarders, consultants and import/export agents) who may subscribe to very different (and lax) business ethical principles and standards; (iii) relatively high rates
of customs duties and import and export taxes; and (iv) a lack of transparency in international trade laws, regulations and procedural requirements. This article, therefore, identifies the key FCPA compliance issues and challenges arising in connection with import and export operations, and presents a series of warnings and recommendations to mitigate the compliance risks associated with those operations.
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