With the still rapid globalization of trade, more U.S. businesses are engaged in construction of warehouses, distribution centers, offices, and retail facilities around the world1. However, this expansion dictates the hard-learned lessons of ABC (Anti-Bribery & Corruption).
This can be very costly for businesses and shareholders hit with multi-million dollar fines or settlements, and also for corporate leadership, who can be held personally liable for conduct of third parties deemed to be acting on the company’s behalf.
The U.S. Department of Justice and Securities & Exchange Commission have made it a priority to pursue and investigate any hint of a violation of the Foreign Corrupt Practices Act (FPCA), citing what they call a “broken window” policy2. In other words, no infraction is too insignificant to ignore.
Here Lies the Real Dilemma
The most attractive expansion payback opportunities are in emerging markets. However, these markets are also often where the existing culture is rife with corrupt practices, and local law enforcement is too lax, or even complicit, in quid pro quo bribes to facilitate approvals, materials delivery, labor and time-critical construction processes.
Since we last reported on this issue, (see “Paying the Price of Corruption…”), 16 more cases have been pursued by the U.S. government against such well-known, major companies as: AstraZeneca, Novartis, Qualcomm, and SAP SE. Of these 16 charged violations, more than half involved projects in China3.
Here’s What Should Be Done
- Develop a comprehensive compliance plan (if one does not already exist) and institute internal anti-corruption training programs
- Engage specialists in creating data analytics programs and internal control systems to identify/detect symptoms of corruption early on
- Since higher penalties are meted out to companies that attempt to cover up illegal behavior, self-report known infractions immediately
- Rely on a construction solutions provider that can de-risk the supply chain and has experience building in markets overseas
- Do business with partners who have high ethical standards and best practices regarding FCPA guidelines
“Precaution and due diligence are the keys to avoiding corruption. It also helps to do business with companies, such as Butler Manufacturing™, that have in-depth knowledge of particular market dangers, coercions and warning signs... along with the discipline to do the right thing in any questionable situation.” Craig Mohr, Director of Butler® Global Corporate Accounts Group & Export Operations
For a more in-depth discussion of international construction risk mitigation, contact an experienced Butler Corporate Accounts Manager. If you would like to schedule a meeting, please complete this simple form.
1 Sources: Conference of European Statisticians Globalization Seminar, Geneva; Globalization: A Brief Overview by the International Monetary Fund, May, 2008; and Emerging Giants: Building World-Class Companies in Developing Countries, Harvard Business Review, Oct., 2006
3 Source: https://www.sec.gov/spotlight/fcpa.shtml