Sheila Keefe, CFE, CPA
Principal, BDR Advisors, LLC
Lake Geneva, WI
Bribes and grease payments to foreign officials used to be considered standard operating procedure for many global enterprises. Much of that came to an end during the tenure of Mark Mendolsohn, former deputy chief of the fraud section at the U.S. Department of Justice (DOJ). Mendolsohn’s zealous prosecution of corporate corruption, under the Foreign Corrupt Practices Act (FCPA), prompted many organizations to ramp up compliance budgets in order to be spared the multi-million dollar fines Mendolsohn managed to get.
Mendolsohn recently left the DOJ to focus on litigation in the private sector. In an interview last month with the Wall Street Journal (subscription only), Mendolsohn discussed how the DOJ’s campaign against foreign corruption paved the way for broader, social, political and economic reforms in foreign countries doing business with the United States.
To wit, Mendolsohn stated, “People are more appreciating the connections to corruption and other issues of grave concern to people, such as democracy building and our efforts in Afghanistan and Iraq. It’s gone from being a taboo topic to a widely discussed topic.”
Looking forward, Mendolsohn suggested that the Dodd-Frank Act could act as a major accelerant to FCPA enforcement as whistleblowers look to profit from reporting violations. Additionally, Mendolsohn believes that increased cooperation between U.S. and foreign authorities, as well as additional funding to the DOJ and SEC, could create an environment of continued ardent FCPA prosecution. Mendolsohn went on to predict that “the oil-and-gas industry and pharmaceutical industry will continue to face challenges because of the nature of their businesses.”
The connection Mendolsohn makes between foreign corruption and democratic reform demonstrates the manner in which FCPA enforcement extends beyond the economic arena. Per Mendolsohn, “There is a growing recognition of what people commonly call the corrosive effects of corruption on development and democracy and democratic institutions. There is, at some level, a growing intolerance for corruption.”
Some may view bribes as a victimless crime, especially when there’s an attitude that “everybody’s doing it” and bribes are “just a cost of doing business” in certain foreign countries. The comments provided by Mendolsohn in the Wall Street Journal suggest a causal relationship between corruption enforcement and democratic reform, illustrating that foreign corruption is most definitely not a victimless crime.
Find more of Sheila's commentary on her blog, Business Done Right Press.