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Lack of corporate monitor obligations in FCPA settlements may ease remediation costs - sources

Source: Thomson Reuters Accelus - Mon, 13 Aug 2012 12:56 GMT
Author: Thomson Reuters Accelus
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By Brett Wolf The U.S. Justice Department has thus far in 2012 forced few companies accused of bribing foreign officials to hire outside monitors to ensure their compliance with anti-corruption laws, sources say. They add that this trend, which began last year, could modestly reduce the costs associated with compliance remediation related to the Foreign Corrupt Practices Act (FCPA). A report released last week by the law firm Shearman & Sterling said that only three of seven corporations charged in 2012 had been ordered to hire "independent" monitors. The others were obligated to self-monitor and report on their compliance efforts. Richard Cassin, a lawyer who helps clients comply with the FCPA and runs a blog dedicated to the statute, said "major problems" with monitors emerged in recent years, embarrassing the Justice Department and forcing it to reconsider requiring the use of monitors. Some U.S. attorneys who required monitors as part of deferred prosecution agreements with FCPA offenders were suggesting that the targeted firms hire specific parties to do the costly work, prompting allegations that the prosecutors were making these decisions based on political ambitions, Cassin added. Cassin said the practice made headlines when former New Jersey U.S. Attorney Chris Christie, now the state's governor, passed such work, worth tens of millions of dollars, to a firm controlled by his former boss, John Ashcroft. The issue of monitors became a political "hot potato" and Congress began to question whether it should have oversight of the process, Cassin said. "Efforts by lawmakers didn't get far but the Justice Department apparently got the message. It stopped appointing monitors completely for a while. Eventually monitors again appeared but not in many cases and the settling companies have been allowed to make their own choices of monitors," Cassin said. Still, the self-monitoring and reporting obligations now commonly imposed on firms are not cheap, carrying price tags that run into millions of dollars, said Mike Koehler, an assistant professor at the Southern Illinois University School of Law who runs the FCPA Professor blog. "The lack of an independent corporate monitor appointed by the Justice Department though will likely save the company some money as a monitor tends to have a steep learning curve, not as to the substantive issues, but just as to the company, its policies and procedures, key personnel, and so on," Koehler said.

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