Supply Chain Pressures Trigger FCPA Risks Escalation – Impact on Retailers

A perfect storm of unprecedented stress on the global supply chain due to the continuing COVID-19 pandemic, coupled with the promise of increased FCPA enforcement by US regulators, makes this an opportune time for retailers to take stock of changes to their corruption risk profile and ensure they adjust their compliance programs accordingly.

With a host of recent statements from the White House and senior Justice Department (“DOJ”) officials, the Biden administration has made it clear that anti-corruption efforts are central to its enforcement strategies. law, national security and foreign policy. On June 3, 2021, the President issued a memorandum on establishing the fight against corruption as a fundamental United States national security interest (the “memorandum”). The memorandum identifies the fight against corruption as a “fundamental interest of the national security of the United States” and calls for an interagency review – including the Department of Justice and other agencies – aimed at developing recommendations and strategies for identify and fight corruption on a global scale. Along with that post, in June 2021, Justice Department Acting Deputy Attorney General Nicholas McQuaid noted that the FCPA stock pipeline was strong despite a perceived app lull brought on by the pandemic. McQuaid also pointed out that the DOJ proactively opens new FCPA investigations and does not simply rely on companies’ self-disclosures to identify potential violations. And last month, Senior Deputy Attorney General John Carlin announced that the Justice Department would “increase resources” for corporate criminal law enforcement.

This recent post from the DOJ, coupled with the Biden administration’s emphasis on tackling broader corruption, portends increased enforcement of the FCPA at a time when the continuing pandemic has dramatically increased pressure points for the government. supply chain and associated corruption risks. Companies in the retail sector are by no means immune to these pressures, as supply chain disruptions have forced retailers to struggle to fill operational gaps created by shortages, trade barriers , logistical constraints and other disruptions, while trying to maintain business continuity and efficiency. To meet these challenges, many retailers may enter new markets or seek out other supply chains, which in turn may lead to new and increased corruption risks to reduce costs or speed up business operations by course. This is consistent with a corresponding increase in the opportunities for FCPA violations and an increasing risk of enforcement by US regulators. Given this environment, companies should actively review their compliance programs to ensure that these programs are adequate enough to prevent, identify and address these evolving corruption and enforcement risks.

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