Last week’s settlement of the long-running Panalpina FCPA investigation is garnering significant attention for the number of entities simultaneously resolving related FCPA investigations and for the size of the fines and disgorgement involved. And while a total of $236 million in civil and criminal fines and disgorgement across seven companies is noteworthy, it is not what companies with FCPA risks of their own should be focusing on. Instead, they should be paying attention to the following issues that the settlement highlights:
- First, even the most reputable agents, representatives and joint venturers require close oversight when you are doing business with them in regions and industries that pose significant corruption-related risks. Panalpina is a well-reputed, publicly-traded Swiss company that is one of the largest, most pervasive and best-known international shipping and logistics companies. However, it became a central player in a wide-ranging FCPA investigation that came to light in 2007 and pulled in scores of its clients in the oil and gas industries.
- Second, industry-specific scrutiny appears to be a growing FCPA enforcement trend. In the case of Panalpina, an initial investigation cascaded across an entire industry. A similar series of investigations by federal law enforcement is now underway in the pharmaceutical and medical device industries.
- Third, non-U.S. companies have been among the most severely impacted by recent FCPA enforcement efforts. Following the Panalpina settlement, eight of the top ten FCPA settlements of all time now involve foreign companies.
Cases such as this serve to remind us of the pervasive risk of FCPA liability, the extent of current enforcement efforts and the broad reach FCPA jurisdiction offers to federal law enforcement.