Today’s Wall Street Journal ran a front-page story regarding Avon’s recent struggles complying with a tough federal law intended to prevent bribes of foreign officials. Several Avon executives have already been fired and more shakeups are likely on the way.
For direct selling companies working internationally, this law is not to be ignored. Earlier in my career I worked for the Corporate Investigations group of the global consulting firm Deloitte, where among other services we counseled companies on complying with the Foreign Corrupt Practices Act, or FCPA. This law is no joke and is being enforced at a record pace.
The standard defense has been “it’s impossible to do business in that country without paying someone off.” This may be true, and if your company finds itself providing free trips, gifts or cash in order to do business somewhere, it may be worth reconsidering being there at all. There is no materiality to this act, making it illegal to offer anything of value as a bribe, including cash or non-cash items. The government focuses on the intent of the bribery rather than on the amount.
The FCPA is a powerful federal law that forbids US companies from “rewarding” foreign officials for approving contracts or otherwise helping companies obtain business. Our firm worked on several of these large investigations, including a case at Siemens which was fined an eye-popping $1.6 Billion. Other cases even led to criminal prosecutions of company executives.
If your company is expanding internationally, I encourage you to review this layperson’s guide to FCPA. I assure you it’s an eye-opener.
Thanks for sharing. If you’re an executive at a direct selling company, be sure to share this post with your colleagues who are expanding their companies internationally.