PE firms warned to remain compliant with FCPA

Private equity firms should ensure they and their portfolio companies remain compliant with the Foreign Corrupt Practices Act, despite negative sentiment toward the law from the new US administration, according to a law source.

Pending investigations into breaches of the FCPA, which makes it illegal for US companies and their supervisors to influence foreign officials with any personal payments or rewards and vice versa, will continue despite political change, according to Edward O’Callaghan, partner at Clifford Chance.

“Both the Department of Justice and the Securities and Exchange Commission has invested a lot in its oversight and enforcement, both in terms of personnel and expertise. It’s difficult to stop the train, so don’t roll back compliance programs,” he told delegates at a Thomson Reuters conference in London on Tuesday.

President Donald Trump has dubbed the FCPA a “horrible law” that stifles American businesses trying to work abroad. He has already abolished a rule to crack down on foreign bribery by US energy companies and canceled ethics training for White House staff.

Och-Ziff became the first asset manager to fall foul of the FCPA, and last year settled with the DOJ and SEC for total penalties of $412 million. As part of the settlement, an Och-Ziff Africa unit pleaded guilty to one count of criminal information.