Exclusive Interview with K.C. Turan from Dun & Bradstreet

July 22, 2010 - PRLog -- K.C. Turan, Vice President, Chief Compliance Officer & Chief Privacy Officer at Dun & Bradstreet will be a speaker at the upcoming Marcus Evans 5th Foreign Corrupt Practices Act (FCPA) & Anti-Corruption Compliance Conference on September 15-16, 2010 in San Francisco, CA.     

-                     Worldwide intolerance of corruption is growing and especially extends to Mergers and Acquisitions (M&A).  Why is it now so important for an organization to be extra vigilant when it comes to acquiring a new company?
-   KCT:  It’s the appropriate manner in which to conduct business, and the political and regulatory environments simply demand it.  The potential legal, regulatory, financial, brand and reputation implications are too severe to forego vigilance.  The regulatory authorities won’t simply focus on actual knowledge of corruption-, bribery- and fraud-related issues prior to acquiring or partnering with an entity.  They’ll focus on “constructive knowledge,” which is essentially what one should know through proper due diligence prior to acquiring or partnering with a company.  Any lapses or insufficiencies in this regard would lead to the acquiring company’s assumption of the target company’s risks, issues and problems.  Once the transaction is complete, the acquiring company will essentially “own” these issues that could have been addressed and resolved prior to the completion of the transaction.

-   How does FCPA enforcement affect the manner in which companies enter into transactions with foreign partners or acquisition targets?
-   KCT:  There’s a direct correlation between enforcement actions and the manner in which transactions should be executed.  Enforcement actions typically highlight where companies and parties have erred and what they should have done to address or avoid such problems.  Through their enforcement actions, the regulatory entities have made it explicitly clear as to the standard that they expect when it comes to due diligence assessments.  Different transactions and circumstances will obviously dictate somewhat different measures, but “reasonable” or “adequate” due diligence should be taken to mean “thorough” and “comprehensive” due diligence.  This will need to be carried out in a case- and fact-specific manner, depending on the industry, location, parties, circumstances and potential for risks, but the general rule of thumb is that transactions should be approached, assessed and executed in a methodical way.  Most companies closely observe regulatory investigations and enforcement actions so as to incorporate the key takeaways into their own M&A transactions.

-   As countries strengthen their own anti-corruption enforcement activities, can this complicate compliance efforts for companies?
-   KCT:  Yes and no.  It certainly means that companies need to be vigilant in their anti-corruption compliance and M&A due diligence initiatives, but I think this remains true even if the US were the only country with vigorous enforcement activities.  We’re noticing a good deal of convergence in that a number of foreign regulatory agencies are now replicating, and cooperating with, the US regulatory agencies’ enforcement culture and actions.  UK and German regulators, for instance, appear to be stepping up their anti-corruption enforcement activities.  That said, companies can try to minimize the jurisdictional burden by applying a strict, comprehensive and uniform compliance standard across their global operations.  If they’re adhering to such an adequate uniform standard, then jurisdictional enforcement complications can be somewhat contained.  It’s important to note that this is always case- and fact-specific.  Given the variable attendant risks that are specific to particular markets, you may need to employ different compliance and oversight measures in countries such as Russia, India and China as opposed to other countries with traditionally lower corruption risk.  If the actual legal requirements and prohibitions in the other countries are substantially different, then this could certainly complicate compliance efforts.  The fact that other countries are strengthening their enforcement activities, however, primarily serves to amplify the importance of implementing and maintaining an effective and comprehensive compliance program across an enterprise’s global operations.

-   Will increased competition caused by a worldwide recession only serve to heighten the pressure to use bribery as a vehicle for obtaining and retaining business?
-   KCT:  Theoretically, yes.  Historically speaking, a number of studies have shown that recessions and economic downturns have induced irresponsible actors to engage in questionable and prohibited activity in order to benefit their business.  Bad actors may be inclined to engage in more bad activity and not-so-bad actors may be inclined to engage in questionable activity in which they otherwise wouldn’t normally engage.  This clearly underscores the need to be increasingly vigilant in one’s compliance efforts.  A robust, comprehensive and effective anti-corruption compliance program and a larger corporate culture of ethics and integrity will proactively factor these external and economic variables into the mix and serve to preemptively mitigate such risks.

-   Are there industries that have proven particularly vulnerable to FCPA investigations? If so, why is that?
-   KCT:  Generally speaking, highly regulated industries that typically involve the need to routinely interact with foreign governmental entities and/or obtain foreign governmental approval for operational initiatives tend to lend themselves to greater corruption risk and anti-corruption regulatory scrutiny.  Some examples are the energy, oil, utilities, defense and aerospace industries, among others.  That said, any company within any industry can potentially be subjected to FCPA and international anti-corruption regulatory inquiries or investigations.  This is why it’s extremely important for all companies to have strong and effective anti-corruption compliance programs.

-   The UK Anti-Bribery Act was passed in April of this year and has gone farther than the FCPA in its measures to tackle corruption.  What further steps, if any, should the FCPA take to aggressively combat this problem?
-   KCT:  Many companies proactively designed their anti-corruption compliance programs to comply with the UK Act’s requirements prior to its passage, as the prohibition of “facilitating payments” and commercial bribery were already considered to be best practices despite the fact that they weren’t explicitly prohibited by the FCPA.  Furthermore, US authorities can prosecute commercial bribery in other ways, such as the wire fraud statutes.  Most companies will hold themselves to the most restrictive standard across their global operations, so I’m not sure that the FCPA necessarily requires enhancement or needs to replicate the UK Act’s provisions.  This is particularly true given the close cooperation that appears to be developing between the US, UK and other international anti-corruption regulators.  If the cross-jurisdictional enforcement actions are generally consistent and coordinated, then I’m not sure that the FCPA itself requires revisions at this time.  I think companies are acutely aware of the potential implications and risks of corruption, in addition to the underlying need to mitigate such risks through the implementation of an effective anti-corruption compliance program.

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