Overall, the number of U.S. Foreign Corrupt Practices Act (FCPA) enforcement actions increased by 85% in 2010. Over the course of the year the U.S. Department of Justice brought 48 criminal cases and the SEC filed 26 new actions. The trend has continued in 2011. In February, 2011, Tyson agreed to a $5.2M settlement. A number of other high-profile companies are currently facing FCPA investigations. The SEC has updated its enforcement approach, but most companies have been slow to improve their internal risk management and risk oversight mechanisms. According to GMI, only 6% of the U.S.’s largest publicly traded companies have appointed Audit Committee members who have professional experience in risk management.
Obviously, FCPA investigations and other types of lawsuits represent a significant threat to shareholder value. Publicly traded companies should work to implement strong board-level risk management oversight mechanisms. Otherwise, if liabilities from lawsuits start to pile up, they run the risk that investors will take their money elsewhere.