The Foreign Corrupt Practices Act

An Examination of Cases and Enforcement Actions

Brittany Zeske, and Michael D. Akers, PhD, CPA, CIA, CMA, CFE, CBM

Recently, two American companies came into conflict with the Foreign Corrupt Practices Act (FCPA). The first, Avon Products Inc., began an internal investigation in 2008 regarding possible bribery payments, including travel and entertainment expenses, to officials in China. Now, Avon's investigation is widening to uncover possible payments to officials in Argentina, Brazil, India, Japan, and Mexico from 2004 to 2010. Avon is also performing compliance reviews in various markets. It disclosed the investigation and is cooperating with the SEC and the U.S. Department of Justice (Ellen Byron, “Avon Bribe Investigation Widens,” Wall Street Journal, May 5, 2011, pp. B1-B2). The second company, Lindsey Manufacturing Co., was recently convicted in a bribery case for violating the FCPA. Lindsey Manufacturing and two of its executives used Mexican sales agents to pay bribes to officials at the Comision Federal de Electricidad (CFE), a Mexican state-owned utility from which Lindsey Manufacturing sought business. This conviction marks the “first time a company has been convicted at a U.S. trial in a foreign bribery case” (Samuel Rubenfeld, “Conviction in Foreign Bribery Case Is First in U.S. Trial,” Wall Street Journal, May 11, 2011, p. B4). Prior to this, companies either pleaded guilty or signed a deferred prosecution agreement.