There are signs everywhere that the FCPA is a growth industry. Enforcement activity is up, law firms, auditors, and consultants now specialize in the practice. Even the mainstream press is getting into the act — this week with Forbes’ mindless clubbing of the DOJ – Biglaw revolving door.
So let’s ask: How will all this attention impact the FCPA and those who deal with it? Will compliance become second nature, part of the corporate fabric, so that FCPA violations become rare? Will the growth and success of the compliance industry result in its own demise? Where are we on the growth curve — at the beginning, somewhere near the middle, or already close to the end?
As we often say in this space, compliance isn’t about math but human beings and how they behave. That’s why we think the FCPA will grow, as it has for the past five years, then ebb somewhat, then grow again, and so on.
Here’s the reason for the cycle. Effective FCPA compliance prevents most violations from happening. Illegal payments aren’t made; books aren’t cooked; corporate crack-ups are averted. That’s all good news but it can produce unexpected results.
When allegations of overseas bribery hit the fan, people often appear from outside the company to control the damage and clean up the mess, and they get the credit. But when a company stays out of trouble, those responsible for compliance aren’t in the news. And as more time passes without a compliance problem, they fall further from the corporate center. When enough time has passed with no FCPA blow up, others start asking what compliance people do all day, since there don’t seem to be any FCPA problems around here that need fixing.
People seldom receive much credit for things that don’t happen. We spend little time pondering non-events. Instead our attention falls on things that do happen, and the bigger the disaster, the more of our attention it gets. So rather than pinning medals on the heroes who have kept the company out of trouble, campaigns to undermine them spring up, usually through budget shrinkage. Companies can end up with no one watching for trouble. That in turn increases the chances of a compliance meltdown.
Taking a broader look, the pattern is similar. Today, compliance officers and related professionals are visible and valued. That’s largely because the DOJ (backed by presidents, congress, and NGOs) threw enforcement into hyper-drive a few years ago. The feds grabbed the action and set the agenda. Companies everywhere, with help from the compliance community, have been scrambling since then to catch up. Eventually there’ll be more equilibrium between enforcement and compliance, and that’s when enforcement should begin to decline.
When it does, companies will start wondering what their compliance people do all day. And so once again the DOJ will find plenty of low-hanging enforcement fruit . . . .