What does the failure of the Kraft Heinz attempted hostile takeover of Unilever portend for the greater world of global anti-corruption enforcement specifically and compliance programs more generally?
As with most business issues during the new administration, things are in flux. But my sense is that it bodes strongly for increased corporate compliance for any internationally focused company which might be subject to the FCPA, UK Bribery Act, or other internationally focused anti-corruption enforcement regime.
Kraft Heinz made its offer on Friday and by the time Monday had rolled around it had withdrawn the unsolicited offer. As noted by Steven Davidoff Solomon, writing in the New York Times Dealbook column, Kraft Heinz is controlled by “the crafty Brazilian deal makers of 3G Capital” and has Warren Buffet is a key shareholder.
Yet even with this merger and acquisition intellectual capital behind it, Kraft Heinz was not prepared for the ferocity of the response by Unilever nor the political hurdles quickly thrown up in its U.S. corporate face. Part of this was Kraft Heinz’s own doing based upon it gutting of the UK company Cadbury after that takeover despite promises “to keep Cadbury factories open;” one company’s cost cutting is another company’s lay-offs.
Part of Solomon’s analysis was around the new age of mercantilism ushered in by President Trump, where “Countries that once hailed the merits of globalization and the free flow of capital and labor are now becoming more protective of what the French refer to as “national champions.”
This may mean that countries which robust anti-corruption regimes will be more likely to consider prosecutions involving bribery and corruption of countries domiciled in other jurisdictions. One need only consider the FCPA Blog’s Top Ten list, which has seven of its slots held by non-U.S. domiciled companies, to see there is clear precedent.
If you want to look outside the United States for examples of countries which prosecuted foreign entities for bribery and corruption, the precedent of the UK pharmaceutical giant GlaxoSmithKline PLC and its prosecution in China is highly relevant.
The response to this new age of mercantilism is a robust compliance program, adhering to and operationalizing a wide variety of anti-bribery/anti-corruption regimes. That is one of the reasons why the recently released Justice Department Evaluation of Corporate Compliance Programs is so valuable. While, it is obviously focused on FCPA compliance, it gives companies a clear road map going forward.
I think the best bet for international businesses is doing compliance, which will protect them going forward.
Tom Fox is a Contributing Editor of the FCPA Blog. He has practiced law in Houston for 30 years. He’s the creator of the award winning FCPA Compliance and Ethics website. He is the Compliance Evangelist. His best-selling seminal book, “Best Practices Under the FCPA and Bribery Act: How to Create a First Class Compliance Program” (available from Amazon here) is widely viewed as one of the top volumes on the nuts and bolts of compliance.