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Sticky Situation: Ill-Gotten Gains From FCPA Violations

Tom Fox | October 19, 2015

One of the continuing myths around Foreign Corrupt Practices Act enforcement is so-called “springing liability,” where a company that acquires a business also acquires a FCPA violation along with the purchase.

I say that it is a myth because the purchase of a corrupt company isn’t the FCPA violation. If the the acquiring entity allows the bribery and corruption to continue after the purchase—that’s the violation. Hence the wisdom of Pete Townsend in Won't Get Fooled Again: Meet the new boss, same as the old boss. (Cue massive Keith Moon drum crescendo here).

Most companies understand their obligations under the FCPA to engage in pre-acquisition due diligence to the best extent possible, and then engage in post-acquisition training and remediation, which 12 to 18 months after the deal is closed. But what happens if the bribery and corruption stop, yet the benefits of this illegal conduct continue going forward?

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