One of the greater truths about the FCPA that is not discussed enough is that any business built on illegal acts is more than simply morally repugnant, it is not sustainable. If business sales are based on bribery and corruption, a key reason is that such a business cannot compete in an open market competition. Obviously such a business strategy has severe commercial, regulatory, and societal risks as well; but for The Man From FCPA it is the business cost that should receive the most attention from senior executives. For just as anti-compliance programs are the business response to the legal issue of laws such as the FCPA, the flip side is to demonstrate that bribery and corruption is bad for business.
The commercial risks seem the most straight-forward; for not only does the illegal act damage the purchaser which gets inferior products, subject to substandard and suboptimal performance going forward. Yet the risk for the seller is equally as great but for a different reason. If a seller engages in illegal activity to make a sale, it is always subject to blackmail or extortion going forward. In addition to this continued exposure to more, greater and ongoing bribe payments, businesses which engage in such activity also subject themselves to local prosecutions of other countries’ domestic anti-bribery laws. Recall that GlaxoSmithKline plc was prosecuted in China for bribery under Chinese domestic law and not under the FCPA.
Even if such dire criminal threats are not made, sales based on bribery and corruption are not sustainable going forward. If a company sustains high sales grow in a high-risk country, based upon bribery and corruption, the sales will drop off dramatically once the spigot is closed and that will lead to negative financial consequences. For it is through not only complying with national and international norms in sales and having a robust compliance program, that companies can typically sustain growth leading to positive return on equity and investment.