A perfect storm of unprecedented stress on the global supply chain from the continuing COVID-19 pandemic coupled with the promise of increased FCPA enforcement by U.S. regulators makes this an opportune time for retailers to take stock of changes to their corruption risk profile and ensure that they adjust their compliance programs accordingly.
With a slew of recent pronouncements from the White House and top Department of Justice (“DOJ”) officials, the Biden administration has made clear that anti-corruption efforts are a core focus of its corporate enforcement, national security, and foreign policy strategies. On June 3, 2021, the President issued a Memorandum on Establishing the Fight Again Corruption as a Core United States National Security Interest (the “Memorandum”). The Memorandum identifies the fight against corruption as a “core United States national security interest,” and commissions an interagency review – inclusive of DOJ and other agencies – geared towards developing recommendations and strategies to identify and combat corruption on a global scale. In lockstep with this messaging, in June 2021 DOJ’s then Acting Assistant Attorney General Nicholas McQuaid noted that the pipeline of FCPA actions was strong despite a perceived lull in enforcement brought on by the pandemic. McQuaid also emphasized that DOJ was proactively opening new FCPA investigations, and was not simply relying on self-disclosures from companies to identify potential violations. And just last month, Principal Deputy Attorney General John Carlin announced that DOJ would “surge resources” for corporate criminal enforcement.
This recent messaging from DOJ, in tandem with the Biden administration’s stated focus on anti-corruption more broadly, portends increased FCPA enforcement at a time when the continuing pandemic has significantly increased supply chain pressure points and associated corruption risks. Companies in the retail industry are by no means exempt from these pressures, as supply chain disruptions have left retailers struggling to fill operational gaps created by shortages, trade barriers, logistical constraints, and other interruptions, while attempting to maintain business continuity and efficiency. To combat these challenges, many retailers may enter new markets or seek alternative supply chains, which in turn can lead to new and increased risks of corruption in order to cut corners or expedite business operations along the way. This dovetails into a corresponding increase of opportunities for FCPA violations and rising enforcement risk by U.S. regulators. Given this environment, companies should actively review their compliance programs to ensure that those programs are sufficiently tailored to prevent, identify, and address these evolving corruption and enforcement risks.