Summary: The Foreign Corrupt Practices Act in Latin America

By Kailie Middleton

What is the outlook for anti-corruption regulation in a Latin American context? An AS/COA panel explored the topic.


  • Frank Holder, Chairman of Latin America, FTI Consulting
  • Joan E. Meyer, Partner, Baker & McKenzie LLP
  • Thomas O’Brien, Partner, Litigation Department, Paul Hastings
  • Christopher Sabatini, Senior Director of Policy, Americas Society/Council of the Americas; Editor-In-Chief, Americas Quarterly (Moderator)


AS/COA hosted a June 25 panel of leading experts to discuss Foreign Corrupt Practices Act (FCPA) compliance and risk factors in Latin America. The conversation focused on legal regulations and corporate responsibility. Panelists analyzed the recent progress and setbacks of FCPA enforcement by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). 

FCPA Today

Paul Hastings’ Thomas O’Brien opened the panel by offering a contextualized view of the advancements and challenges of current anti-corruption regulations throughout the region. He argued that in an increasingly interconnected global economy, there is no place in the world that can operate without facing such constraints. More than half of the companies against which cases have been filed are third parties that do business with U.S.-based corporations in foreign countries.

Historically, U.S. companies, which are restricted by domestic anti-corruption regulations, have complained about the uneven playing field in the international market. Foreign companies make it difficult to compete for those companies that are bound by the regulation. O’Brien argued that although regulation and enforcement is coming predominantly from the United States and Europe, significant strides are being made at the international level. He highlighted the recent Brazilian protests as an example of a local push against corporate and political corruption that has captivated a global audience.

Corporate Best Practices Procedures

Joan Meyer from Baker & McKenzie LLP continued the discussion by highlighting the short-term and long-term effects that FCPA litigation has had on non-compliant multinational corporations. She argued that FCPA legal cases have a deep impact on a company’s reputation, even issuing corporate “death sentences” in some cases. Non-compliant businesses face unhappy investors, diminished profits, and reluctance from potential partners. Companies that have been most successful in salvaging their reputations after being flagged by the DOJ are those that remedy their past infractions by implementing corporate responsibility procedures.

The panelists agreed that over the past few years, they have seen more Best Practice Compliance programs emerge, especially from companies in Latin America. Rather than merely offering lip-service to FCPA regulations and enforcement, as was the case in the past, companies are now taking the regulations seriously and making an effort to comply. The panelists agreed that autonomous internal review boards are the most effective form of compliance and accountability. Joan Meyer strongly advised, however, that compliance boards and initiatives should incorporate executives. She argued that executives should be cautious of any red flags in contracts, especially during multi-country mergers and acquisition proceedings. The most common form of corruption, according to the speakers, is the systematic use of bribes and job perks at the lower levels. Although they rarely find the “smoking gun” condoning these practices in the hand of the higher executives, prosecutors use these documented red flags as evidence that the executives “should have known better.” FCPA regulations hold corporate executives accountable not only for their own employees, but also their vendors, suppliers, and other third-party partners. It is in their best interest, argued Meyer, to ensure their companies’ and their partners’ compliance.

Challenges to Full Eradication of Corruption

According to Frank Holder of FTI Consulting, the objective of the DOJ is to set precedence, often by damaging reputations of non-compliant companies through press releases and media coverage. He argued that the DOJ will go after a company and indict as many high-level executives as they can. Nonetheless, critics still question whether the FCPA is tough enough.

Holder argues that the primary objective is not to drive the company out of business—which would have rippling effects for innocent, lower level employees—but rather to take away any profits gained from corruptive practices. The long-term goal is that the risks outweigh the benefits from such practices. Meyer warns that an executive that chooses not to address the problem through full disclosure runs the risk of being caught, lambasted in the media, and likely indicted. Holder added that it is the responsibility of the managerial board to set the right tone for their company culture. The question, however, is how deep and how high up corruption goes on the corporate ladder. Non-compliance at the highest level, even in companies that have anti-corruption policies in place, makes it very difficult to enforce FCPA regulations.

Additional challenges are rooted in jurisdiction restrictions. The global circulation of money has changed dramatically over the last decade, and it is difficult for regulations and enforcement law to keep up. Yet multilateral joint intelligence and enforcement efforts, as well as increased transparency, have enabled high profile anti-corruption cases to be filed in the recent past.   

Projection for the Future

Despite these challenges, the panelists agreed that enforcement has improved over the past few years. New whistleblower laws have enabled employees to bring cases to the DOJ for review. Sometimes what they find, however, is that the problem extends not only throughout a company, but throughout entire industries. According to Holder, industries that are highly susceptible to corruptive practices are those that work in countries that have loose, hard-to-enforce regulations, and in fields such as energy, manufacturing and farming industries. He encouraged companies to fully disclose any non-compliance before the DOJ comes to them.

O’Brien said that the FCPA law is well-written, and other countries are beginning to adopt anti-bribery and anti-corruption laws, using the U.S. law as a model. More than half of the DOJ’s FCPA cases and nearly 80 percent of global enforcement action take place in Latin America. The root of corruption, according to the panelists, is government inefficiency, which, they argue, makes it difficult for companies to comply, and increases the temptation to take short cuts. They believe that greater transparency and more recent highly publicized anti-corruption lawsuits will limit both the severity and diffusion of corruption throughout the region.