While any company conducting business globally should be concerned about avoiding conduct that would violate the Foreign Corrupt Practices Act (FCPA), the UK Bribery Act (UKBA), and other similar anti-corruption laws, companies working in the aerospace industry are at special risk. This special risk is created by two main factors inherent in the industry – a high percentage of government-owned or -controlled airlines and the prominent use of third parties in countries with high risk of corruption, payments to which are prohibited if all or a part of that payment would be passed on to a foreign official. This special risk is not limited to airplane manufacturers but also exists in the repair and supply sector of the aerospace industry. In fact, no other industry has been the subject of more scrutiny: American Airlines cash payments to then-president Nixon's reelection campaign served as a catalyst to prompt Congress to pass the FCPA, and since then 12 percent of FCPA enforcement actions have involved airlines, aerospace manufacturers, suppliers, and service companies. This is second only to the oil and mining industry. In the realm of anticorruption enforcement, aerospace is the world's third-most investigated, prosecuted, and fined industry. In a word, the aerospace industry has been a clear "target" of the government, a trend that is likely to continue.

The U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ) have made no secret of their goal to heighten both civil and criminal enforcement of the FCPA. In the past five years alone, the agencies have launched more than 150 investigations and prosecutions and have assessed over $2.5 billion in fines. When discussing the increase in government-initiated FCPA investigations, Patrick Stokes, chief of the FCPA Unit at the DOJ Fraud Section, warned that "[c]orporate executives should wonder who is listening in on their calls and conversations," adding that the DOJ is "very focused" on prosecuting individuals and companies, because "going after one or the other is not sufficient for deterrence purposes." This viewpoint is supported by Leslie Caldwell, assistant attorney general for the DOJ Criminal Division. In April 2015 she stated that the FBI has formed new squads specifically focused on proactively investigating FCPA violations.

In sum, aerospace companies and their executives face more exposure than ever before and need to be cognizant of the growing risk of becoming a target of multijurisdictional enforcement efforts. BakerHostetler's White Collar Defense and Corporate Investigations team is uniquely positioned to help aerospace companies identify risks, prevent potential violations through heightened compliance programs, and investigate any allegations of misconduct. This industry-focused guide will provide an overview of anti-corruption laws around the world, recent industry-specific enforcement actions, guidelines for how companies can help prevent violations of these anticorruption laws, and several articles providing in-depth analysis on various anti-corruption issues the aerospace industry faces. (See the Table of Contents on page one for a list of covered topics.)

Managing Anti-Corruption and Export Control Risk in the Aerospace Industry

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.