The Trump administration has vowed to bring jobs back to the
states. One of the methods it appears it'll take advantage of
is continued, aggressive enforcement of U.S. laws governing exports
and international conduct.
Up to now, the U.S. government has undertaken a strategy of
aggressively enforcing U.S. laws governing extraterritorial
conduct. These include the Foreign Corrupt Practices Act
FCPA), economic sanctions largely administered by the Office of
Foreign Assets Control (
OFAC), and export controls on U.S. goods. These laws underscore
the premium that all multinational companies need to place on
aggressively identifying and managing regulatory risk, particularly
for their international operations.
The automotive sector is a high-profile industry, resulting in
amplified risks and a higher level of special enforcement and
regulatory attention. High-profile FCPA investigations involving
prominent original equipment manufacturers (OEM), and special OFAC
sanctions that target the automotive sector and any such operations
in Iran, underscore the risks that automotive suppliers incur when
selling or operating overseas. Similar developments are evident in
the domestic domain as well, where the growing frequency and
intensity of antitrust, False Claims Act, and government contract
investigations present new challenges for manufacturers, suppliers,
and service providers of all kinds.
U.S. laws governing exports and international conduct pose
unique risks for the automotive sector. From the FCPA to
ever-changing sanctions and export controls, companies involved in
the automotive supply chain face an increasingly complex universe
of requirements governing how and where they conduct business
overseas. These regimes also shape business decisions at home, with
the so-called "deemed export" rule compelling exclusively
domestic companies to seek export licenses before disclosing
controlled articles, data, software, and technology to their
non-U.S. employees. Combined with disclosure requirements for
listed companies and government contractors, the regulatory
environment grows more complicated with each passing day.
Enforcement trends amplify these risks. In recent years, U.S.
government agencies have targeted automotive and automotive supply
chain companies under a number of different regulatory regimes.
Notable examples include FCPA enforcement actions against AB Volvo,
Daimler AG, Fiat, Iveco, Ingersoll-Rand, and Renault. The
revelation of ongoing FCPA investigations within the industry, such
as the disclosure by Delphi Corporation in its SEC filings that it
is investigating potential FCPA violations in China, underscores
that the regulatory risks posed by foreign operations are real and
not going away any time soon. Sanctions enforcement is also on the
rise, with Toyota Motor Credit Corporation and Volvo Construction
Equipment North America both targeted by the U.S. Treasury
Department's Office of Foreign Assets Control. Automotive
companies like GM-Daewoo have even faced government enforcement
actions in relatively obscure areas like anti-boycott violations
— a little-known legal regime that has both export and tax
Faced with these challenges, leading companies make sure to get
ahead of the curve and be proactive. This means identifying and
addressing the risks that are likely to arise based on the nature
of their business, the places where they conduct business, and the
customers they serve. It also means evaluating the degree to which
foreign parties — whether subsidiaries, joint ventures, or
even contractors — engage in activities that expose their
U.S. counterparts to civil and criminal liability. The same
principles apply in the domestic compliance context. Suppliers need
to understand their areas of risk and rigorously monitor and
enforce their compliance policies, procedures, and codes of
conduct. Conducting periodic internal reviews, reviewing and
updating written policies and procedures, and updating and
enhancing training programs are all components of a robust
compliance program. Encouraging your employees to report any
improper, unethical, or illegal conduct is critical to uncovering
any potential fraud within your organization. Clearly delineating
responsibility for compliance with various policies and internal
controls ensures accountability.
For Additional Information About These Developments and
In order to provide an overview for busy in-house counsel and compliance professionals, we summarize below some of the most important international anti-corruption developments from the past month, with links to primary resources.
On 21 December 2016, Odebrecht S.A., a global construction conglomerate based in Brazil, and its affiliate Braskem S.A., a Brazilian petrochemical company, pleaded guilty to violating the anti-bribery provisions of the FCPA.
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