A month for more effective compliance in business ventures – Day 04 – JV Risks under the FCPA | Thomas Fox – Conformity Evangelist

Just as the scope of FCPA enforcement is covered by actions that center around M&A, many actions involve JVs. JVs continue to harm many American companies to this day. In many ways, JVs present more difficult issues for the compliance practitioner than M&A because of the control issues present in JVs owned by foreign governments or state-owned enterprises.

There are other risks that a company should try to avoid. This includes See more +

Just as the scope of FCPA enforcement is covered by actions that center around M&A, many actions involve JVs. JVs continue to harm many American companies to this day. In many ways, JVs present more difficult issues for the compliance practitioner than M&A because of the control issues present in JVs owned by foreign governments or state-owned enterprises.

There are other risks that a company should try to avoid. These include the transfer of valuables to a state-owned enterprise for the benefit of someone outside the JV. A company should avoid payments for which there is no legitimate business purpose for the state-owned enterprise in the JV itself, as they will be considered illegal benefits for the state-owned enterprise outside the JV.

Ultimately, JVs present a unique set of FCPA risks for the compliance practitioner. You will need to incorporate risk management techniques at all stages of the JV relationship; pre-formation, JV agreement and in operations after the JV has started operations. Compliance obligations and the compliance process are ongoing.

Three main recommendations:

1. JVs present unique FCPA risks.

2. Control is only one issue that the compliance practitioner should consider in assessing JV risks.

3. Companies continue to have significant FCPA risks from JVs. See less –