Just as the FCPA enforcement field is covered with actions centering around M&A, there are multiple actions involving JVs. JVs continue to plague many U.S. companies up 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 with foreign governments or state-owned enterprises ownership.
There are other risks that a company must seek to avoid. These include the transfer of things of value to a state-owned enterprise for benefits of someone outside the JV. A company must avoid payments for which there is no legitimate business purpose to the state-owned enterprise in the JV itself; as they will be deemed to be illegal benefits to the state-owned enterprise outside the JV.
The bottom line is JVs present a unique set of FCPA risks for the compliance practitioner. You will need to incorporate risk management techniques in all phases of the JV relations; pre-formation, the JV agreement and in operations after the JV has begun operation. The compliance obligations and compliance process are ongoing.
Three key takeaways:
- JVs present unique FCPA risks.
- Control is only one issue a compliance practitioner must consider in evaluating JV risks.
- Companies continue to have significant FCPA risks from JVs.
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