As the World Shrinks, Risks Grow

This past week, the Securities & Exchange Commission and the U.S. Justice Department announced a major settlement with Johnson & Johnson (J&J) as a result of corrupt financial practices overseas. J&J agreed to pay $70 million in fines for non-compliance with the Foreign Corrupt Practices Act (FCPA) over more than a decade. Violations included payments to physicians in three European countries to buy J&J products as well as payments to the former Iraq government officials to buy products labeled as "humanitarian aid".

“The message in this and the SEC's other FCPA cases is plain – any competitive advantage gained through corruption is a mirage,” said Robert Khuzami, Director of the SEC's Division of Enforcement. “J&J chose profit margins over compliance with the law by acquiring a private company for the purpose of paying bribes, and using sham contracts, off-shore companies, and slush funds to cover its tracks." As the world continues to shrink as it relates to business, the risk of corruption is on the rise. What some countries simply may view as acceptable business practices are in fact violations of the law.

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