We all know now that in compliance circles it is better for an American corporation (or a business working in America) to confess and investigate possible corruption than to wait for the Department of Justice to investigate and charge you.
The Netherlands-based Frank’s International N.V. (NYSE: FI) took this reasonable approach through the company’s June 13 SEC Form 8-K that it has uncovered possible violations of the Foreign Corrupt Practices Act in its West African business. Form 8-K is used to alert investors and the SEC (and DOJ) of an important event.
Further, Frank’s Form 8-K filing advises the two US agencies that it will “cooperate fully” and is conducting an “internal investigation” into these possible violations. Frank’s International, an oil and gas service provider, states finally that it is “committed to continuously enhancing the Company’s internal controls that support improved compliance and transparency throughout its global operations.”
Bingo. Well done. A textbook response from a corporation to the Department of Justice and the Securities & Exchange Commission.
But one question remains. While Frank’s has done a bang-up job of informing U.S. regulators ahead of time, it is not clear whether Frank’s International has been equally forthcoming to the West African governments where the possible corruption took place. A quick look at Frank’s website shows that the company operates in the following West African countries:
- Nigeria (site of regional HQ)
- Côte d’Ivoire
- Cameroon (often considered part of West Africa)
All four of these West African states have anti-corruption laws on the books through which cases are investigated and prosecuted (albeit with uneven vigor.)
For instance, following 2015 election, Nigeria President Buhari has reinvigorated the anti-corruption agency in Nigeria — the Economic & Financial Crimes Commission (EFCC). One only has to visit the EFCC’s Twitter feed or Facebook page to see how active the agency is in fighting corruption.
Likewise, the three other West African states — Côte d’Ivoire, Ghana, and Cameroon — have similar anti-corruption laws on the books.
The question remains whether U.S. corporations feel equally compelled to report possible corruption to host country authorities as they do to U.S. regulators. None of these countries has a “textbook” way for reporting potential malfeasance to get in the good graces of prosecutors. While criminal charges are unlikely against companies, civil penalties can be quite severe.
So, does a corporation report the possible corruption to African authorities before or after its “internal investigation?” Or simply handle it in-house through suspensions and firings.
Of course, a failure to immediately alert the authorities in all four West African countries of possible malfeasance is a crime in itself.
We’ll have to watch and see how Frank’s International handles the investigations. Like its June 13 Form 8 filing, Frank’s will likely report its findings in a future SEC filing.
Thanks to The FCPA Blog for originally reporting on the Frank’s International case.