Traversing the Minefield : Joint Ventures and the Foreign Corrupt Practices Act

High-risk business relationships and aggressive enforcement make the Foreign Corrupt Practices Act (“FCPA”) a minefield for transnational joint ventures. Spiraling FCPA risks emerge from a variety of scenarios, including vicarious liability for the acts of majority-owned or controlled joint ventures, joint-venture partners, and third-party agents. The involvement of state-owned enterprises further elevates the risk of a costly enforcement action, as even routine payments can become potential FCPA landmines. Expansive applications of the FCPA's accounting provisions — which can ensnare corporate issuers regardless of whether a corrupt payment occurs — add additional danger to an already perilous environment.While numerous strategies for mitigating FCPA exposure are available, even expansive due diligence, comprehensive compliance systems, and ironclad contractual remedies cannot protect against an uncertain enforcement landscape. The continuous evolution of FCPA enforcement raises the costs of compliance by adding additional uncertainty to joint-venture relationships. This may have an unintended consequence: deterring the investments that best promote the anti-corruption and pro-competition norms underlying the FCPA