Insurance covers bills from Foreign Corrupt Practices probes.
By Susan Kelly|September 01, 2011 at 08:00 PM
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The U.S. government’s push to enforce the Foreign Corrupt Practices Act in recent years has left corporations on the defensive. Being charged with violating FCPA, which forbids paying bribes to foreign officials, can mean big fines or criminal charges, and even an FCPA investigation can be costly. Beauty products seller Avon Products, which began an FCPA investigation in 2008, reportedly has run up $122.5 million in legal costs related to the investigation to date. Such expenses may not be covered by directors and officers liability insurance, either. Generally, D&O coverage must be triggered by some type of charge, which may be missing in a preliminary investigation, and D&O policies do not cover the company itself. Now a couple of insurers are addressing that gap.
In July, insurance brokerage Marsh announced a new policy, FCPA Corporate Response, that covers the cost of investigations for the company and individuals.
Jack Flug, a managing director in Marsh’s financial and professional liability practice, says FCPA investigative costs can pile up. Companies may need to hire not only lawyers, but forensic accountants, IT consultants and compliance consultants, Flug says. “If you send experts offsite to Brazil or China or wherever, it can get quite expensive.”
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