More investors are backing out of business deals because of their prospective partners' less-than-stellar ethical reputation, according to a Deloitte Financial Advisory Services survey. The firm's "Look Before You Leap" survey of more than 500 investors and executives shows 63 percent of respondents said they renegotiated or pulled out of planned business relationships, mergers or acquisitions over a three-year period because of Foreign Corrupt Practices Act, or FCPA, issues.
Since the 2004-2005 timeframe, the federal government has cracked down on multinational corporations that are guilty of bribing foreign officials through FCPA. The stepped-up enforcement has led to record fines and in some cases imprisonment. But experts caution another negative side-effect could be lost business opportunities.
Increasingly, investors are examining whether a company has had issues in the past with corruption. This includes investigating falsified documents, the use of slush funds and past issues with payoffs or awarding contracts to relatives of public officials.
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