Cover: Anti-Corruption Regulations in Emerging and Expeditionary Markets

Anti-Corruption Regulations in Emerging and Expeditionary Markets

New Markets, New Challenges

Published Jun 15, 2012

by Elvira N. Loredo, Karlyn D. Stanley, Michael D. Greenberg

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Research Questions

  1. What are the primary corruption-related threats facing businesses operating in emerging markets overseas, in terms of cost, corporate culture, and personnel safety?
  2. To what extent is compliance with anti-corruption legislation an impediment to U.S. businesses operating in such markets? Are they at a disadvantage relative to foreign competitors that face no such requirements?
  3. Is it possible to reconcile the seemingly opposing objectives of increasing business participation in emerging markets and increasing compliance with the U.S. Foreign Corrupt Practices Act?
  4. What are the implications for U.S. foreign policy if businesses withdraw from emerging and expeditionary foreign markets? What are some ways to level the playing field for U.S. businesses while spreading an example of positive corporate culture in emerging markets?

The participation of U.S. firms in emerging markets strengthens the economy and serves U.S. foreign policy interests to influence and stabilize politically insecure regions. However, many of these regions are plagued by endemic corruption. Efforts to combat corruption via ramped-up enforcement of the U.S. Foreign Corrupt Practices Act of 1977 and the United Kingdom's Bribery Act of 2010 have placed an emphasis on policing the behavior of U.S. and European firms as a lever to intervene against corruption occurring elsewhere. However, the risk and cost of ensuring compliance with these laws may undermine firms' competitiveness in foreign markets. Taken to the extreme, these challenges could lead to the withdrawal of U.S. firms from some markets, thereby harming U.S. economic interests and influence while leaving the reality of corruption on the ground unchanged. To shed light on these and associated issues, RAND convened the roundtable symposium "New Markets, New Challenges: Dealing with Anti-Corruption Regulation in Emerging and Expeditionary Markets" in Washington, D.C., on January 12, 2012. The event brought together participants with experience as executives at major public companies and backgrounds in foreign policy, diplomatic service, law, and the nonprofit sector to discuss the practical difficulties facing private-sector companies that diligently comply with anti-corruption mandates, the challenges of unraveling the culture of corruption in parts of the world where it has compromised civil institutions, and opportunities for making private-sector businesses more effective allies in the fight against corruption. This document details the key themes and recommendations arising from the symposium.

Key Findings

Anti-Corruption Compliance Costs and Related Liability Can Be Significant for Businesses Operating in Emerging Markets.

  • Regulatory approaches, such as the U.S. Foreign Corrupt Practices Act (FCPA), have had some positive effects on corporate ethics and integrity. However, symposium participants agreed that punitive measures address, at best, only one facet of a much deeper-seated problem.
  • Risk and uncertainty can undermine firms in seeking to assess the true cost of doing business in emerging and expeditionary markets. Participants cited the cost of complying with anti-corruption mandates, threats to employee safety and corporate reputation, and related forms of competitive disadvantage as examples of uncertainty and risk.
  • Prevention efforts, such as closer collaboration among U.S. firms, U.S. government agencies, and international development banks in establishing broader anti-corruption standards with greater international transparency and accountability, can complement broader efforts to fight corruption in emerging and expeditionary markets.

Participants Identified Several Areas of Risk and Cost for Businesses in Confronting Corruption and in Complying with U.S. Law.

  • For example, corruption is often linked to other forms of illicit activity, including human trafficking, drug trafficking, organized crime, and even nuclear proliferation. Participants noted that safety risks can make it difficult to recruit U.S. nationals to work in foreign settings; a greater reliance on local workers and affiliates can increase the risk of noncompliance with anti-corruption legislation.
  • Participants were concerned that the cost of compliance with anti-corruption enforcement mandates opens firms to liability risk and may result in an ultimate withdrawal of U.S. business interests in important emerging markets.


  • Major U.S. corporations have devised rigorous corporate compliance programs for their overseas operations in response to investigations and prosecutions under anti-corruption laws. However, the U.S. government must understand that punitive measures and enforcement efforts address, at best, only one facet of a much deeper-seated problem.
  • Prevention is an important complementary strategy in fighting corruption in emerging and expeditionary markets. Potential prevention efforts could focus on education and training for corporate and government officials and emphasize positive incentives for integrity, such as improved access to U.S. capital markets.
  • Establishing international, audited standards for transparency in dealings between government officials and U.S. firms, or between governments and international development banks, could also play an important role in future corruption prevention efforts.
  • New efforts to stem the occurrence of major forms of corruption while simultaneously increasing the competitiveness of U.S. firms operating overseas could help level the playing field for U.S. business interests in emerging markets and protect U.S. foreign policy interests.

This research was conducted by the RAND Center for Corporate Ethics and Governance, a research center within RAND Law, Business, and Regulation, a division of the RAND Corporation.

This report is part of the RAND conference proceeding series. RAND conference proceedings present a collection of papers delivered at a conference or a summary of the conference.

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