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Costs for FCPA Investigations Can Be Huge, Making Insurance Coverage Important

Investigations under the Foreign Corrupt Practices Act (FCPA) can quickly become extremely costly. In fact, Walmart recently spent more than $439 million within a two-year span on these types of investigations alone. While this is a rather extreme example, companies that have any sort of internal operations should at least be familiar with how they can comply with FCPA rules and whether D&O policies allow FCPA investigation costs to be covered if they happen before lawsuits occur. 

The FCPA was established to help control the problem of bribery of foreign officials. The consensus is that bribery leads other criminal activity while undermining the standards of fair competition that should be upheld in the business world. 

The problem with FCPA investigations is that they can be extremely expensive. But in some cases, investigations that occur before any lawsuits arise may actually be covered under director and officer liability (D&O) insurance. In the case of Walmart, the company actually self-reported its compliance issues and launched its own investigation, which may have saved it a significant amount of money in the long run. 

The purpose of D&O insurance is to protect directors and officers when they are defendants in legal action. However, whether this type of insurance actually can cover at least some of the huge costs of an FCPA investigation depends heavily on the language of the policy in question. Each policy is different based on the coverage needed, which adds some complexity to these types of cases. 

For more information about D&O insurance coverage of FCPA investigations and similar issues, speak with a team of Dallas internal investigations attorneys from Whistleblower Law for Managers.

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