Unforeseen Corruption Liability: How to Avoid a Post-Acquisition “Oh My!” Moment

In the “Wizard of Oz,” when Dorothy, the Scarecrow and the Tin Man are already deep in the haunted forest, Dorothy asks her guides what dangers could be present.  “Oh my!” she exclaims when she is told of the perils around her.  It is too late to turn back.  Such is the plight of many public companies when they acquire or merge with entities doing business in countries with a high corruption risk.  Without proper anti-corruption guidance, many companies discover too late that they have placed themselves – and their shareholders – in great potential danger by effectively buying a target’s legal liability for past FCPA violations.  The legal liability extends well beyond the U.S., as many countries such as the U.K. and, recently, Brazil, have enacted their own anti-corruption laws.  In a guest article, John Carney and Christina Tsesmelis, partner and senior associate, respecitvely, at BakerHostetler LLP, discuss best practices for merger and acquisition due diligence in light of U.S. precedent and the newly-passed Brazilian law.

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