If you’ve been assuming that the Foreign Corrupt Practices Act (FCPA) isn’t a concern for folks in the finance and treasury areas, think again. To be sure, the FCPA historically has been seen as an issue for operations or sales – after all, they’re the ones who may be tempted to bribe a government official in the hope of winning a lucrative contract or two. Today, however, finance types also need to understand the law and their companies’ exposure, says Joe Zier, head of the West Coast FCPA Investigative and Consulting Services practice for Deloitte. In the last few years, as more companies have increased their global exposure through business partnerships, joint ventures, cross-border sourcing, and the like, they’re having to manage money differently.

What’s more, the number of reported FCPA investigations against U.S. corporations more than quadrupled between 2003 and 2007, jumping from four to 19. That’s according to a 2008 report, “Recent Trends and Patterns in FCPA Enforcement,” by the law firm Shearman & Sterling LLP.

This ratcheting up of enforcement is partly a result of the shenanigans that have gone on over the past decade in the business world – from Enron to WorldCom to Bernard Madoff. The government is taking seriously the job of policing corporate America. On top of that, their work pays off. A handful of individuals in the Department of Justice’s FCPA division can bring in billions in fines, Zier says. “A small group of people can drive significant money to government coffers,” he adds. “It’s a good ROI.”

The FCPA could come into play in finance and treasury in a couple of ways, Zier says. A company could bribe a foreign government for, say, favorable tax treatment on a particular deal or to get the licenses it needs to operate. The stimulus spending currently under way by many government entities around the globe also can be an issue. That’s because a bank or financial institution that used to belong firmly in the private sector may now be, more or less, an arm of the government. “Whenever you deal with the government, the FCPA kicks in,” Zier says.

Assuming that your firm can simply swallow any fines that might come its way can come back to haunt you. First, the fines themselves are getting bigger. “The size of DOJ penalties has grown in recent years, culminating with the April 2007 FCPA penalty of $44 million against Baker Hughes,” Shearman & Sterling noted in a press release discussing the report. Moreover, the fines account for a fraction of the cost of a violation. The time and resources needed to investigate a breach, as well as the likely hit to the company’s reputation and share price are where the real hits can come.

What’s a treasurer to do? To start, get an understanding of the statute.

Then, identify areas of exposure within your firm. “You need to know who’s interacting with whom,” Zier says. That includes third parties working on your behalf. Your firm won’t get a pass just because its contractors or consultants, rather than employees, are operating in a legal gray zone. The DOJ will scrutinize their actions just as they would your own employees’ actions.

Along those lines, simply reiterating a global, generic FCPA policy is inadequate, Zier says. “Local culture trumps corporate culture,” unless you take explicit steps to address local practices that may present trouble. Zier identifies several steps to take:

•: Ensure that the country manager speaks the local language and also has been trained in U.S. regulations and expectations.

•: In training, talk through specific examples that could apply to day-to-day operations at your company.

•: For high-risk countries or cultures, make sure that your internal audit team focuses on the risk of corruption.

Most significantly, be aware of the potential for trouble and act to head off potential problems. “The days of the ostrich syndrome are over,” Zier says. “You can’t afford not to know anymore.” ###