Morgan Stanley proactive on FCPA issue in China

It's no secret the Justice Department is paying more attention to the Foreign Corrupt Practices Act, which makes it illegal for America executives to take bribes overseas. China is said to be a country rife with potential activity. By one estimate, at least 24 big companies have had "issues" in the country.

It pays to be proactive. So you've got to pat Morgan Stanley on the back for taking the bulls by the horn when it came to Garth Peterson, once a rising star in the China office. After a nine-month internal investigation into the real estate expert's doings, the bank fired Peterson and turned its findings over to the U.S. Department of Justice and U.S. Securities and Exchange Commission, which subsequently opened their own probes, reports Reuters. Peterson rose quickly through the ranks of Morgan Stanley's real estate unit, and built close ties to many in the Shanghai market.

It's unclear exactly why some internal compliance officers became suspicious. But he was fired in December 2008, and firm soon reported what appears to be an FCPA violation. This is a good move because it builds favor with the authorities and allows Morgan to shape what prosecutors know. So far, they seem convinced that this was an isolated issue, which is far better than a office-wide one. 

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