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Executive Summary: On November 14, 2012, the Criminal Division of the United States Department of Justice ("DOJ") and the Enforcement Division of the United States Security and Exchange Commission ("SEC") issued "A Resource Guide to the U.S. Foreign Corrupt Practices Act" (the "Guide"). Although not binding on the DOJ or SEC, the Guide is very useful in detailing the agencies' enforcement approaches, interpretations and priorities.
Background: FCPA was enacted in 1977 to combat what was perceived to be widespread bribery of foreign officials by U.S. Companies. The Act prohibits any direct or indirect payment to a foreign government official for the purpose of influencing any act or decision in order to obtain or retain business. Additionally, the FCPA may be violated by the inaccurate accounting and record-keeping of such activities. Both the DOJ and SEC have ramped up enforcement activities. Companies should also be aware that the whistleblower component of the Dodd-Frank Act provides that an individual who provides the SEC with original information about FCPA violations is entitled to 10-30% of the amount of recovery in a successful SEC enforcement action that results in sanctions of more than $1 million.
Key Takeaways: The Guide provides non-binding guidance that is helpful in light of the broad terms of the statute and the lack of judicial precedent. The Guide looks exhaustively at both the Act's anti-bribery and books and records provisions. For example, in connection with the anti-bribery provisions:
In the accounting provision section of the Guide, the SEC attempts to describe when a parent "issuer" may be held liable for accounting violations. If a subsidiary's earnings are consolidated with the parent's, then the parent is obligated to make sure that the subsidiary complies with the accounting provisions. The Guide becomes much murkier when the subsidiary is owned less than 50% by the parent. The Guide waffles between "good faith," a lesser standard, and "best efforts," under which the parent is required to take all actions necessary to ensure compliance.
The Bottom Line
The Guide is a must read and should remain close at hand for any HR leader or attorney responsible for drafting and monitoring anti-corruption compliance programs as well as with investigating and defending against alleged violations.
If you have any questions regarding this Alert, please contact the author, Ken Hannahs, email@example.com, who is an attorney in our Atlanta office, or the FordHarrison attorney with whom you usually work.
Topics: Compliance, DOJ, FCPA, FCPA Resource Guide, SEC
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