The Foreign Corrupt Practices Act (FCPA) prohibits payment of bribes to foreign officials to assist with obtaining or retaining business. It also requires companies whose securities are listed in the US to make and keep books and records that accurately and fairly reflect their transactions as well as to devise and maintain an adequate system of internal accounting controls.
Individuals can be prosecuted for violating the FCPA
Title 15 § 78dd of the US Code (COMMERCE AND TRADE) states that it is unlawful for any officer, director, employee, or agent of a US Person of a US Company or Foreign Nationals to:
2. to corruptly do any act outside the United States in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to any of the persons or entities.
Besides its Anti-Bribery provisions, the FCPA includes an accurate books and records component, and a robust internal controls component
The FCPA Resource Guide states that: In the past, “corporate bribery has been concealed by the falsification of corporate books and records” and the accounting provisions “remove this avenue of coverup.”
Bribes, both foreign and domestic, are often mischaracterized in companies’ books and records as:
Payment of bribes often occurs in companies that have weak internal control environments
The internal controls provision of the FCPA requires entities to maintain a system of internal accounting controls to provide reasonable assurances that:
Individuals acting on behalf of an Entity can have Civil and Criminal Liability under the FCPA
Individuals can face up to a $100,000 criminal fine ($10,000 for Civil) for an Anti-Bribery Violation and five years of prison. For a Book & Records Reporting violation, an Individual can face up to a $5,000,000 criminal fine and twenty years of prison time (15 U.S.C. §§ 78). An Individual’s fines may NOT be paid by his or her employer.
The Prosecution of Individuals is a Priority for the US Department of Justice (DOJ)
From the “Yates Memo” to the US DOJ FCPA Pilot Program, to the current FCPA Enforcement Policy, the message is clear: the DOJ wants to encourage companies to voluntarily self-disclose potential violations and identify the individuals who engaged in wrongdoing.
Don’t be a Victim and Protect Yourself
Individuals face mounting risks of liability under the FCPA. Individuals ought to prevent FCPA violations by ensuring that there is a comprehensive compliance program in place and knowing “who they are doing business with”. Senior Level Executives need to question if the comprehensive compliance programs outlay the right internal accounting controls as opposed to “unspoken” environments that could permit “circumventing the controls”.