Complying with the FCPA

FCPA: The Basics

The FCPA has two discrete roles. According to guidance provided by the U.S. Department of Justice, Congress passed the FCPA in 1977 to “make it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.” In other words, the FCPA is an anti-bribery statute that is focused on bribes from all U.S. people and certain foreign firms, persons, and issuers of securities to foreign government officials.

Beyond the anti-bribery provisions, the FCPA also contains accounting and record-keeping provisions. This provision requires issuers to create and maintain accurate books and records, along with devising and maintaining an adequate system of internal accounting controls. It also prohibits “individuals and businesses from knowingly falsifying books and records 

Ultimately, Congress enacted the statute to ensure that bribery is halted and deterred, to create a level playing field for honest businesses, and to help the public feel more confident about the integrity of business. The penalties are severe for non-compliance with the FCPA. For the anti-bribery provisions, guilty individuals may face fines of up to $100,000 per criminal violation and five years’ imprisonment. For the accounting and record-keeping provisions, individuals can face criminal fines of up to $5 million per violation and 20 years’ imprisonment. For companies themselves, they can face fines of up to $2 million per violation of the anti-bribery provisions and $25 million per violation of the accounting and record-keeping provisions.

Naturally, several questions emerge from this description of the FCPA. For one, what constitutes a violation of the anti-bribery provisions? A company or individual can be liable under the anti-bribery provisions for not only making an improper payment, but for an offer, promise, or authorization of an improper payment. Also, to violate the anti-bribery provisions, the individual must have a “corrupt intent” when submitting a payment or offer.

The FCPA is a complicated statute and it is impossible to describe all of its implications here. To learn more, we would recommend speaking with your organization’s attorney. If you have a specific question, there are also a variety of resources on the Internet (mostly from law firms) discussing the FCPA if you have a specific question.

Compliance

That said, what should managers know and do in order to fully comply with the FCPA?

First, understand your organization's risk of being involved in international bribery. Identify the riskiest parts of your business, including whether you conduct foreign business through your own employees or agents, whether you need permits to sell goods in certain countries, or whether your organization is involved in litigation in foreign countries. Completing a risk audit is a great first step in minimizing potential FCPA violations.

Second, train your team members on potential FCPA violations. It’s not enough for you to have some familiarity with the FCPA. Your team must as well. Whether it’s through mandatory compliance training or frequent check-ins, making FCPA compliance a priority will lessen the chances of an FCPA violation actually occurring.

Finally, if you believe that you or a team member may be in violation of the FCPA, you must speak to your organization’s attorney—preferably, sooner rather than later. Be forthcoming and divulge as many details that you can recall. Ultimately, candor will help your organization’s attorney identify whether FCPA violations occurred, and if so, to develop the appropriate strategy to respond to the violations.

Be On the Lookout

As a manager, it’s impossible to be expected to know all of the legal intricacies behind the FCPA. That is the job of your organization’s attorney. However, it is important to be on the lookout for potential violations. By taking a proactive approach to compliance, you will minimize the chances that you, your team, or your organization will be investigated for potential FCPA violations.

Train your employees with TrainingABC's new employee training course - The FCPA Made Simple.