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Financial Regulation and Compliance: How to Manage Competing and Overlapping Regulatory Oversight, + Website by H. David Kotz

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CHAPTER 12 How to Defend FCPA Claims

Congress enacted the U.S. Foreign Corrupt Practices Act (the “FCPA”) in 1977 in response to revelations of bribery of foreign officials by U.S. companies.1 The FCPA which has as its purpose to promote transparency in international transactions, especially between businesses and government, has historically led to significant penalties for both companies and increasingly, individual corporate representatives.

Under the FCPA, firms who are operating in the U.S. face charges in the U.S. for any laws their subsidiaries violate in a foreign country. In addition, the FCPA makes the organization liable even for the actions committed by its third-party agents. The FCPA is one of the most emphasized enforcement areas for both the DOJ and SEC and can be very challenging for companies to defend.

12.1 FCPA PROVISIONS

The FCPA contains both anti-bribery and accounting provisions. The anti-bribery provisions prohibit corrupt payments to foreign officials, parties, or candidates to assist in obtaining or retaining business or securing any improper advantage. The accounting provisions require companies to make and keep accurate books and records and to devise and maintain an adequate system of internal accounting controls. The accounting provisions also prohibit individuals and businesses from knowingly falsifying books and records or knowingly circumventing or failing to implement a system of internal controls.

12.2 FCPA ENFORCEMENT AUTHORITY

The DOJ ...

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