The United States has broad prohibitions against bribery of government officials both within the country and worldwide. Since 1977, the Foreign Corrupt Practices Act has prohibited the payment of bribes to foreign officials for purposes of obtaining or retaining business. The Foreign Corrupt Practices Act (FCPA) also regulates businesses in another important way: it requires public companies to follow basic accounting rules to ensure transparency.
Violation of the FCPA is a serious federal offense, and there are both civil and criminal penalties imposed for wrongdoing. Those who are accused of a violation need to understand what defense options they may have and should consult with an attorney who understands this complex area of law.
LV Criminal Defense has extensive experience representing businesses and corporate leaders accused of FCPA violations. We will help you to develop a comprehensive defense strategy for both civil and criminal action designed to minimize potential risk, limit financial exposure, avoid jail time, and reduce penalties that could be associated with conviction.
The Foreign Corrupt Practices Act is found in 15 U.S.C. Section 78dd-1. FCPA applies to issuers of registered securities, officers, directors, employees, and agents of issuers. It applies to prohibited conduct that occurs anywhere in the world. All publicly-traded companies are required to abide by its rules and regulations.
These rules and regulations prohibit bribery of foreign officials and mandate that accurate books and records are kept so it is possible to determine if transactions are executed and assets accessed only with authorization of management. FCPA was passed after the Watergate political scandal when the SEC discovered more than 400 companies throughout the U.S. had secured overseas business by paying hundreds of millions of dollars in bribes.
Both the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) are responsible for the enforcement of FCPA. The SEC has a specialized unit to ensure the accounting transparency provisions are complied with. The Department of Justice works together with the International Corruption Unit of the Federal Bureau of Investigation, the Department of Homeland Security, and the criminal division of the Internal Revenue Service.
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A publicly-traded U.S. company is not permitted, either directly or through its agents, to try to bribe foreign officials to do any actions or to fail to do any actions. U.S. companies cannot try to use any items or value, nor any promises of items of value, to try to secure or retain business in foreign locations.
FCPA broadly prohibits paying money, authorizing the payment of money, the giving of gifts, or the promise of gifts or items of value to foreign officials if the purpose of the gift is to influence acts in official capacity. Giving items of any value to secure an improper advantage of any type is against the law.
A U.S. company also cannot bribe foreign officials to use their influence with their governments to influence official actions.
Accounting provisions of FCPA, found in Section 13(b)(2)(A) the Exchange Act in 16 U.S.C. Section 78m(b)(2)(A), are intended to ensure transparency of publicly traded companies. Provisions addressing accounting requirements are commonly called the “books and records” provisions.
These rules prohibit keeping ‘off the books’ accounts. Books and records must be accurate, they must fairly reflect transactions and dispositions of assets, and they must contain reasonable detail. Reasonable detail is defined as a level of detail sufficient to “satisfy prudent officials in the conduct of their own affairs.” Companies are also required to devise and maintain a system of internal accounting controls that is sufficient to ensure management has authority, control, and responsibility over the assets of the firm.
Accounting provisions were included in FCPA to ensure companies could not use their money to create a “slush fund” to pay bribes to foreign officials and to ensure companies did not try to hide bribes made to government entities. The accounting rules, however, do not apply only in situations where companies keep off-the-books accounts or hide bribes. The provisions apply broadly to form the backbone for the majority of accounting fraud cases and financial disclosure cases that are brought by either the Securities and Exchange Commission and the Department of Justice.
When I initially met with Mr. Wooldridge, he took the opportunity to sit and go over my problem with me. He described details in my case which he found disturbing and explained why he I should have him on my side.
Defenses are available to defendants accused of FCPA violations. Two affirmative defenses to anti-bribery rules were created in 1998 and include a local law defense and a reasonable and bona fide promotional expense defense. It is also not a violation of FCPA to facilitate or expedite payments of government officials if those payments are required for the performance of routine government actions.
There are defenses specific to both the anti-bribery provisions and the accounting provisions of the FCPA. Choosing the right approach to take to respond to accusations is complicated, especially as a defendant may be facing both civil and criminal consequences for alleged bribery or alleged failure to maintain accurate and sufficient records.
At LV Criminal Defense, we understand accounting requirements and we know all of the exceptions to anti-bribery rules. We understand how complex corporate transactions can be, especially when doing business internationally in countries with different rules. We will help to address jurisdictional issues, questions of whether FCPA applies, and technical arguments related to corporate actions and officer or agent behavior. We represent businesses and individuals who have been accused of FCPA violations and we work hard to raise defenses or negotiate reasonable settlements. To learn more, give us a call or contact us online today so we can get to work on your case.