FCPA Compliance
Practice Overview
With its eclectic culture, diverse peoples, virgin but very promising oil and gas industry, and infrastructure development needs, Guyana offers immense opportunities and challenges for American companies, investors, and individuals doing business in Guyana. With Guyana’s first barrel oil flowing on December 20, 2019 and the frenetic scramble to get in on the Guyana opportunity, conditions are favorable for corrupt practices to flourish. By providing competent individualized counsel, Callender Law ensures our clients remain FCPA compliant and mitigate the risk of very costly infractions. FCPA violations can lead to civil and criminal penalties, sanctions, and remedies, including fines, disgorgement, and/or imprisonment.
Callender Law offers our clients a full FCPA compliance program that includes: risk assessment; training of executive management, all employee levels and third-party distributors; due diligence procedures for all third-party business dealings (agents, suppliers, distributors, foreign attorneys, etc.); corporate FCPA compliance policy; robust internal procedures/ controls over company assets and expenditures; ensuring all international contracts contain clear FCPA terms; disciplinary standards and procedures and self-reporting protocols for violations; pre-acquisition due diligence and post-acquisition integration; and benchmarking. As a Callender Law client, our attorneys will also represent you against SEC or DOJ allegations of FCPA violations.
About the Foreign Corrupt Practices Act (FCPA)
The United States Congress enacted the Foreign Corrupt Practices Act in 1977 to stop widespread bribery of foreign officials by American concerns. The FCPA contains both anti-bribery and accounting provisions. The anti-bribery provisions prohibit U.S. concerns and others from making corrupt payments to foreign officials to obtain or retain business. The accounting provisions require U.S. and foreign public companies listed on stock exchanges in the United States or which are required to file periodic reports with the Securities and Exchange Commission (“issuers”) 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. The Department of Justice (DOJ) and the Securities and Exchange Commission share FCPA enforcement authority.
FCPA – Anti-bribery Provisions
Generally, the FCPA prohibits offering to pay, paying, promising to pay, or authorizing the payment of money or anything of value to a foreign official in order to influence any act or decision of the foreign official in his or her official capacity or to secure any other improper advantage in order to obtain or retain business.
No Requirement of Materiality. The FCPA concerns the intent of the bribery rather than the amount. Thus, the law prohibits offering anything of value as a bribe – whether cash or non-cash.
The FCPA’s anti-bribery provisions apply broadly to: (1) “issuers” and their officers, directors, employees, agents, and shareholders; (2) “domestic concerns” and their officers, directors, employees, agents, and shareholders; and (3) certain persons and entities, other than issuers and domestic concerns, acting while in the territory of the United States.
An issuer is any company, including foreign companies, with a class of securities listed on a national securities exchange in the United States, or any company with a class of securities quoted in the over-the-counter market in the United States and required to file periodic reports with SEC. Foreign companies with American Depository Receipts that are listed on a U.S. exchange are also issuers. Under the FCPA, the U.S. can also prosecute officers, directors, employees, agents, or stockholders acting on behalf of an issuer (whether U.S. or foreign nationals), and any co-conspirators.
A domestic concern is any individual who is a citizen, national, or resident of the United States, or any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship that is organized under the laws of the United States or its states, territories, possessions, or commonwealths or that has its principal place of business in the United States. Also included are officers, directors, employees, agents, or stockholders acting on behalf of a domestic concern, including foreign nationals or companies.
Jurisdiction. Since 1998, the FCPA’s anti-bribery provisions have applied to foreign persons and foreign non-issuer entities that, either directly or through an agent, engage in anyact in furtherance of a corrupt payment (or an offer, promise, or authorization to pay) while in the territory of the United States – whether or not they utilize the U.S. mails or a means or instrumentality of interstate commerce. Moreover, officers, directors, employees, agents, or stockholders acting on behalf of such persons or entities may be subject to the FCPA’s anti-bribery prohibitions.
In practice, the FCPA’s anti-bribery provisions apply to conduct both inside and outside of the United States. Issuers, domestic concerns, and covered persons may be prosecuted for using the U.S. mails or any means or instrumentality of interstate commerce in furtherance of a corrupt payment to a foreign official. Additionally, under the ‘alternative jurisdiction’ provision of the FCPA, there is no requirement for use of interstate commerce (e.g., texts, email, telephone call, wire) for acts in furtherance of a corrupt payment to a foreign official by U.S. companies and persons occurring wholly outside of the United States.
FCPA – Accounting Provisions
In addition to anti-bribery provisions, the FCPA contains accounting provisions applicable to public companies. The accounting- and anti-bribery- provisions operate in tandem and prohibit off-the-books accounting.
The FCPA’s accounting provisions consist of two primary components: (1.) the Books and Records Provision – requires that issuers must make and keep books, records, and accounts that, in reasonable detail, accurately and fairly reflect an issuer’s transactions and dispositions of an issuer’s assets; and (2.) the Internal Controls Provision requires that issuers must devise and maintain a system of internal accounting controls sufficient to assure management’s control, authority, and responsibility over the firm’s assets.
High Cost of Non-compliance Requires Proactive Strategies
The U.S. Government does not lose FCPA cases. FCPA violations can lead to civil and criminal penalties, sanctions, and other remedies, including fines, disgorgement, and/or imprisonment. For each violation of an FCPA anti-bribery provision, corporations and other business entities are subject to a fine of up to $2 million. Individuals, including officers, directors, stockholders, and agents of companies, are subject to a fine of up to $250,000 and imprisonment for up to five years. For each violation of an FCPA accounting provision, corporations and other business entities are subject to a fine of up to $25 million. Individuals are subject to a fine of up to $5 million and imprisonment for up to 20 years.
Effective Compliance Program. No American company or individual doing business abroad, even if only through distributors, should be without an FCPA Compliance Program that works. Prudence and responsibility require it. For companies operating in foreign countries, an effective compliance program is a critical component of a company’s internal controls and is essential to detecting and preventing FCPA violations. Compliance with the FCPA and ethics rules must begin at the executive level.
Callender Law will help your company develop and implement an effective compliance program tailored to your company’s specific business and to the risks associated with that business. We will ensure your company has a robust and effective compliance program that protects its reputation, ensures investor value and confidence, reduces uncertainty in business transactions, and secures its assets. Moreover, having a robust, carefully implemented and consistently enforced compliance and ethics program helps prevent, detect, remediate, and report misconduct, including FCPA violations. Callender Law’s experienced attorneys assist clients in developing and implementing robust, tailored FCPA Compliance Programs that include:
- risk assessment;
- training of executive management, all employee levels and third-party distributors;
- due diligence procedures for all third-party business dealings (agents, suppliers, distributors, foreign attorneys, etc.);
- corporate FCPA compliance policy;
- robust internal procedures/ controls over company assets and expenditures;
- ensuring all international contracts contain clear FCPA terms;
- disciplinary standards and procedures and self-reporting protocols for violations;
- continuous improvement processes and procedures;
- pre-acquisition due diligence and post-acquisition integration; and
- benchmarking.