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Gray's Summary of the Foreign Corrupt Practices Act. Gray International (Gray) is an international network of public accounting and consulting firms based in the U.S., Hong Kong, China and Europe. Gray was started over 10 years ago in the U.S. (via its predecessor) and took the form of Gray International in 2013 as the result of the networking of multiple independent practices and professionals. Gray provides international accounting and compliance solutions in the U.S., Americas, Asia and Europe. Gray focuses on U.S. accounting, tax, and governmental compliance for multinational companies, investors, U.S. persons living overseas and foreign investors and companies investing in or moving to the U.S. Gray also consults on compliance with U.S. laws for businesses and financial institutions overseas such as the Foreign Corrupt Practices Act (FCPA) and the Foreign Account Tax Compliance Act (FATCA), the IRS Offshore Voluntary Disclosure Program, and the Program for Non-Prosecution Agreements or Non-Target letters for Swiss Banks. Grays principals, partners, and employees have served clients worldwide. Gray has offices in Geneva, Hong Kong, Seattle, Shanghai and plans to open an office in Singapore in late 2013. Grays U.S. public accounting firm (Gray CPA, PC) is registered with the U.S. Public Company Accounting Oversight Board and is a member of the American Institute of Certified Public Accountants and the Center for Audit Quality. For more information about us, please visit us at: www.grayintl.com
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U.S. FOREIGN CORRUPT PRACTICES ACT
Overview of the FCPA
GENEVA | HONG KONG | SEATTLE | SHANGHAI
International
Accounting &
Compliance
International Accounting & Compliance
IMPORTANT LEGAL INFORMATION PLEASE READ
LEGAL NOTICE This presentation is prepared for general guidance only, and does not constitute the provision of accounting, legal or tax advice in any manner, written tax advice under U.S. Internal Revenue Service Circular 230, or any professional advice of any kind. “Gray International” or “Gray” refers to Gray CPA, PC (a U.S. CertiIied Public Accountant) and Gray International Ltd (a Hong Kong Limited Company). The information provided in this presentation should not be a substitute for consultation with qualiIied professionals who understand your situation, as it will differ from others. In addition, when making any tax planning decisions you should consult with your own legal, tax, accounting and other professional advisors. This presentation has been provided as a courtesy, and therefore while care has been executed in the preparation of this information Gray CPA, PC (U.S.), Gray International, Ltd. and all of their afIiliates make no representations as to its completeness, accuracy or the timeliness of the information and takes no responsibility to update this information, such information is being provided without warranty of any kind. IRS Circular 230 notice: Tax advice, if any, included in this communication (including any attachments) is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code or by any other governmental tax authority. © 2013 Gray CPA, PC and Gray International Ltd. with all rights reserved, this document shall not be reproduced or distributed without the express written permission of Gray CPA, PC or Gray International, Ltd. For more information about us, please visit us at www.grayintl.com.
WWW.COMPANYSITE.COM | [email protected] | +123 456 789 | THIS STREET 321, CITY, COUNTRY
International Accounting & Compliance
WHO WE ARE OUR PROFILE
Gray International (“Gray”) is an international network of public accounting and consulting Iirms based in the U.S., Hong Kong, China and Europe. Gray was started over 10 years ago in the U.S. (via its predecessor) and took the form of Gray International in 2013 as the result of the networking of multiple independent practices and professionals. Gray provides international accounting and compliance solutions in the U.S., Americas, Asia and Europe. Gray focuses on U.S. accounting, tax, and governmental compliance for multinational companies,
investors, U.S. persons living overseas and foreign investors and companies investing in or moving to the U.S. Gray also consults on compliance with U.S. laws for businesses and Iinancial institutions overseas such as the Foreign Corrupt Practices Act (FCPA) and the Foreign Account Tax Compliance Act (FATCA), the IRS Offshore Voluntary Disclosure Program, and the Program for Non-‐Prosecution Agreements or Non-‐Target letters for Swiss Banks. Gray’s principals, partners, and employees have served
clients worldwide. Gray has ofIices in Geneva, Hong Kong, Seattle, Shanghai and plans to open an ofIice in Singapore in late 2013. Gray’s U.S. public accounting Iirm (Gray CPA, PC) is registered with the U.S. Public Company Accounting Oversight Board and is a member of the American Institute of CertiIied Public Accountants and the Center for Audit Quality. For more information about us, please visit us at: www.grayintl.com
International Accounting & Compliance
OUR SERVICES
WHAT WE DO
WWW.COMPANYSITE.COM | [email protected] | +123 456 789 | THIS STREET 321, CITY, COUNTRY
AUDIT AND ATTEST SERVICES
INTL. FORENSIC ACCOUNTING
U.S. TAX COMPLIANCE
U.S. FATCA COMPLIANCE
INTL. TAX STRUCTURING
U.S. FCPA COMPLIANCE
International Accounting & Compliance
WHAT WE DO OUR PRACTICE AREAS
U.S. FCPA COMPLIANCE
AUDIT AND ATTEST SERVICES INTL. FORENSIC ACCOUNTING
No single piece of U.S. legislation will have a larger impact on foreign Iinancial institutions and intermediaries in the next 5 years as FATCA. Let us help you assess how this will impact your organization and how to implement a practical, affordable solution.
In today’s global landscape international tax structuring and planning has never been more important. From transfer pricing, treaty compliance, withholding minimization, estate planning and domiciliation, to pre-‐residency tax planning Gray is ready to help you navigate this difIicult terrain.
Widespread globalization brings increased risks of corrupt practices, and correspondingly, an increase in FCPA enforcement, penalties and prosecutions. Let Gray help you prepare and implement appropriate controls to protect your organization from violations.
Our experienced auditors provide extensive experience auditing public and private companies in the developed and developing markets. Let us put our extensive experience operating in the U.S., Asia, Europe and the Americas to work for you.
Our forensic accounting services are designed to providing vigilance before the fact, reconstructing and tracing records after the fact, and preparing for trial once the Iindings are made. Our team of experts are available for worldwide engagement.
Gray provides extensive U.S. tax compliance solutions to clients worldwide. We work with individuals, family ofIices, investors, Iinancial institutions, multinational companies and domestic (U.S.) businesses. Let us guide you through the maze of complex U.S. tax compliance.
U.S. TAX COMPLIANCE
U.S. FATCA COMPLIANCE INTL. TAX STRUCTURING
International Accounting & Compliance
GEOGRAPHIC AREAS OF EXPERIENCE
WHERE WE WORK
WWW.COMPANYSITE.COM | [email protected] | +123 456 789 | THIS STREET 321, CITY, COUNTRY R. Congo
Zambia
Yemen
Westsahara
Vietnam
Venezuela
U.A.E
Uzbekistan
USA
Uruguay
Ukraine
Uganda
Chad
Tunisia
Turkey Turkmenistan
Togo
Thailand
Tanzania
Taiwan
Tajikistan Syria
Swaziland
South Korea
South Africa
Spain
Zimbabwe
Suriname
Sudan
Somalia Sierra Leone
Senegal
Sweden
Saudi Arabia
Russia
Romania
Portugal
Poland
Philippines
Peru
Paraguay
Papua New Guinea
Panama
Pakistan
Oman
Norway
North Korea
Nikaragua Nigeria
Niger
New Zealand
Nepal
Namibia
Myanmar
Mozambique
Mongolia
Morocco
Mexico
Mauritania Mali
Malaysia
Madagascar
Libya
Liberia
Lebanon
Lesotho
Laos
Kyrgysistan
Kenya
Qatar
Kazazhstan
Cambodia
Japan
Jamaica
Israel
Italy
Ireland
Iraq Iran
Indonesia
India
Iceland
Honduras
Guyana Guinea
Guatemala
Greenland
Greece
Great Britain
Ghana
Germany
Gabun Fr. Guyana
France
Finland
Ethiopia
Eritrea
El Salvador
Egypt
Ecuador D. R. Congo
Dom. Rep. Cuba
Columbia
Cote d‘Ivoire
Costa Rica
China
Chile
C.A.R.
Canada
Kamerun
Burkina
Brazil
Botswana
Bolivia
Bhutan
Belize
Belarus
Bangladesh
Bahamas
Australia
Argenena
Angola
Algeria
Alaska
Afghanistan
International Accounting & Compliance
THE U.S. FOREIGN CORRUPT PRACTICES ACT
A BRIEF OVERVIEW
International Accounting & Compliance
INTRODUCTION The (U.S.) Foreign Corrupt Practices Act1 (“FCPA” or “the Act”) was enacted by congress in 1977 in response to revelations of widespread bribery of foreign ofIicials by U.S. companies. The Act makes it illegal for U.S. companies or individuals (domestic concerns), public companies listed on stock exchanges in the United States or who are required to Iile reports with the Securities and Exchange Commission (Issuers), acting anywhere in the world, to directly or indirectly, offer or pay anything of value to foreign ofIicials for the purpose of obtaining or retaining business. The accounting provisions of the act requires issuers to make and keep accurate books and records and to devise and maintain an adequate system of internal accounting controls. The U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) share FCPA enforcement authority. The FCPA is a sweeping law with widespread implication for any U.S. persons or companies doing business internationally. Due to the pace of globalization (and other factors), the U.S. government has increased enforcement efforts resulting in massive Iines and jail time for violators. As a result of the increased scrutiny, companies and individuals doing business internationally face an increasing range of exposure under the FCPA. Even for small organizations and relatively minor infractions the Iines and penalties are so signiIicant they can result in the insolvency of the organization.
Any U.S. business doing business overseas should have a compliance strategy, continuously monitor compliance and be acutely aware of the risks to the organization and its principals.
1. (15 U.S.C. §§ 78dd-‐1, 78dd-‐2, 78dd-‐3, 78m)
International Accounting & Compliance
DOES THE FCPA APPLY TO ME?
The FCPA has a broad range of individuals and businesses that it applies to including: § “Issuers” (including foreign companies, explanation below), their ofIicers, directors, employees,
agents and shareholders
§ Domestic concerns
§ Foreign companies while acting in the territory of the United States (either directly or through an agent)
A company is an “issuer” under the FCPA if it has a class of securities registered under Section 12 of the Exchange Act or is required to Iile periodic or other reports with the SEC under Section 15(d) of the exchange act. In practice this means that any company with a class of securities listed on a national securities exchange in the U.S., or any company with a class of securities quoted in the over-‐the-‐counter market in the U.S. (and required to Iile periodic reports with the SEC) is an issuer. Domestic concerns (15 U.S.C. § 78dd-‐2) are further deIined as any individual who is a citizen, national, or resident of the U.S., or any corporation, partnership, association, joint-‐stock company, business trust, unincorporated organization, or sole proprietorship that is organized under the laws of the U.S. or its states, territories, possessions or commonwealths or that is has its principal place of business in the U.S. OfIicers, directors, employees, agents, or stockholders acting on behalf of a domestic concern, including foreign nationals or companies are also covered.
A company does not need to be a U.S. Company, nor have any place of business in the U.S. to be deemed an issuer.
International Accounting & Compliance
FCPA: THE PROVISIONS
The FCPA addresses the issue of international corruption with two provisions, the anti-‐bribery provisions and the accounting provisions as described below: § Anti-‐bribery provisions: These provisions prohibit individuals and business
from bribing foreign government ofIicials in order to obtain or retain business.
§ The accounting provisions: These provisions impose certain requirements
on issuers, and prohibit individuals and companies from knowingly falsifying an issuer’s books and records or circumventing or failing to implement an issuer’s system of internal controls (note: these provisions only apply to issuers).
Violations of the FCPA can lead to civil and criminal penalties, sanctions, and remedies, including Iines, disgorgement, and/or imprisonment.
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International Accounting & Compliance
ANTI-BRIBERY PROVISIONS
The FCPA’s anti-‐bribery provisions make it unlawful to pay, offer to pay, promise to pay, or authorize to pay money or anything of value to a foreign ofIicial in order to inIluence any act or decision of the foreign ofIicial in his or her ofIicial capacity or to secure any other improper advantage in order to obtain or retain business. The FCPA anti-‐bribery provisions can apply to conduct both inside and outside the United States. Issuers and domestic concerns – as well as their ofIicers, directors, employees, agents, or stockholders – may be prosecuted for using the U.S. mails or any means or instrumentality of interstate commerce in furthers of a corrupt payment to a foreign ofIicial. The act deIines “interstate commerce” as “trade, commerce, transportation, or communication among several states, or between any foreign country and any State or between any State and any place or ship outside thereof…” the Term also includes the intrastate use of any interstate means of communications, or any other interstate instrumentality. Placing a telephone call, sending an e-‐mail, text message or fax, from, to, or through the U.S. involves interstate commerce.
International Accounting & Compliance
ANTI-BRIBERY PROVISIONS: BUSINESS PURPOSE REQUIRED
The FCPA applies only to payments intended to induce or inIluence a foreign ofIicial to use his or her position “in order to assist… in obtaining or retaining business for or with, or directing business to, any person (note: meaning applicable entities or persons). This requirement is known as the “business purpose test “and it is broadly interpreted by the U.S. Government and courts. SpeciIically, the FCPA also prohibits bribes in the conduct of business or to gain a business advantage. Examples of actions taken to obtain or retain business are as follows:
• Winning a contract • InIluencing the procurement process • Circumventing the rules for importation of products • Gaining access to non-‐public bid tender information • Evading taxes or penalties • InIluencing the adjudication of lawsuits or enforcement actions • Obtaining exceptions to regulations
International Accounting & Compliance
ANTI-BRIBERY PROVISIONS: WHO IS A FOREIGN OFFICIAL?
The designation of “foreign ofIicial” is broad and can include individuals that would not have otherwise been considered “ofIicials” under a traditional deIinition. These include: • Any ofIicer or employee of a foreign government or any department, agency, instrumentality thereof; • Any ofIicer or employee of a public international organization; • Any person acting in an ofIicial capacity for or on behalf of any such government, department, agency or
instrumentality; • Any person acting in an ofIicial capacity for on on behalf of any such public international organization.
The FCPA broadly applies to corrupt payments “any” ofIicer or employee of a foreign government and to those acting on the foreign government’s behalf. This means that the FPCA covers both low ranking and high ranking ofIicials.
In addition, the inclusion of the language “department, agency or instrumentality of a foreign government” includes an even wider range of potential government ofIicials. This can include (and it is of particular note when doing business in developing countries) ofIicers, employees, agents of state owned or state-‐controlled
entities. There is no “bright line” when evaluating whether a company is considered an instrumentality of a foreign government. It is advisable in cases where this is not clear to perform a fact-‐speciIic analysis of an entity’s ownership, control, status, and function to make a determination. Public international organization is any organization designed as such by Executive Order under the International Organizations Immunities Act, 22 U.S.C. § 288 or any other organization that the president so designates. These include organizations such as: the World Bank, the International Monetary Fund, the World Intellectual Property Organization, the World Trade Organization, the OECD, the Organization of American States and numerous others.
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International Accounting & Compliance
ANTI-BRIBERY PROVISIONS: 5 ELEMENTS NEEDED FOR A VIOLATION
In order for a payment (or promise of payment) to constitute a violation, Iive elements exist: • The U.S. government has jurisdiction over the party involved.
• The regulated party makes a payment, offer, promise to pay, or authorization to pay or offer anything of value.
• The payment is made to a foreign ofIicial.
• The person making or authorizing the payment has a corrupt intent (it is intended that the payment induce its recipient to misuse his ofIicial position).
• The purpose of the payment is to inIluence a government ofIicial’s actions or decisions, or lack of, that violate the ofIicial’s or other government ofIicial’s duties or responsibilities.
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International Accounting & Compliance
ANTI-BRIBERY PROVISIONS: LIABILTY FOR THIRD PARTIES
Under the theory of vicarious liability, individuals and organizations subject to jurisdiction under the act, can be held liable for the violations of third parties. This means that if an organization participates in transactions with third parties (ex: sales agents, consulting companies, consultants, attorneys, lobbyists, governmental relations Iirms, agents, etc.) where the organization had knowledge that all or a portion of such transaction (money or thing of value) will be offered, given, or promised, directly or indirectly, to a foreign ofIicial it can be held liable and prosecuted under the act. In this context “knowledge” includes both “conscious disregard” and “deliberate ignorance.” This means that you can be prosecuted even if you do not have direct knowledge of the speciIic act or action.
The provisions for third party liability has wide ranging applicability in the developing markets where payments to government ofIicials may be seen as the “cost of doing
business” and structured through third parties so that the beneIiciary can feign ignorance of the transaction. There is further liability for aiding and abetting and conspiracy which will not be discussed in this presentation.
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International Accounting & Compliance
ANTI-BRIBERY PROVISIONS: SUCCESSOR LIABILITY
When a company merges with or acquires another company, the successor company assumes the predecessor company’s liabilities. These liabilities include liability under the FCPA. Some general rules for successor liability as it applies to the FCPA are listed below:
• Whether successor liability applies to a particular corporate transaction depends on the facts and circumstances and applicable federal, state, and foreign law.
• Liability cannot be created by transaction where it would have otherwise not have existed before. This means that if a U.S. parent acquires a foreign company which was not previously subject to FCPA’s jurisdiction, the acquisition of the foreign company would not retroactively create FCPA liability for the acquiring company.
Any company considering the acquisition of another business which operates or conducts business internationally should conduct pre-‐acquisition due diligence to
identify either violations or internal control weaknesses which could result in violations. In a signiIicant number of instances the DOJ and SEC have declined to take action against companies that have voluntarily disclosed and remediated conducted and cooperated with the DOJ and SEC in the merger and acquisition context.
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International Accounting & Compliance
ANTI-BRIBERY PROVISIONS: PARENT SUBSIDIARY LIABILITY
A Parent may be liable for the FCPA violations of its subsidiaries. This is generally in one of two ways: • A parent has participated sufIiciently in the activity to be directly liable for the conduct (ex:
the parent directed or supervised the activities).
• A parent may be liable under traditional agency principles. The fundamental agency in this case is control.
In the case of agency, the DOJ and SEC evaluate the parent’s control, including the parent’s knowledge and direction of the subsidiary’s actions, both generally and in the context of a speciIic transaction. Not only is the formal relationship between the parent and the subsidiary important but also the function of how the parent and subsidiary interact (function over form). If agency exists, then a subsidiary’s actions and knowledge are imputed to its parents. Under the traditional principles of respondeat superior, a company is liable for the acts of its agents, including its employees, undertaken within the scope of their employment and intended to at least beneIit the Company.
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International Accounting & Compliance
FCPA ANTI-BRIBERY PROVISIONS: EXCEPTIONS
The FCPA contains an explicit exception for certain types of payments, referred to as “facilitating or expediting payments” which are made to expedite or secure performance of a routine governmental action by a foreign ofIicial, political party, or party ofIicial that relates to the performance of non-‐discretionary acts. Examples of this are payments to process visas, permits/licenses to do business in a foreign country, governmental papers, provide police protection, provide mail service, expedite supply of utilities such as water, sewer, electrical. SpeciIically excluded from this are any payments made which includes a decision to aware new business or retain current business. This allows companies to avoid liability where small amounts are paid to expedite certain non-‐discretionary government acts.
Warning: This exception is narrowly construed and facts and circumstances may determine that due to size, intent, or other circumstances a facilitating payment may still be deemed a violation. The payor (or beneIiciary in the case of third
party payments) has the burden of proof to establish that the exception applies. Careful consideration should be made prior to making these types of payments.
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International Accounting & Compliance
FCPA ANTI-BRIBERY PROVISIONS: PENALTIES
Penalties for violations of the Act are severe and in most cases range from the millions of dollars to the hundreds of millions of dollars. Each violation of the anti-‐bribery provisions can carry penalties of up to: • Corporations and other business entities: are subject to a Iine of up to $2 million
• Individuals, including ofIicers, directors, stockholders, and agents of companies: subject to a Iine of up to $100,000 and imprisonment for up to Iive years.
This means that a company with 50 violations of the anti-‐bribery provisions (i.e. 50 separate corrupt payments) the penalties could be as high as $100 million.
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International Accounting & Compliance
ANTI-BRIBERY PROVISIONS: AFFIRMATIVE DEFENSES
The FCPA provides two afIirmative defenses to the anti-‐bribery provisions. They are as follows: • The payment was lawful under the written laws and regulations of the foreign country.
• The payment was a reasonable and bona-‐Iide expenditure related to product promotion or performance of a government contract. In order to establish this defense, the defendant must show that the bona Iide expenditures lack a corrupt purpose.
Examples of the second defense may be bona-‐Iide travel expenses for a foreign government ofIicial to tour your plant, meet with engineers, and see the product testing environment. Every component of the trip as paid for by the Company would need to be substantiated, so a company paid “side trip” to Las Vegas or New York with no business purpose, or exorbitant expenses such as luxurious accommodations, limos, $10,000 dinners, etc. would be a violation.
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International Accounting & Compliance
ACCOUNTING PROVISIONS
The FCPA accounting provisions are primarily related to books and records and internal controls. They are as follows:
• Books and records: Issuers must make and keep books, records, and accounts that, in reasonable detail, accurately and fairly reIlect and issuer’s transactions and dispositions of and issuers assets.
• Internal Controls: Issuers must devise and maintain a system of internal controls
sufIicient to assure management’s control, authority, and responsibility of the Iirm’s assets.
The accounting provisions are primarily designed to prevent publicly traded companies from disguising bribes as legitimate commercial transactions. The accounting provisions are more limited in scope than the anti-‐bribery provisions as they only apply to issuers (as de:ined previously). However, the accounting provisions apply regardless of whether the issuer engages in foreign activities.
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International Accounting & Compliance
ACCOUNTING PROVISIONS: BOOKS AND RECORDS
Because bribes, both foreign and domestic, are often mischaracterized in an issuer’s books and records the FCPA requires that issuers must make and keep books, records, and accounts that, in reasonable detail, accurately and fairly reIlect and issuer’s transactions and dispositions of an issuer’s assets. This requirement is designed to prevent the following: • The failure to record the improper transactions.
• The alteration of records to conceal the improper transactions.
• The creation of records that are for the most part correct (i.e. income and expense is correctly reported), but fails to adequately describe the aspects of a potential corrupt payment.
The term “reasonable detail” is deIined in the statute as the level of detail that would “satisfy prudent ofIicials in the conduct of their own affairs,” which means that a number of factors must be weighted that are relevant to a speciIic transaction(s), and also taking into account the costs of compliance. The SEC which has rulemaking authority over the accounting provisions has also adopted two regulations enforcing these provisions. Rule 13b2-‐1 makes it unlawful to falsify accounts, providing that no person shall, directly or indirectly, falsify of cause to be falsiIied, any book, record or account which is required to be kept under the act. Additionally, Rule 13b2-‐2 makes it unlawful to supply false information to auditors.
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International Accounting & Compliance
ACCOUNTING PROVISIONS: INTERNAL CONTROLS
Issuers must adopt a system of internal account controls to provide reasonable assurance that: • Transactions are executed in accordance with management’s general or speciIic authorization;
• Transactions are recorded as necessary to (i) permit preparation of Iinancial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and (ii) to maintain accountability for assets;
• Access to assets is permitted only in accordance with management’s general or speciIic authorization; and
• The recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences…
The act deIines “reasonable assurances” as such level of detail and degree of assurance as would satisfy prudent ofIicials in the conduct of their own affairs. There is no proscribed set of controls as each company operates differently and has particular set of needs and circumstances, a robust and reasonable set of internal controls is necessary to help prevent FCPA violations for all companies doing business internationally.
The FCPA requires that a company make a good-‐faith effort to ensure that any company, including joint ventures, in which the U.S. company or one of its subsidiaries holds 50 percent or less of the voting power comply with the FCPA accounting provisions.
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International Accounting & Compliance
ACCOUNTING PROVISIONS: PENALTIES
Individuals and companies are subject to criminal and civil penalties for violating the FCPA’s accounting and control provisions. • Civil liability: The SEC can seek civil penalties of up to $500,000 for covered entities
and $100,000 for individuals per violation.
• Criminal liability: In criminal cases, a willful violation of the accounting and controls provision is punishable by a Iine of up to $25 million against entities, and a Iine of up to $5 million and imprisonment for up to 20 years for individuals.
An individual may be held criminally liable for “knowingly” falsifying any book, record, or account, or circumventing or failing to implement a system of internal controls. “Knowing” in this context may include willful blindness or conscious
attempts not to know. Important: the accounting provisions do not contain a materiality standard and no proof of knowledge or intent is required to establish a civil violation.
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International Accounting & Compliance
ENFORCEMENT EXAMPLES
Below are some relevant examples of recent FCPA enforcement actions and penalties: • Total S.A. -‐ SEC charged the France-‐based oil and gas company for paying bribes to intermediaries of an Iranian government
ofIicial who then exercised his inIluence to help the company obtain valuable contracts to develop oil and gas Iields. Total agreed to pay $398 million to settle SEC and criminal charges. (5/29/13)
• Parker Drilling Company -‐ SEC charged the worldwide drilling services and project management Iirm with violating the
FCPA by authorizing improper payments to a third-‐party intermediary in order to entertain Nigerian ofIicials involved in resolving the company's customs disputes. Parker Drilling agreed to pay $4 million to settle the SEC's charges. (4/16/13)
• Koninklijke Phillips Electronics -‐ SEC charged the Netherlands-‐based health care company with FCPA violations related to
improper payments made by employees at its Polish subsidiary to health care ofIicials in Poland. Philips agreed to pay more than $4.5 million to settle the charges. (4/5/13)
• Eli Lilly and Company -‐ SEC charged the Indianapolis-‐based pharmaceutical company for improper payments its subsidiaries
made to foreign government ofIicials to win business in Russia, Brazil, China, and Poland. Lilly agreed to pay more than $29 million to settle the charges. (12/20/12)
• Garth R. Peterson -‐ SEC charged Garth R. Peterson with secretly acquiring millions of dollars worth of real estate investments
for himself and an inIluential Chinese ofIicial who in turn steered business to Morgan Stanley's funds. He agreed to a settlement in which he is permanently barred from the securities industry and must pay more than $250,000 in disgorgement and relinquish his approximately $3.4 million interest in Shanghai real estate acquired in his scheme. (4/25/12)
• Smith & Nephew -‐ SEC charged the London-‐based medical device company with violating the FCPA when its U.S. and German
subsidiaries bribed public doctors in Greece for more than a decade to win business. The company and its U.S. subsidiary agreed to pay more than $22 million to settle civil and criminal cases. (2/6/12)
• Magyar Telekom -‐ SEC charged the largest telecommunications provider in Hungary and three of its former top executives
with bribing government and political party ofIicials in Macedonia and Montenegro. The Iirm and its parent company agreed to pay $95 million to settle civil and criminal charges. (12/29/11
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International Accounting & Compliance
ENFORCEMENT EXAMPLES (Cont.)
Below are some relevant examples of recent FCPA enforcement actions and penalties: • Watts Water Technologies and Leesen Chang -‐ SEC charged the company and a former vice president
of sales for improper payments disguised as sales commissions by its Chinese subsidiary to employees at state-‐owned design institutes in order to inIluence design speciIications that favored their valve products for infrastructure products in China. (10/13/11)
• Armor Holdings -‐ SEC charged the Jacksonville, Fla.-‐based body armor supplier for illicit payments to United Nations ofIicials to obtain contracts related to U.N. peacekeeping missions. Armor Holdings agreed to an SEC settlement of $5.7 million and a criminal Iine of $10.29 million. (7/13/11)
• Data Systems & Solutions LLC – The DOJ charged the Reston, Va. based nuclear facility design, installation, maintenance and other service provider for paying bribes to ofIicials employed by the Ignalina Nuclear Power Plant, a state-‐owned nuclear power plant in Lithuania. Data Systems entered into a deferred prosecution and paid a $8.82 million criminal penalty. (06/18/2012)
• Biomet, Inc. – The DOJ charged the Indiana based medical device company for making various improper payments to publicly employed healthcare providers in Argentina, Brazil and China to secure lucrative business in hospitals. The Company entered into a deferred prosecution agreement and paid a $17.28 million criminal penalty. (03/26/2012)
• Marubeni Corporation – The DOJ charged the Tokyo based trading company with conspiracy and aiding and abetting violations of the FCPA in a scheme to bribe Nigerian government ofIicials to obtain contracts. Under the terms of a deferred prosecution agreement the Company paid $54.6 million criminal penalty and $1.7 billion in total penalties for all members of the joint venture (Halliburton $579 million, Technip $338 million, Snamprognett $365 million, JGC $218.8 million). (01/17/2012)
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International Accounting & Compliance
GRAY’S FCPA SOLUTIONS Gray believes that the FCPA is the single most important compliance issue for companies doing business internationally. The Law’s broad reach can apply to businesses and individuals that never thought that they would be subject to its provisions. With civil and criminal penalties in the tens to hundreds of millions of dollars and the potential of jail time, no compliance problem needs addressing as urgently by international organizations than the FCPA. Single violations can put small to medium size companies out of business, multiple violations result in insolvency for even large companies. To help you navigate implications of the FCPA for your business, Gray provides a broad range of FCPA compliance solutions tailored to your organization and operating environment. With a deep expertise of operating and auditing in the emerging markets Gray is uniquely position to provide world class services to your organization:
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FCPA INVESTIGATIONS
ANTI-‐CORRUPTION PROGRAMS
IMPLEMENTATION
THIRD PARTY MONITORING
INTERNAL CONTROL DESIGN
International Accounting & Compliance
CONTACT US
Website www.grayintl.com
E-mail [email protected]
Addresses U.S. International OfIice Attn: Jeremy Stobie, CPA, CFE 10900 NE 8th Street Suite 1000 Bellevue, WA 98004
Phone + 001 425.999.3685 xt 10
Gray welcomes your questions, comments and inquiries and would like the opportunity to serve you.
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