Every company that is based in the United States but does its business beyond the national boundaries has to adhere
to the country’s rules and guidelines. Foreign Corrupt Practices Act (FCPA), enacted in 1977, defines what these rules and guidelines are and how they can impact a company’s business model. The FCPA does offer two provisions-Anti-Bribery and Accounting. The Anti-Bribery provision makes it essential for any U.S. company or even individuals to offer, directly or indirectly, anything of monetary value to a foreign government official for influencing and securing the award of business or favors from him. The Accounting provision makes it illegal for a company reporting to the SEC to fail in maintaining accounting books accurately.
Staying compliant with the FCPA guidelines is of utmost importance, in order to avoid getting penalized for violating those guidelines. Listed below are some FCPA basics that can help small businesses comprehend what they need to do to stay compliant:
Corruption in international business is omnipresent:
Everyone lives with the perception that their companies adhere to laws of the land. However, when it comes to doing business with a company in a foreign land, where there is a different work culture, people speak a different language, and the rules of the games are drastically bent. Paying bribes to get business favors is considered normal, even when the U.S. laws deem that as illegal.
Conviction numbers under FCPA are on the rise:
Going by the statistics, more than 40 cases of FCPA violations surface every year, with as many as 150 investigations going on at any given time. The statistics also reveal that more than a billion dollars of penalties are imposed for FCPA violations every year by SEC and DOJ.
Assessing risk of FCPA violations in international business:
FCPA guidelines define a “Government Official” as every such person who works at any level with a government-owned company. Doing business with them while engaging in malpractices can incur hefty penalties.
The importance of training management and employees with compliance adherence:
Companies operating in a foreign country usually pushes to train employees over there with appropriate international business rules. Those who have budget constraints should at least try to train employees in the United States with international business practices via in-person training, online training, or as a combination of both.
Establish internal controls over company’s expenses:
Finance departments for several companies in the United States may have little idea about FCPA issues and just how critical such issues can be. Any small bribe or inaccurate book records can jumble the system of controls and may lead to a company getting prosecuted. Thus, it will always be essential to have a mechanism in place using which a company can control its books and records, and how expenses for different activities are made using its internal funds.
Include FCPA terms and conditions clearly in every international contract:
Inserting terms and conditions is a general practice that is inexpensive and impactful at the same time. Doing so can give everyone an idea just how much dedicated your company is towards curbing corruption, and what and how the partners need to act for staying compliant with the company guidelines.
For more on anti-bribery and anti-corruption laws in the corporate context, join expert speaker Diana Trevley in a live webinar, titled ‘Bribery and Corruption: What Every Employee Needs to Know’ on Wednesday, March 29, 2017. By attending this event, you will get an overview of the anti-bribery and anti-corruption laws, including the FCPA. You will also get to learn how an organization can mitigate corruption risks with an effective corporate compliance and ethics program, and work towards contributing to an ethical culture.
