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International Business and FCPA Compliance Part 1

Surendran K. Pattel Attorney & Counselor at Law, PKS Law Firm, PLLC

Surendran K. Pattel
Attorney & Counselor at Law, PKS Law Firm, PLLC

 

Question: How can FCPA violations be avoided in international business?

The Foreign Corrupt Practices Act (FCPA) was enacted in 1977, the legislative response to revelations that American-based companies were bribing foreign officials on a widespread basis in their pursuit of lucrative business deals. The Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) share FCPA enforcement, which has increased in recent years. Ongoing investigations are reported to involve drug manufacturers, computer companies, media firms, and retailers.
FCPA investigations and their related costs can be onerous, so it is best for those in business to know as much as possible about the FCPA, beginning with its basic components and functions.
First, there are anti-bribery provisions, which prohibit payments to foreign officials to obtain or retain businesses. Generally, these provisions make it unlawful to offer, pay, promise to pay, or promise to give anything of value to any foreign official in order to obtain or retain a business; they also are meant to prohibit offers or payments to secure an improper business advantage.
Second, there are accounting provisions, rules requiring accurate bookkeeping and record- keeping, as well as a comprehensive system of internal accounting controls. The FCPA accounting provisions prohibit falsification of books and records, as well as knowingly failing to implement internal controls.
Those subject to FCPA requirements include “domestic concerns” (that is, U.S. residents and business concerns) and “issuers,” which are all public companies listed on U.S. stock exchanges or are required to file periodic reports with the SEC. Also, certain foreign individuals and businesses, while acting on U.S. territory, may be subject to the FCPA.
The SEC has broad authority for civil enforcement of the FCPA over issuers and their officers. These individuals may include directors, employees, agents, and stockholders who act on the issuer’s behalf. Other U.S. agencies and departments that can become involved in FCPA enforcement include the Internal Revenue Service, the Department of Homeland Security, and the Federal Bureau of Investigation.
In the next column we will discuss in more detail the FCPA anti-bribery and accounting provisions.

Disclaimer: Information in this column is meant to be general and informational; it is not intended as legal advice. Consult an attorney regarding your personal situation before you take any action that has legal consequences.

BIO: Surendran K. Pattel is an Indian-born attorney in private practice in the Houston area. He is the founder of PKS Law Firm, PLLC. He is licensed to practice in Texas, United States District Court Southern District of Texas, and in India. To contact please email: adv.surendran@gmail.com


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