Home » Columnists » International Business and FCPA Compliance – Part 3

International Business and FCPA Compliance – Part 3

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

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

Question: What are the basic FCPA accounting provisions?
Answer: The accounting provisions of the Foreign Corrupt Practices Act (FCPA) consist of two main components. First and foremost, the act requires diligent maintenance of records that reflect an issuer’s transactions and disposition of assets both accurately and fairly. Ideally, all books and records are to be kept in such as manner as to prevent incorrect characterizations of bribes, or attempts to hide bribes. In addition, the FCPA contains provisions that require issuers to devise a system that ensures management control, authority, and responsibility for the firm’s assets.
Under FCPA accounting provisions, there can be civil liabilities for both companies and individuals. Also, if the company or the individuals knowingly fail to comply with FCPA accounting provisions, they can be held criminally liable. Remember, however, that FCPA accounting provisions apply only to issuers, not private companies.
There are fines up to $2 million for corporations and other business entities, and $100,000 for individuals, that knowingly violate FCPA anti-bribery provisions; guilty individuals are also subject to imprisonment for up to five years. Willful violations of the accounting provisions can result in businesses being fined up to $25 million; individuals can be fined up to $5 million. Individuals also face the possibility of 20 years in prison for criminal violations. The courts can impose additional fines under the Alternative Fines Act.
The U.S. Department of Justice can pursue civil actions for anti-bribery violations. In addition, the Securities and Exchange Commission can pursue civil actions for violations of the accounting provisions of the FCPA. For violations of anti-bribery provisions, a civil penalty up to $10,000 per violation is possible. For violations of accounting provisions, the SEC has flexibility in terms of penalties; its penalties depend on the severity of the violation.
Additional consequences stemming from FCPA violations can include: being barred from contracting with the federal government; cross-debarment by multilateral development banks; or severe limitations on certain export privileges.
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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