Cybersecurity and nonprofits: Time to button up!
If you were to look up the biggest data breaches over the last 10 years, you would find a gathering of some of the largest companies in the world, many ...
The Foreign Corrupt Practices Act (FCPA), enacted in 1977, generally prohibits the payment of bribes to foreign officials to assist in obtaining or retaining business. The FCPA can apply to prohibited conduct anywhere in the world and extends to publicly traded companies and their officers, directors, employees, stockholders, and agents. Agents can include third party agents, consultants, distributors, joint-venture partners, and others.
The FCPA also requires issuers to maintain accurate books and records and have a system of internal controls sufficient to, among other things, provide reasonable assurances that transactions are executed and assets are accessed and accounted for in accordance with management's authorization.
The costs of implementing and adhering to a robust compliance program relative to the Foreign Corrupt Practices Act, which is the governing law that regulates a Company’s procedural responsibilities in foreign lands insofar as it relates to bribery, is a small price to pay in relation to the penalties and headaches of non-compliance with this law.
The sanctions for FCPA violations can be significant. The SEC may bring civil enforcement actions against issuers and their officers, directors, employees, stockholders, and agents for violations of the anti-bribery or accounting provisions of the FCPA. Companies and individuals that have committed violations of the FCPA may have to disgorge their ill-gotten gains plus pay prejudgment interest and substantial civil penalties. Companies may also be subject to oversight by an independent consultant.
Take for example, in February 2016, the Securities and Exchange Commission announced a global settlement along with the U.S. Department of Justice and Dutch regulators that requires telecommunications provider VimpelCom Ltd. to pay more than $795 million to resolve its violations of the Foreign Corrupt Practices Act (FCPA) to win business in Uzbekistan.
The SEC alleges that VimpelCom offered and paid bribes to an Uzbek government official related to the President of Uzbekistan as the company entered the Uzbek telecommunications market and sought government-issued licenses, frequencies, channels, and number blocks. At least $114 million in bribe payments were funneled through an entity affiliated with the Uzbek official, and approximately a half-million dollars in bribes were disguised as charitable donations made to charities directly affiliated with the Uzbek official.
“VimpelCom made massive revenues in Uzbekistan by paying over $100 million to an official with significant influence over top leaders of the Uzbek government,” said Andrew J. Ceresney, Director of the SEC Enforcement Division. “These old-fashioned bribes, hidden through sham contracts and charitable contributions, left the company’s books and records riddled with inaccuracies.”
The settlement requires VimpelCom to pay $167.5 million to the SEC, $230.1 million to the U.S. Department of Justice, and $397.5 million to Dutch regulators. The company must retain an independent corporate monitor for at least three years.
“International cooperation among regulators is critical to holding companies responsible for all facets of a bribery scheme. This closely coordinated settlement is a product of the extraordinary efforts of the SEC, Department of Justice, and law enforcement partners around the globe to jointly pursue those who break the law to win business,” said Kara N. Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit.
The following is a list of the SEC's FCPA enforcement actions listed by calendar year:
Note: The above information was obtained directly from the SEC website www.SEC.gov.
Contact us if you need assistance in developing policy considerations and procedures to comply with the requirements of the FCPA and visit our webpage to learn more about the services we can provide for public companies.
The general rule under Internal Revenue Code §451 is that an item of income shall be included in gross income for the taxable year or receipt unless ...