Foreign Corrupt Practices Act
GrayIntl
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28 slides
Nov 06, 2013
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About This Presentation
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 Int...
Slide Content
U.S. FOREIGN CORRUPT PRACTICES ACT
Overview of the FCPA
GENEVA&&&&&|&&&&&HONG&KONG&&&&|&&&&&SEATTLE&&&&|&&&&&SHANGHAI&&&&
International
Accounting &
Compliance
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%
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For%more%information%about%us,%please%visit%us%at%www.grayintl.com..
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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%NonY
Prosecution%Agreements%or%
NonYTarget%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.
!
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%NonY
Prosecution%Agreements%or%
NonYTarget%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
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%preYresidency%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&
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%preYresidency%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&
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Vietnam&
Venezuela&
U.A.E&
Uzbekistan&&
USA&
Uruguay&
Ukraine&
Uganda&
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Tunisia&
Turkey&
Turkmenistan&
Togo&
Thailand&
Tanzania&
Taiwan&
Tajikistan&
Syria&
Swaziland&
South&Korea&
South&Africa&
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Sudan&
Somalia&
Sierra&Leone&
Senegal&
Sweden&
Saudi&
Arabia&
Russia&
Romania&
Portugal&
Poland&
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Liberia&
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Kenya&
Qatar&
Kazazhstan&
Cambodia&
Japan&
Jamaica&
Israel&
Italy&
Ireland&
Iraq&
Iran&
Indonesia&
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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&
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Alaska&
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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
Accounting &&
Compliance&
THE U.S. FOREIGN CORRUPT
PRACTICES ACT
%%
A BRIEF OVERVIEW
International&
Accounting &&
Compliance&
INTRODUCTION
The%(U.S.)%Foreign%Corrupt%Practices%Act
1
%(“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.%§§%78ddY1,%78ddY2,%78ddY3,%78m)%&
Accounting &&
Compliance&
INTRODUCTION
The%(U.S.)%Foreign%Corrupt%Practices%Act
1
%(“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.%§§%78ddY1,%78ddY2,%78ddY3,%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%overYtheYcounter%
market%in%the%U.S.%(and%required%to%Iile%periodic%reports%with%the%SEC)%is%an%issuer.%%
%
Domestic%concerns%(15%U.S.C.%§%78ddY2)%are%further%deIined%as%any%individual%who%is%a%citizen,%national,%
or%resident%of%the%U.S.,%or%any%corporation,%partnership,%association,%jointYstock%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.%
%
%
%
%
!
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%overYtheYcounter%
market%in%the%U.S.%(and%required%to%Iile%periodic%reports%with%the%SEC)%is%an%issuer.%%
%
Domestic%concerns%(15%U.S.C.%§%78ddY2)%are%further%deIined%as%any%individual%who%is%a%citizen,%national,%
or%resident%of%the%U.S.,%or%any%corporation,%partnership,%association,%jointYstock%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%antiYbribery%provisions%and%the%accounting%provisions%as%described%below:%
%
! AntiYbribery%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.%%
%
%
%
%
!
WWW.COMPANYSITE.COM&&&&&|&&&&&[email protected]&&&&|&&&&&+123&456&789&&&&|&&&&&THIS&STREET&321,&CITY,&COUNTRY&
Accounting &&
Compliance&
FCPA: THE PROVISIONS
The%FCPA%addresses%the%issue%of%international%corruption%with%two%provisions,%
the%antiYbribery%provisions%and%the%accounting%provisions%as%described%below:%
%
! AntiYbribery%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.%%
%
%
%
%
!
WWW.COMPANYSITE.COM&&&&&|&&&&&[email protected]&&&&|&&&&&+123&456&789&&&&|&&&&&THIS&STREET&321,&CITY,&COUNTRY&
International&
Accounting &&
Compliance&
ANTI-BRIBERY PROVISIONS
The%FCPA’s%antiYbribery%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%antiYbribery%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%eYmail,%text%message%or%fax,%
from,%to,%or%through%the%U.S.%involves%interstate%commerce.%%
%
!
Accounting &&
Compliance&
ANTI-BRIBERY PROVISIONS
The%FCPA’s%antiYbribery%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%antiYbribery%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%eYmail,%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%nonYpublic%bid%tender%information%
• Evading%taxes%or%penalties%
• InIluencing%the%adjudication%of%lawsuits%or%enforcement%actions%
• Obtaining%exceptions%to%regulations%
%
%
%
%
%
!
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%nonYpublic%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%stateYcontrolled%
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%factYspeciIic%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.%
%
%
%
%
!
WWW.COMPANYSITE.COM&&&&&|&&&&&[email protected]&&&&|&&&&&+123&456&789&&&&|&&&&&THIS&STREET&321,&CITY,&COUNTRY&
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%stateYcontrolled%
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%factYspeciIic%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.%
%
%
%
%
!
WWW.COMPANYSITE.COM&&&&&|&&&&&[email protected]&&&&|&&&&&+123&456&789&&&&|&&&&&THIS&STREET&321,&CITY,&COUNTRY&
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.%
%
%
%
%
%
!
WWW.COMPANYSITE.COM&&&&&|&&&&&[email protected]&&&&|&&&&&+123&456&789&&&&|&&&&&THIS&STREET&321,&CITY,&COUNTRY&
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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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%preYacquisition%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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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%preYacquisition%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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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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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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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%nonYdiscretionary%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%
nonYdiscretionary%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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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%nonYdiscretionary%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%
nonYdiscretionary%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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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%antiYbribery%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%antiYbribery%provisions%(i.e.%50%
separate%corrupt%payments)%the%penalties%could%be%as%high%as%$100%million.%%
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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%antiYbribery%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%antiYbribery%provisions%(i.e.%50%
separate%corrupt%payments)%the%penalties%could%be%as%high%as%$100%million.%%
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ANTI-BRIBERY PROVISIONS: AFFIRMATIVE DEFENSES
The%FCPA%provides%two%afIirmative%defenses%to%the%antiYbribery%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%bonaYIide%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%bonaYIide%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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Compliance&
ANTI-BRIBERY PROVISIONS: AFFIRMATIVE DEFENSES
The%FCPA%provides%two%afIirmative%defenses%to%the%antiYbribery%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%bonaYIide%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%bonaYIide%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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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%antiYbribery%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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Accounting &&
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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%antiYbribery%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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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%13b2Y1%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%13b2Y2%makes%it%unlawful%to%supply%false%
information%to%auditors.%
%
%
%
%
%
%
!
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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%13b2Y1%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%13b2Y2%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%goodYfaith%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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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%goodYfaith%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.%
%
%
%
%
%
%
%
%
%
!
WWW.COMPANYSITE.COM&&&&&|&&&&&[email protected]&&&&|&&&&&+123&456&789&&&&|&&&&&THIS&STREET&321,&CITY,&COUNTRY&
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.%%
%
%
!
WWW.COMPANYSITE.COM&&&&&|&&&&&[email protected]&&&&|&&&&&+123&456&789&&&&|&&&&&THIS&STREET&321,&CITY,&COUNTRY&
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.%%
%
%
!
WWW.COMPANYSITE.COM&&&&&|&&&&&[email protected]&&&&|&&&&&+123&456&789&&&&|&&&&&THIS&STREET&321,&CITY,&COUNTRY&
International&
Accounting &&
Compliance&
ENFORCEMENT EXAMPLES
Below%are%some%relevant%examples%of%recent%FCPA%enforcement%actions%and%penalties:%
%
• Total%S.A.%%Y%SEC%charged%the%FranceYbased%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%Y%SEC%charged%the%worldwide%drilling%services%and%project%management%Iirm%with%violating%the%
FCPA%by%authorizing%improper%payments%to%a%thirdYparty%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%Y%SEC%charged%the%NetherlandsYbased%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%Y%SEC%charged%the%IndianapolisYbased%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%Y%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%Y%SEC%charged%the%LondonYbased%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%Y%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%
%
%
!
WWW.COMPANYSITE.COM&&&&&|&&&&&[email protected]&&&&|&&&&&+123&456&789&&&&|&&&&&THIS&STREET&321,&CITY,&COUNTRY&
Accounting &&
Compliance&
ENFORCEMENT EXAMPLES
Below%are%some%relevant%examples%of%recent%FCPA%enforcement%actions%and%penalties:%
%
• Total%S.A.%%Y%SEC%charged%the%FranceYbased%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%Y%SEC%charged%the%worldwide%drilling%services%and%project%management%Iirm%with%violating%the%
FCPA%by%authorizing%improper%payments%to%a%thirdYparty%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%Y%SEC%charged%the%NetherlandsYbased%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%Y%SEC%charged%the%IndianapolisYbased%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%Y%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%Y%SEC%charged%the%LondonYbased%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%Y%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%
%
%
!
WWW.COMPANYSITE.COM&&&&&|&&&&&[email protected]&&&&|&&&&&+123&456&789&&&&|&&&&&THIS&STREET&321,&CITY,&COUNTRY&
International&
Accounting &&
Compliance&
ENFORCEMENT EXAMPLES (Cont.)
Below%are%some%relevant%examples%of%recent%FCPA%enforcement%actions%and%penalties:%
%
• Watts%Water%Technologies%and%Leesen%Chang%%Y%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%stateYowned%design%institutes%in%order%to%inIluence%design%speciIications%that%
favored%their%valve%products%for%infrastructure%products%in%China.%(10/13/11)%
• Armor%Holdings%Y%SEC%charged%the%Jacksonville,%Fla.Ybased%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%stateYowned%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)%
%
%
!
WWW.COMPANYSITE.COM&&&&&|&&&&&[email protected]&&&&|&&&&&+123&456&789&&&&|&&&&&THIS&STREET&321,&CITY,&COUNTRY&
Accounting &&
Compliance&
ENFORCEMENT EXAMPLES (Cont.)
Below%are%some%relevant%examples%of%recent%FCPA%enforcement%actions%and%penalties:%
%
• Watts%Water%Technologies%and%Leesen%Chang%%Y%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%stateYowned%design%institutes%in%order%to%inIluence%design%speciIications%that%
favored%their%valve%products%for%infrastructure%products%in%China.%(10/13/11)%
• Armor%Holdings%Y%SEC%charged%the%Jacksonville,%Fla.Ybased%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%stateYowned%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)%
%
%
!
WWW.COMPANYSITE.COM&&&&&|&&&&&[email protected]&&&&|&&&&&+123&456&789&&&&|&&&&&THIS&STREET&321,&CITY,&COUNTRY&
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:%
%
%
!
WWW.COMPANYSITE.COM&&&&&|&&&&&[email protected]&&&&|&&&&&+123&456&789&&&&|&&&&&THIS&STREET&321,&CITY,&COUNTRY&
FCPA&INVESTIGATIONS&
ANTIfCORRUPTION&PROGRAMS&
IMPLEMENTATION&
THIRD&PARTY&MONITORING&
INTERNAL&CONTROL&DESIGN&
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:%
%
%
!
WWW.COMPANYSITE.COM&&&&&|&&&&&[email protected]&&&&|&&&&&+123&456&789&&&&|&&&&&THIS&STREET&321,&CITY,&COUNTRY&
FCPA&INVESTIGATIONS&
ANTIfCORRUPTION&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%8
th
%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.%
WWW.COMPANYSITE.COM&&&&&|&&&&&[email protected]&&&&|&&&&&+123&456&789&&&&|&&&&&THIS&STREET&321,&CITY,&COUNTRY&
Accounting &&
Compliance&
CONTACT US
Website
www.grayintl.com%
[email protected]%
%
Addresses
U.S.%International%OfIice% % %%
Attn:%Jeremy%Stobie,%CPA,%CFE% %%
10900%NE%8
th
%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.%
WWW.COMPANYSITE.COM&&&&&|&&&&&[email protected]&&&&|&&&&&+123&456&789&&&&|&&&&&THIS&STREET&321,&CITY,&COUNTRY&
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