FCPAméricas Blog
The Most Important Features of the FCPA Guidance … for Latin America
12.14.2012
There are several reasons to read the recently published FCPA Guidance. FCPAméricas has described some of them, including its level of detail, hypothetical scenarios, and declinations. The current climate of enhanced enforcement is another obvious reason to do so. But some sections may be particularly interesting for Latin American audiences. Consider the following:
1. Context: The FCPA, including its history and the way it is enforced, is a unique and revolutionary law. It is technically embedded in common law, and the common law system is largely based on the principle of precedent, also known as stare decisis. But Latin American audiences should also be aware that few FCPA cases actually go to court. Thus, precedent does not always take on the same meaning in the FCPA context. Instead, FCPA enforcement actions are often settled with the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC). Prosecutorial discretion is of paramount importance.
The Guidance helps civil law audiences better understand these differences by shedding light on the law’s context. It describes the historical background on pages 3-4. It shows how the FCPA is part of a web of other laws targeting financial crime on pages 48-49.
2. Jurisdiction: The law’s jurisdictional reach is aggressive. This is one of the most controversial features of the law for foreign audiences. How can it be that a U.S. law reaches the actions of a non-US company paying bribes in Latin America? How can a Latin American company be subject for paying bribes in an area of the world that has nothing to do with the United States? Why have numerous individuals in Argentina been charged under the FCPA for paying bribes in Argentina?
The Guidance provides answers on pages 10-12. On page 4, it describes the amendments that Congress made to the law in 1998 that, among other things, extended the law to “reach certain foreign persons who commit an act in furtherance of a foreign bribe while in the United States.” The discussions on aiding and abetting, conspiracy, and agency on pages 12 and 34 are particularly informative: “A foreign national or company may also be liable under the FCPA if it aids or abets, conspires with, or acts as an agent of an issuer or domestic concern, regardless of whether the foreign national or company itself takes any action in the United States.”
The FCPA even reaches third party payments, described on pages 21-23. In fact, bribe payments by agents, consultants, distributors, and other third parties represent one of the highest risk areas under the FCPA. Latin American companies might be liable for the improper payments of their third parties. They might also be liable when they act as the third parties themselves. The Guidance gives examples of when a non-U.S. third party has been subject to FCPA enforcement.
3. Books and Records and Internal Controls Violations: Latin American companies should be careful not to focus exclusively on the corruption prohibitions and forget the accounting provisions. Though the FCPA deals with “Corrupt Practices,” it is a two-part law. For companies listed in the United States, the accounting provisions (described at pages 38-41) are equally, if not more, important. They follow something close to a strict liability standard, not always requiring authorities to establish corrupt intent. As more Latin American companies go public in the United States, the relevance of these rules in the region will only grow. Good examples of internal controls at work are found on pages 16 and 19. Ways that SEC reporting problems can lead to other violations are described on page 41.
Even if a Latin America company is not listed in the United States, it still might have to follow accounting requirements if it is a subsidiary or partner of a U.S.-listed company, described on pages 42-43. Since a publicly traded company’s books and records include those of its consolidated subsidiaries and affiliates, that company’s responsibility “extends to ensuring that subsidiaries or affiliates under its control, including foreign subsidiaries and joint ventures, comply with the accounting provisions.” The section provides helpful examples.
The FCPAméricas blog is not intended to provide legal advice to its readers. The blog entries and posts include only the thoughts, ideas, and impressions of its authors and contributors, and should be considered general information only about the Americas, anti-corruption laws including the U.S. Foreign Corrupt Practices Act, issues related to anti-corruption compliance, and any other matters addressed. Nothing in this publication should be interpreted to constitute legal advice or services of any kind. Furthermore, information found on this blog should not be used as the basis for decisions or actions that may affect your business; instead, companies and businesspeople should seek legal counsel from qualified lawyers regarding anti-corruption laws or any other legal issue. The Editor and the contributors to this blog shall not be responsible for any losses incurred by a reader or a company as a result of information provided in this publication. For more information, please contact Info@MattesonEllisLaw.com.
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@2012 Matteson Ellis Law, PLLC
Post authored by Matteson Ellis, FCPAméricas Founder & Editor
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