Foreign Corrupt Practices Act
The FCPA amended the SEC to make it unlawful for securities issuers and domestic concerns to make an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to any foreign official, foreign political party or official thereof or any person, while knowing that all or a portion of such money or thing of value will be offered, given, or promised, directly or indirectly, to any foreign official or to any foreign political party or official thereof.
In addition to the above, it is also unlawful for foreign persons and foreign non-issuer entities that, either directly or through an agent, engage in any act in furtherance of a corrupt payment (or an offer, promise, or authorization to pay) while in the territory of the United States.
The FCPA defines ‘domestic concern‘ as any individual who is a citizen, national, or resident of the United States or corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship which has its principal place of business in the United States, or which is organized under the laws of a State of the United States or a territory, possession, or commonwealth of the United States. A ‘foreign official’ is ‘any officer or employee of a foreign government or any department, agency, or instrumentality thereof, or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality. Such term does not include any employee of a foreign government or any department, agency, or instrumentality thereof whose duties are essentially ministerial or clerical.’
Furthermore, the FCPA requires from issuers to make and keep books, records, and
accounts that, in reasonable detail, accurately and fairly reflect an issuer‘s transactions and dispositions of an issuer‘s assets. In addition, it requires them to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that:
- transactions are executed in accordance with management’s general or specific authorization;
- transactions are recorded as necessary;
- access to assets is permitted only in accordance with management’s general or specific 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.
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Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act of 1977 (‘FCPA’) prohibits bribery of foreign officials by U.S. persons and businesses who issue securities under the Securities Exchange Act of 1934 (‘SEC’), domestic concerns and foreign persons. Additionally, it provides that securities issuers make and keep accurate books and records and devise and maintain an adequate system of internal accounting.
Last Updated: July 30, 2019
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