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Ahead of the Curve Auto Supplier Blog

September 04, 2012

DOJ is Cracking Down, Is Your Company Stepping Up?

The Department of Justice and the Securities and Exchange Commission over the last several years have stepped up enforcement of the Foreign Corrupt Practices Act (FCPA). The FCPA has two primary sets of provisions: (1) the anti-bribery provisions, which prohibit bribery of foreign public officials, and (2) the accounting provisions, which require accurate books and records and adequate internal compliance controls.  Failure to comply with the FCPA can be a costly mistake with a maximum criminal penalty of $2 million and a maximum civil penalty of $500,000.  Extended prison sentences are also being pursued for those violating the FCPA provisions.    The best way to reduce the chance of having to defend against FCPA charges is to implement a proactive compliance program..  The following are some characteristics of an effective compliance program: 1. It assesses the level of risk that a company faces – by reviewing issues such as whether the company does business in a high risk country, whether the company's business entails a large amount of customer travel and entertainment, or whether the company relies heavily on outside distributors. 2. It is sufficiently funded and includes comprehensive oversight systems (internal reporting systems that are well publicized to allow employees and third party agents to report improper conduct anonymously and without the threat of retaliation). 3. It disseminates policies, processes and protocols to  reduce the likelihood of a company violating the FCPA, such as code of conduct and anti-corruption policies, third party, joint venture or merger and acquisition diligence processes and/or audit and compliance audit protocols. 4. It involves active employee training programs to permit employees to interact and allow up-to-date information to be disseminated. 5. It includes investigation and remediation policies to create "safe" reporting avenues, ensure appropriate responses to reported violations and create discipline procedures for employees who violate the law or company policies, including penalties for failure to detect violations of the law and company policy. 6. It includes self-reporting provisions to allow such issues to be identified quickly and reviewed with appropriate regulatory authorities.

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