FCPA'S (FOREIGN CORRUPT PRACTICES ACT OF 1977) IMPACT ON DIRECTORS

• NCJ Number: 65234
• Journal: Financial Executive Volume: 48 Issue: 2 Dated: (FEBRUARY 1980) Pages: 50,52-55
• Author(s): D S VANRIPER
• Date Published: 1980
• Length: 5 pages
• Corporate Author: Financial Executives Institute
• Publication Format: Article
• Language: English
• Country: United States of America

Annotation

THE FOREIGN CORRUPT PRACTICES ACT (FCPA) OF 1977, AIMED AT ENDING FOREIGN BRIBERY BY U.S. COMPANIES, HAS CHARGED CORPORATE DIRECTORS AND OFFICERS WITH INCREASED LEGAL RESPONSIBILITIES.

Abstract

THESE CORPORATE OFFICIALS ARE SUBJECT TO A MAXIMUM 5-YEAR JAIL TERM AND A $10,000 FINE IF CONVICTED OF VIOLATING THE LAW. SIMILARLY, CORPORATIONS ARE SUBJECT TO PENALTIES OF UP TO $1 MILLION. ALTHOUGH IT IS UNCLEAR WHETHER, OR UNDER WHAT CIRCUMSTANCES, FOREIGN SUBSIDIARIES OF U.S. CORPORATIONS ARE COVERED BY THE LAW, IF IT IS DETERMINED THAT THE LAW DOES APPLY TO FOREIGN SUBSIDIARIES, U.S. DIRECTORS AND OFFICERS COULD BE PROSECUTED AND CONVICTED IF THEY KNEW ABOUT OR AUTHORIZED PAYMENTS BY A FOREIGN SUBSIDIARY. THE LAW APPLIES TO ALL U.S. COMPANIES WHETHER PRIVATELY OR PUBLICLY OWNED. THE ACT HAS THREE MAJOR SUBSECTIONS: ACCOUNTING STANDARDS; FOREIGN CORRUPT PRACTICES BY ISSUERS (I.E., REGISTRANTS), AND FOREIGN CORRUPT PRACTICES BY DOMESTIC CONCERNS. THE ACCOUNTING STANDARDS ARE APPLICABLE TO EVERY ISSUER HAVING A CLASS OF SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934, AND TO EVERY ISSUER REQUIRED TO FILE REPORTS PURSUANT TO SECTION 15 (D) OF THE SAME ACT. THE ACCOUNTOMG STANDARDS DO NOT APPLY TO OTHER DOMESTIC CONERS. TO COMPLY WITH THESE PROVISIONS, ISSUERS SHOULD FORMALLY REVIEW AND TEST THEIR SYSTEM OF INTERNAL ACCOUNTING CONTROLS AND DEVISE A PROCEDURE FOR MONITORING CHANGES IN THE SYSTEM. DETAILED EXPLANATIONS AND DEFINITIONS ARE PROVIDED TO ENABLE CORPORATE MANAGEMENT TO COMPLY. A CAREFULLY PREPARED CORPORATE CODE OF CONDUCT ADOPTED BY THE BOARD OF DIRECTORS OF EACH CORPORATION SHOULD CREATE A CORPORATE ENVIRONMENT THAT ENCOURAGES INTEGRITY OF MANAGEMENT AND COMPLIANCE WITH THE LAW. OTHER CORPORATE ACTIONS SHOULD INCLUDE CHECKING UP ON FOREIGN OPERATIONS, CONFERRING WITH OUTSIDE AUDITORS, AND ENCOURAGING COMPLIANCE BY THE INTERNAL AUDIT DEPARTMENT. (PRG)