In 2013 the SEC has issued $468 Million in fines for violations with the Foreign Corrupt Practices Act (FCPA) to date. Moving into 2014 enforcement of the FCPA will continue to be a high priority area for the SEC. This financial wake up call which comes on the heels of Wal-Mart’s high profile Mexican bribery case has the worlds most recognized multi-billion dollar companies seeking better visibility into activities at the agent, subsidiary and/or supplier level.
Detecting potential violations of the FCPA are particularly difficult when there is an agent or subsidiary representing the company’s interests on foreign soil. Two key drivers of failure to comply with the SEC’s FCPA include: 1) lack of parent company awareness of practices occurring that could lead to punishment, and 2) inability to internally identify, track and control possible violations.
The first step at addressing foreign corrupt practices is to ensure that agents, subsidiaries and suppliers are aware of both the SEC’s FCPA and the company’s explicit policy regarding these acts. Secondly, training and education must be disseminated to all levels of the supply chain, particularly when manufacturing and product purchases are being conducted abroad. Lastly, a mechanism for pro-active alerts should be in place for agents, suppliers and government officials who encounter suspect behavior.
The FCPA was enacted in 1977 to prohibit American businesses from paying bribes to foreign political figures and government officials for the purpose of obtaining business. The department of Justice is responsible for enforcement foreign and domestic companies, while the SEC is responsible for civil enforcement. Companies are required to keep books that reflect their transactions made and maintain internal accounting controls.
The monetary penalties along with negative publicity can cripple a company, not to mention the significant impact it can have on shareholder value.
Source Intelligence, the leading provider of conflict minerals compliance programs, launched its Foreign Corrupt Practices Program exclusive to existing conflict mineral customers to address compliance with the FCPA by agents, suppliers and independently operating subsidiaries. “It’s a natural extension of our suite of compliance driven solutions,” commented Lina Ramos, Chief Business Officer at Source, “More importantly, our FCPA solution is in direct response to the overwhelming requests we’ve received over the last year from our existing conflict minerals customers — their compliance priorities are our compliance priorities.”
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