On November 14, 2012, the U.S. Department of Justice (DOJ) and U.S. Securities and Exchange Commission (SEC) released their long-awaited Resource Guide to the U.S. Foreign Corrupt Practices Act (FCPA). The 120-page Guide provides valuable direction on anti-corruption compliance for companies and individuals carrying on business internationally.
The Guide will be of obvious interest to Canadians subject to FCPA jurisdiction, such as Canadian companies that are U.S. issuers (i.e., listed on a U.S. stock exchange or whose stock is traded in the U.S. over-the-counter market) or who carry on business in the United States, as well as their officers and directors. However, in view of the similarities between the FCPA and Canada's Corruption of Foreign Public Officials Act (CFPOA), the Guide will also serve as a useful reference for Canadian companies when considering compliance issues arising under Canadian law. The CFPOA and FCPA are the means by which Canada and the United States comply with their international obligations under the 1997 OECD and 2003 UN Anti-Corruption Conventions. In addition, the close cooperation between the U.S. enforcement agencies and the RCMP and the Public Prosecutions Service of Canada in anti-corruption matters strongly suggest that Canadian investigators and prosecutors will pay close attention to the policies and views articulated in the Guide.
Issues addressed in the Guide include:
The "hallmarks" of an effective compliance program, including senior management commitment and oversight, a "clear, concise and accessible" code of conduct and risk-based program design and implementation;
The role of risk-based due diligence in mergers and acquisitions and other corporate transactions;
Payments to third parties or intermediaries, including "red flags" and due diligence in relation to the retention of agents and representatives;
The line between proper and improper payments, gifts, travel and entertainment expenses to foreign officials;
Defences to the FCPA's anti-bribery provisions, including compliance with local law, payment of reasonable and bona fide travel and lodging expenses to a foreign official, and facilitation payments made in furtherance of routine government action (Canadian companies should note that similar defences are available under Canadian law);
Corporate liability for anti-bribery violations, e.g., parent-subsidiary liability and successor liability in the mergers and acquisitions context;
Factors considered by enforcement officials when deciding whether to initiate an investigation or bring charges for non-compliance;
The FCPA's books and record keeping requirements and internal accounting control practices; and
The jurisdictional and extraterritorial reach of the FCPA.
While the Guide goes significantly beyond previous FCPA guidance documents offered by the U.S. government, it is not comprehensive and offers only limited practical direction in many instances. It is also silent on important mitigation issues, such as reducing the risk of liability through contractual provisions or regular internal compliance reviews. Despite its limitations, the Guide is an important contribution to the growing resources available to international businesses and should be required reading for anti-corruption compliance officers and corporate counsel involved in international transactions.
The Guide is available on the websites of the DOJ and the SEC at: