The Resource Guide to the U.S. Foreign Corrupt Practices Act has recently been revised for the first time by the U.S. Department of Justice and the Securities and Exchange Commission. The Resource Guide provides guidance on the DOJ’s and SEC’s enforcement policies and their interpretation of the FCPA: from how to define a “foreign official” to how to establish the hallmarks of an effective compliance program. The revisions bring the guidance more in line with FCPA statutory language, but it is important to keep in mind that the Resource Guide is still the DOJ’s and SEC’s interpretation of the law and of their enforcement powers. Although the changes are merely of a technical nature, we recommended reviewing the chapters on accounting provisions and on penalties, sanctions and remedies, as the new wording may provide a better understanding of the purpose of these provisions.
The Resource Guide provides guidance to individuals and companies seeking to comply with the Foreign Corrupt Practices Act (FCPA). But the guide, like the previous version, cannot “be relied upon to create any rights, substantive or procedural, that are enforceable at law”.
Most changes are of a technical nature, but the revision of Chapter 3 (The FCPA: Accounting Provisions) and Chapter 6 (FCPA Penalties, Sanctions and Remedies) now offer more clarity.
Chapter 3: The FCPA: Accounting Provisions (see p. 43)
- The revised version of the Resource Guide only refers to “joint ventures” instead of “joint ventures partners” when considering the issuer’s responsibility for the books and records of affiliated entities under the issuer’s control. The deletion of “partners” seems to clarify that issuers are only responsible for the books and records of entities over which they have some degree of control.
- Instead of “best efforts”, the revised guide now requires issuers to use “good faith efforts” to cause their minority-owned subsidiaries or affiliates to implement adequate accounting systems. This new formulation is in line with the FCPA and sets the record straight, as “best efforts” exceeded the requirement as set forth in the statute. Unfortunately, no definition or examples of “good faith efforts” are provided.
- To bring the language of the Resource Guide more in line with the FCPA, the parent company is required to use good faith efforts if it owns “50% or less” of a subsidiary or affiliate instead of “less than 50%” to cause the minority-owned subsidiary or affiliate to devise and maintain a system of internal controls consistent with the issuer’s own obligations under the law.
Chapter 6: FCPA Penalties, Sanctions and Remedies (see p. 68)
- The maximum fine is raised from USD 100,000 to USD 250,000. Although the FCPA imposes a maximum of USD 100,000, individuals can be fined up to USD 250,000 under the Alternative Fines Act.
- When calculating pecuniary gain under the Alternative Fines Act, a fine up to twice “the benefit that the defendant obtained” may be imposed, instead of twice the benefit “the defendant sought to obtain”.
The part on corporate compliance programmes in Chapter 5 (Guiding Principles of Enforcement) has not been revised. Perhaps the compliance expert that the DOJ is in the process of hiring will supplement the guidance on how the identification of compliance issues affects the government’s assessment of a programme’s effectiveness.