Page 47 - U.S. FOREIGN CORRUPT PRACTICES ACT

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

noted when it adopted this definition,
“[t]he concept of reasonableness of necessity
In the past, “corporate bribery has been
contemplates the weighing of a number of relevant
concealed by the falsification of corporate
factors, including the costs of compliance.” 228
books and records” and the accounting
Although the standard is one of reasonable
provisions “remove[] this avenue of
detail, it is never appropriate to mischaracterize
coverup.”
Senate Report No. 95-114, at 3 (1977) transactions in a company’s books and records. 229
Bribes are often concealed under the guise of
legitimate payments, such as commissions or
What Is Covered by the Accounting consulting fees.
Provisions? In instances where all the elements of a

violation of the anti-bribery provisions are not
Books and Records Provision
met—where, for example, there was no use of
Bribes, both foreign and domestic, are
interstate commerce—companies nonetheless
often mischaracterized in companies’ books and
may be liable if the improper payments are
records. Section 13(b)(2)(A) of the Exchange Act
inaccurately recorded. Consistent with the FCPA’s
(15 U.S.C. § 78m(b)(2)(A)), commonly called the
approach to prohibiting payments of any value
“books and records” provision, requires issuers
that are made with a corrupt purpose, there is no
to “make and keep books, records, and accounts,
materiality threshold under the books and records
which, in reasonable detail, accurately and fairly
provision. In combination with the internal controls
reflect the transactions and dispositions of the
provision, the requirement that issuers maintain
assets of the issuer.” 224 The “in reasonable detail”
books and records that accurately and fairly
qualification was adopted by Congress “in light of
reflect the corporation’s transactions “assure[s],
the concern that such a standard, if unqualified,
among other things, that the assets of the issuer
might connote a degree of exactitude and precision
are used for proper corporate purpose[s].” 230 As
which is unrealistic.” 225 The addition of this phrase
with the anti-bribery provisions, DOJ’s and SEC’s
was intended to make clear “that the issuer’s
enforcement of the books and records provision
records should reflect transactions in conformity
has typically involved misreporting of either
with accepted methods of recording economic
large bribe payments or widespread inaccurate
events and effectively prevent off-the-books slush
recording of smaller payments made as part of a
funds and payments of bribes.” 226
systematic pattern of bribery, and both DOJ and
The term “reasonable detail” is defined
SEC look to the nature and seriousness of the
in the statute as the level of detail that would
conduct in determining whether to pursue an
“satisfy prudent officials in the conduct
enforcement action.
of their own affairs.” 227 Thus, as Congress

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