Page 53 - U.S. FOREIGN CORRUPT PRACTICES ACT

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

An issuer’s officers and directors may internal controls, falsifying books and records,
also be held civilly liable for making false making false statements to accountants, and
statements to a company’s auditor. Exchange Act signing false certifications. 268 He consented to the
Rule 13b2-2 prohibits officers and directors from entry of an injunction and paid disgorgement and a
making (or causing to be made) materially false or civil penalty. 269 He also later pleaded guilty in the

misleading statements, including an omission of United Kingdom to conspiring to corrupt Iraqi and
material facts, to an accountant. This liability arises Indonesian officials. 270
in connection with any audit, review, or examination
of a company’s financial statements or in connection Criminal Liability for Accounting Violations
with the filing of any document with SEC. 267 Criminal liability can be imposed on companies
Finally, the principal executive and principal and individuals for knowingly and willfully failing

financial officer, or persons performing similar to comply with the FCPA’s books and records or
functions, can be held liable for violating Exchange internal controls provisions. 271
Act Rule 13a-14 by signing false personal For example, a U.S.-based hedge fund was
certifications required by SOX. Thus, for example, criminally charged with violating the books and
in January 2011, SEC charged the former CEO of records and the internal accounting controls

a U.S. issuer for his role in schemes to bribe Iraqi provisions of the FCPA, among other things. As part
government officials in connection with the United of its deferred prosecution agreement, the company
Nations Oil-For-Food Programme and to bribe admitted to falsifying its books and records by
Iraqi and Indonesian officials to purchase the falsifying records related to the retention and nature
company’s fuel additives. There, the company used of services of, and payments to, an intermediary it
false invoices and sham consulting contracts to used in Libya in order to conceal the true nature of

support large bribes that were passed on to foreign the payments. Also, the hedge fund admitted that
officials through an agent, and the bribes were it failed to implement a system of internal controls
mischaracterized as legitimate commissions and relating to due diligence for the retention of third-
travel fees in the company’s books and records. The party intermediaries, pre-clearance and approval

officer directed and authorized the bribe payments of agreements with third parties and agents,
and their false recording in the books and records. He notification to clients and prospective clients of
also signed annual and quarterly SOX certifications arrangements with third parties having an impact
in which he falsely represented that the company’s on the client arrangements, documentation and
financial statements were fairly presented and the proof of services provided by the third parties,
company’s internal controls sufficiently designed, auditing assets and operations in areas that posed

as well as annual representations to the company’s a high risk of corruption, ensuring appropriate
external auditors where he falsely stated that he justification for the use of and payment to nominee
complied with the company’s code of ethics and entities, and oversight of payment processes to
was unaware of any violations of the code of ethics ensure that payments were made pursuant to
by anyone else. The officer was charged with aiding appropriate controls. 272 Similarly, a U.S.-based

and abetting violations of the books and records electronics company entered into a deferred
and internal controls provisions, circumventing prosecution agreement to resolve charges that it

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