In its April 9, 2014, the SEC announced charges and a settlement with HP for alleged FCPA violations by foreign subsidiaries. Not much to say here – the list of SEC FCPA actions for alleged foreign violations is getting long. CEO’s, CFO’s, management, employees, internal audit, and boards/audit committees, get your house in order.  But let’s also acknowledge that if there is an intent by an employee, agent, affiliate, etc. to engage in bribery or kickbacks it cannot be said that it is always possible to prevent those actions – the actions, events and allegations need to be investigated and evaluated on a case by case basis.  Simply because a violation might have occurred does not and should not automatically determine liability or that risk management, internal controls, oversight, etc. were improper, i.e., below the standards of care. I say “standards” of care, because there are different standards depending on the different positions and functions and access to information of the various different people involved.  And, of course, a violation or liability by itself does not establish damages or the amount of damages.

That having been said, the following is a quote from the SEC’s press release – and this quote certainly is correct.

“The company’s books and records reflected the payments as legitimate commissions and expenses,” said Kara Brockmeyer, chief of the SEC Enforcement Division’s FCPA Unit.  “Companies have a fundamental obligation to ensure that their internal controls are both reasonably designed and appropriately implemented across their entire business operations, and they should take a hard look at the agents conducting business on their behalf.”

Working to ensure that FCPA violations don’t occur needs to be an ongoing, well thought out, designed, implemented and monitored process.

The following is the link to the SEC’s press release, click here.

Dave Tate, Esq. (San Francisco and California)