The computer giant Hewlett Packard has come under fire from the US Securities and Exchange Commission for breaches of the Foreign Corrupt Practices Act, related to payments made by company subsidiaries in Mexico, Poland and Russia. Issuing a USD108m penalty to HP, the SEC took the opportunity to issue a reminder of its expectations and requirements under the FCPA.
(On a personal note, I bought a new HP laptop a few months ago, had I known about the bribery case then, I probably would not have gone with them. I doubt losing my sale is anything more than a speck of dust on the HP magnifying glass, but imagine if everyone thought like that?)..
Back to the story…
Commissions paid for services are under scrutiny by the SEC and abuses or attempts to hide bribes under ‘commissions’ in company accounts will be penalised.
Internal controls – including anti-bribery policies, procedures and training should be implemented across firms, including in subsidiaries. This post from yesterday has some useful resources on internal controls.
Agents used to facilitate operations and conduct business on behalf of the firm should be subjected to due diligence.
“The company’s books and records reflected the payments as legitimate commissions and expenses. 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.” Karen Brockmeyer, SEC Enforcement
The FCPA is not the only extra-territorial legislation that firms need to be on alert for. The UK Bribery Act 2010 affects UK citizens and companies globally, as well as foreign firms that are carrying on business in the UK.
More information in this report from The Guardian.