Companies are being warned to design and implement an appropriate risk-based anti-bribery and corruption compliance programme - as the SEC increases its vigilance.A briefing from law firm Allen & Overy said that the increasing ease with which the SEC has been able to find a violation of the FCPA’s books and records and internal controls provisions in recent years demonstrates the potency of the provisions. The alert pointed out that the SEC has been increasingly using the FCPA’s books and records and internal controls provisions to bring enforcement actions where evidence of bribery is lacking. In two cases there were no accounting irregularities or allegations of bribery – lacking internal controls were sufficient to “create a risk” of bribery and therefore a violation of the FCPA. Most recently, the SEC has charged violations of the FCPA's internal controls provisions where an issuer has been deemed to have "created a risk" of bribery through inadequate compliance policies, procedures and internal controls.

No payment link

The alert warned that the SEC was also increasingly finding violations of the FCPA in the absence of any link to an improper or corrupt payment. 'In 2016, the SEC charged Las Vegas Sands, a Nevada-based owner and operator of casinos in Asia and the United States, with a USD9m civil penalty to settle alleged books and records and internal controls violations despite there being no evidence of any alleged bribery. The SEC found that the company failed to properly account for payments associated with a Beijing real estate project, a Macau ferry operator, and for a transaction to purchase a Chinese basketball team with the help of an agent. In the settlement documents, the SEC presented no evidence that the payments to the agent hired to assist with the transaction were used to obtain government approval for the acquisition of the team or amounted to an unauthorised payment. The improper accounting for payments to the agent and lacking internal controls were enough to violate the FCPA.' Source: Allen & Overy