Key issues: Bribery and corruption

Bribery and corruption risk have become big issues for companies, with more reported incidents and more enforcement by the regulators over the last two years.

The Department of Justice and the US Securities and Exchange Commission enforce the US Foreign Corrupt Practices Act (FCPA), whose anti-bribery provisions prohibit US companies and citizens, and certain foreign issuers of securities, from making corrupt payments to foreign government officials to help obtain or retain business. They also apply to foreign firms and people acting in furtherance of such payments while in the US.

The enforcement framework of the FCPA is derived from the Federal Sentencing Guidelines, which require companies to exercise due diligence to prevent and detect criminal conduct and to promote a culture that encourages ethical conduct and a commitment to comply with the law.

The SEC's new whistleblower rules will likely result in even more FCPA enforcement actions.

Prosecutions of these violations have been mounting, with increased cooperation among various enforcement agencies around the globe. Regulators not only pursue violators but have also been targeting personnel within a company who are responsible for internal controls related to the prevention of bribery and corruption. Directors are not necessarily immune from scrutiny, as the Federal Sentencing Guidelines state that a board must "exercise reasonable oversight with respect to the implementation and effectiveness of the compliance and ethics program."

Directors will want to be sure to understand the basics of the related laws and their reach, as well as the scope of their responsibility and that of management. They will also want to understand their company's compliance and deterrence programs.

PwC perspective

Don Keller “The prevention of bribery and corruption presents a huge challenge for companies and their boards in today's environment. The issue is exacerbated in several ways -- materiality doesn't apply, so a crime could involve amounts that are immaterial to reported financial results. Gift-giving is also accepted as an inherent part of doing business in many local cultures. Another difficulty for companies is that they can be held responsible for the behavior of any third party they do business with, such as distributors, agents and resellers.”
— Don Keller, Partner, Center for Board Governance

Other key issues

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