Did You Just Buy an FCPA Problem? How to Design Post-M&A Compliance Integration and Audit Plans

Coauthors: Valerie Charles, Partner, StoneTurn, and Jamen Tyler, Managing Director 

Acquirers Can be Liable for the Target’s Misdeeds

Overview of the FCPA

The FCPA’s anti-bribery provisions make it unlawful for any U.S. corporation (or for any corporation that has issued securities trading on a U.S. exchange) to make (or promise to make) payments to foreign government officials^[1] for the purposes of influencing or inducing the foreign official to act in a particular manner or to secure an improper business advantage.^[2] This applies to any officer, director, employee, agent or shareholder acting on behalf of the corporation. Importantly, there is no de minimis exception to the anti-bribery provisions.^[3] No matter how small the violation, it can elicit enforcement.

The FCPA’s accounting provisions require that an issuer of securities trading on a U.S. exchange maintain books, records and accounts that accurately and fairly reflect the company’s transactions and that the issuer devise a system of internal accounting controls sufficient to provide reasonable assurances that the issuer’s financial statements are accurate.^[4] There is criminal liability for persons who knowingly circumvent or fail to implement a system of internal controls or who knowingly falsify an issuer’s books, records or accounts.^[5] Importantly, there is no “materiality” component to a books and records violation.

Reprinted with permission from the July 6, 2021, issue of Corporate Compliance Insights. © 2021 Corporate Compliance Insights. All Rights Reserved.