compliance

3 key takeaways from recent FCPA compliance actions 

by Josephine McCann October 23, 2019

Three new FCPA enforcement actions were recently resolved with the SEC, totaling over $20.3M in fines. Quad/Graphics, a Wisconsin-based printing and graphics company, was fined $9.9M for invoicing schemes in Peru and China to win business. Barclays, a British multinational investment bank, was cited $6.3M for offering internships and job opportunities in the Asia-Pacific region. Lastly, Westport Fuel Services, a Canadian clean technology company, agreed to pay $4.1M to resolve charges for engaging in a scheme to bribe a Chinese official. 

While the findings from each of these recent FCPA enforcement actions are unique, there are broader compliance lessons that can be drawn from each. Compliance professionals should assess if their businesses adhere to the FCPA compliance expectations articulated by the government. 

Quad/Graphics fined for $9.9M in invoicing scheme

In the case of Quad/Graphics, the company used sham sales to hide improper payments to Peru and China. According to the government, the company lacked sufficient internal accounting controls because numerous red flags were not detected – for example, vendor invoices with rounded dollar amounts, large invoice amounts disproportionate to the services described, invoices with consecutive numbers (sometimes with the same date), and invoices without purchase orders or other supporting documentation. 

The enforcement action against Quad/Graphics serves as a reminder that any third party can give rise to liability, not just third parties such as agents, representatives and distributors that help companies obtain or retain business. Indeed, the problematic third party in Peru was a local Peruvian law firm engaged by a company subsidiary in connection with tax litigation. 

Barclays cited $6.3M for offering jobs as incentives

In the Barclays enforcement action, the government acknowledged that Barclays did in fact have policies that included prohibitions on providing employment in exchange for business. However, the government found that Barclays failed to effectively train Asia-Pacific employees or monitor their compliance with the policies. Specifically, the government cited instances in which employees claimed to have no knowledge of the FCPA or that internships or offers of employment consisted “anything of value” under the policy. In this case, it’s important to be aware that FCPA compliance law is much broader than the name suggests, and relates to far more than just anti-bribery provisions. 

Westport Fuel slapped with $4.1M to resolve FCPA infringement

The Westport Fuel enforcement action was the result of a single business transaction with an alleged foreign official. While there is nothing per se illegal under the FCPA with having a business relationship with a foreign official, the government was critical of Westport Fuel’s control environment in connection with the transaction. For instance, the government stated that while Westport Fuel’s code of conduct required that due diligence be conducted when retaining third parties to provide goods or services, it didn’t address the need for due diligence when engaging in a business transaction with a third party in which a foreign official may have a financial interest. In addition, the government stated that while Westport Fuel required anti-bribery clauses in contracts with vendors, there was no such requirement when engaging in a business transaction with a foreign official.

Each of these recent enforcement actions, unique in their facts, provides compliance professionals with the opportunity to assess whether their business organization is adhering to FCPA compliance expectations articulated by the government. To learn how to stay ahead of regulatory violations, download our compliance checklist.

Josephine McCann
Product Marketing Manager, Content

Josephine is a Product Marketing Manager at AppZen, where she loves crafting content and telling interesting stories.

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