An International Perspective of Fraud Including Bribery and Corruption - Part 4.

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An International Perspective of Fraud Including Bribery and Corruption - Part 4.

The United States Of America

For nearly twenty years from 1977, the US was the only country with a Foreign Corrupt Practices Act empowering its courts to prosecute US companies for paying bribes abroad. However in 1997 the OECD countries signed an anti-bribery convention whereby member states promised to introduce similar legislation.

The OECD Convention mirrors the US's Foreign Corrupt Practices Act (FCPA) to a large extent. The FCPA consists of two independent sets of provisions:

anti-bribery provisions. The provisions bar (with limited exceptions) US persons or an issuer of US securities from facilitating the payment of any thing of value to a foreign official to influence his or her decision, to get that official to act, or not to act, as part of an effort to retain or obtain business; and

books and records provisions. These require issuers of US securities to keep detailed and accurate accounts of their assets and maintain a system of internal accounting controls. They were introduced to address the practice of maintaining off-the-book 'slush funds' to pay bribes to officials.

The FCPA requires special attention to be given to 'red flags', these being flags, taken alone or in combination, put a person on notice of the high probability or substantial certainty that payments to an agent may violate the FCPA. Examples of red flags under the FCPA include - the reputation of the country with respect to corruption, the reputation of the proposed agent, consultant or business partner, their representations and warranties; their relationship with the foreign governm...

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