The Securities and Exchange Commission announced recently that a global company has agreed to pay a $15 million civil penalty to settle charges that it violated the Foreign Corrupt Practices Act in connection with a bribery scheme involving a consultant in Guinea.
According to an SEC press release, in 2011 the company hired a close friend of a former senior Guinean government official as a consultant without conducting adequate due diligence. The consultant represented the company without a written agreement defining the scope of his services or deliverables. An SEC investigation revealed that the consultant, acting as the company’s agent, offered and attempted to make an improper payment of at least $822,000 to a Guinean government official in connection with efforts to help the company retain its mining rights in that country.
The SEC states that the company ultimately retained its mining rights and paid the consultant $10.5 million for his services. However, none of those payments was accurately reflected in the company’s books and records, and the company failed to have sufficient internal accounting controls in place to detect or prevent the misconduct.
"Even well-designed controls need committed managers to be effective," said Charles Cain, chief of the SEC Division of Enforcement’s FCPA Unit. "Here, deficient controls were no match for managers determined to hire a consultant whose only ostensible qualification was a personal relationship with a senior government official."
For more information on the FCPA and how to ensure your company’s compliance, please contact attorney Kristine Pirnia at (202) 730-4964 or via email.
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