The Tecma Group’s Mark Earley explains how having a strong Foreign Corrupt Practices Act in place enables companies to conduct transactional business in an honest and straightforward manner.

Tecma Group of Companies:

Hello, and welcome to another installation of Tecma Talk Podcasts. These, as regular listeners know, are discussions with individuals that are internal and external to the Tecma Group of Companies. They are on subjects that have to do with manufacturing in Mexico, and things that are related to that topic. Today, we are with one of our internal experts. His name is Mark Earley. I will let him introduce himself, in a moment, but first I will give a bit of background on what we are going to speak about. We are going to talk about the Foreign Corrupt Practices Act. This discussion contains useful information for any company that is doing business that transcends international boundaries. Mark, please introduce yourself, and speak to the importance of this topic, if you could.

Mark Earley:

Thank you. I appreciate the opportunity that has been provided me to speak on this very important topic. I am the vice president of accounting within the Tecma Group. I have also been assigned the duties of the roll out of the of the Foreign Corrupt Practices Act, or the FPCA, for Tecma. This includes for, not only our own employees, but also agents and representatives of Tecma that potentially have the ability to corrupt foreign officials.

Tecma Group of Companies:

It is interesting that you mentioned a few moments ago that the Foreign Corrupt Practices Act is almost thirty years old, so it has been around a while. Can you tell us exactly what the FPCA is?

Mark Earley:

Sure. This is a US law that was enacted in 1977 to prohibit bribery of foreign officials. There are really two main provisions of the Foreign Corrupt Practices Act. The first is considered the “anti-bribery” portion of the Act, while the other one consists of the accounting provisions. The best way to look at the “anti-bribery” section of the FCPA is to consider that it points out what constitute violations. It prohibits bribery of any foreign official, and in the accounting provisions we are looking at the internal controls that a company employs to ensure that bribes are not paid out to foreign officials. Basically, the provisions included in the accounting section of the Foreign Corrupt Practices Act make it difficult for bribery to take place.

Tecma Group of Companies:

Why should companies and individuals care about the Foreign Corrupt Practices Act?

Mark Earley:

It is interesting that the Act has been around for thirty-eight years. If you look at most companies, and how they would go ahead and protect themselves to ensure that employees or agents that represent their organizations were not involved in bribery was mostly through the “code of conduct” that a company would have. That is something that an employee would review and sign upon starting with an employer. Some companies would go through this, or a similar exercise, every year. In the last ten years, we have seen an increase in the enforcement of the provisions of the Foreign Corrupt Practices Act by the Department of Justice (DOJ) and the Securities Exchange Commission (SEC). When we look at the year 2013, for instance, the average fine that was levied for FCPA violations was US $80 million, per occurrence. What we’ve seen, then, is a drastic increase in enforcement levels. We see that both the DOJ and the SEC have hired quite a number of individuals whose sole function is the prosecution of violations of the Foreign Corrupt Practices Act.

Tecma Group of Companies:

Ignoring the FCPA can be costly?

Mark Earley:

Yes. One thing that I would like to mention is that both criminal and civil penalties can be associated with violations. This can impact not only the companies, but the individuals involved.

Tecma Group of Companies:

This is even more reason to [...]