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« Corruption Super-Trial Opens In Brazil | Main | In China, Fame Is Fleeting (And Corrupt) »
Friday
Aug032012

Facilitating Payments And The Reporting Dilemma

Compliance insider Pete from DC first appeared on this blog nearly five years ago.

We're happy to report that he still drops by.

In response to yesterday's Small (Bribe) Talk From The Editors, Pete sent this comment:

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Dear Editors:

Fascinating discussion, and I think Marc Alain Bohn's point about transparent recording deserves a bit more attention, as it puts public companies (i.e., those subject to the books and records and internal controls provisions of the FCPA) in an awkward spot.

If they make a facilitation payment in a jurisdiction where that payment is illegal, but they record it accurately, they're essentially creating evidence of a crime (unscrupulous tax inspectors love that kind of thing - they can then extort a larger bribe). If they fail to record accurately, the misrecording itself could be a books and records problem, if not also an internal controls problem. 

Some companies try to get away with recording accurately at a consolidated level (e.g., regionally) rather than locally, but there are a number of cases (Dow, Wabtec, Triton) where the regulators have prosecuted local misrecording of relatively small bribes under the books and records provisions, so that's no solution either.

Cheers,

Pete from DC

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