When under scrutiny for potential Foreign Corrupt Practices Act violations, how does a company prove that it was doing the right thing? The memories of your employees, along with their narratives of what happened will not be persuasive. Sure, interviewing them can uncover helpful information. But nothing is so compelling as documentation that supports the company’s position.

Your company must be able to document several things as it relates to possible FCPA violations:

1. The existence of a compliance program, and details about what that program actually entails
2. How the company evaluates employees, vendors, customers, and business partners that may pose FCPA-related risks.
3. The details surrounding potential violations and actual violations (Receipts, agendas, business operations, background investigations…. all the types of things that show what the company did to ensure compliance and fully investigate any potential sources of problems.)

The Foreign Corrupt Practices Act (FCPA) is aimed at preventing bribery of foreign officials. One key part of the FCPA is the books and records provision, which includes the following from 15 U.S.C. § 78m:

(2) Every issuer which has a class of securities registered pursuant to section 78l of this title and every issuer which is required to file reports pursuant to section 78o (d) of this title shall—

(A) make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer;

Earlier this week, Las Vegas Sands (NYSE:LVS) announced in its 10-K for the year ended December 31, 2010 that it is the subject of an FCPA investigation:

On February 9, 2011, LVSC received a subpoena from the Securities and Exchange Commission requesting that the Company produce documents relating to its compliance with the Foreign Corrupt Practices Act (the “FCPA”). The Company has also been advised by the Department of Justice that it is conducting a similar investigation. It is the Company’s belief that the subpoena may have emanated from allegations contained in the lawsuit filed by Steven C. Jacobs described above. The Company intends to cooperate with the investigations.

Las Vegas Sands says that it is also the target of a similar investigation by the U.S. Department of Justice.

If you follow any business new sites, you can’t help but notice that the U.S. government is talking tough about enforcement. Issues like insider trading, Foreign Corrupt Practices Act enforcement, and healthcare fraud are hot topics. I question the government’s ability to significantly step up enforcement efforts, particularly in light of budgetary issues related to doing so, but businesses can’t take a chance that they will be able to fly under the radar.

White collar criminal defense lawyer Brian Mahany writes on his blog Due Diligence about why this issue of enforcement and compliance is so important:

2010 has been a momentous year for securities enforcement, litigation and compliance issues–and there are still a few days left in 2010 for more crazy stuff to happen!

On December 29, 2010, Securities Docket will host its annual “Year in Review” webcast featuring many of the leading bloggers and commentators in the field. The panel will include Compliance Week editor Matt Kelly, Francine McKenna (re: The Auditors) , Mike Koehler (aka the “FCPA Professor“), Francis Pileggi (Delaware corporate law guru), Kevin LaCroix (The D&O Diary), Tracy Coenen (The Fraud Files), Lyle Roberts (The 10b-5 Daily) and Securities Docket’s Bruce Carton.

This week I recorded a podcast for the International Association for Asset Recovery (IAAR), which is accessible on the IAAR site. We talked a bit about where financial investigations are going, and how I am using technology to complete these investigations quicker and more effectively.

David Quinones, host of the podcast and Editorial Director for IAAR, asked how a private sector forensic accountant fits into a Foreign Corrupt Practices Act (FCPA) case.

I talked about two ways that forensic accountants and fraud investigators can be utilized:

Guest post by Brian Mahany, Esq.

More arrests and tough prison sentences for were the topic at the Senate Subcommittee on Drugs and Crime last week in Washington D.C.  Committee chair Sen. Arlen Specter grilled Justice Department officials on November 30th asking why so few individuals are prosecuted under the Foreign Corrupt Practices Act (FCPA).

I’ve recently been looking more closely at the Foreign Corrupt Practices Act (FCPA) as I consider the types of services companies will need from independent forensic accountants. This is an area in which government enforcement is skyrocketing, and so there are lots of opportunities for me to work with companies that need investigations or ongoing compliance work.

There are significant problems with FCPA enforcement, and Mike Koehler does an excellent job of discussing the issues in his paper, The Facade of FCPA Enforcement. He makes the case that the enforcement activities are not transparent and not tested legally. He says:

A recent Compliance Week article, An Expensive Lesson on FCPA Compliance [subscription required], provides some valuable insights on the direction that our government is taking with enforcement. Foreign Corrupt Practices Act violations are a huge focus of the feds right now. Why? Because there are plenty of violations, there is pressure on the SEC to enforce laws of some sort, and there is money to be made in fining the violators.

According to Richard Kassin at The FCPA Blog:

The United States Sentencing Guidelines (USSG) continue to make life tough for those in charge of corporate compliance and ethics. Corporate attorneys, both in-house and outside counsel, must ensure that companies are following protocols set for by the USSG. Rightfully, companies focus first on profits. But where does that leave the issues of compliance and ethics?

Although the creation and maintenance of a proper compliance program is secondary to core business pursuits, wise managers and executives know how critical it is to obtain specialized outside counsel to conduct internal investigations.