FCPA Record-Keeping Provisions: Scope

When considering the FCPA record-keeping provisions in the context of global anti-bribery compliance, attorneys, international lawyers, in-house counsel, accountants, consultants, and others providing advice concerning the FCPA, it is critical to understand what records are subject to its provisions. These records, of course, relate to issuers and anyone interacting with issuers.  The breadth of the scope of application of the FCPA’s record-keeping provisions always needs to keep in mind.

Actually, what constitutes a book, record or account subject to the record-keeping provisions is not defined by the FCPA.  As a result, no categorical statement can be made as to what records are beyond the purview of the record-keeping provisions.  However, case law exists that states that Congress’ use of the term “records” suggests that virtually any tangible embodiment of information made or kept by an issuer is within the scope of the record-keeping provisions of the FCPA, such as tape recordings, computer print-outs, and similarly representations.[1]

In the legislative history of the accounting and record-keeping provisions, the Senate version was largely adopted in conference with the only addition of the qualification that the accuracy of the record be in “reasonable detail.”[2]  In discussing the proposed legislation, the Senate Report included a footnote suggesting the breadth of application of the record-keeping provisions:

The phrase “disposition of its assets” is not intended as a limitation on the scope of the requirement that accurate books and records be maintained. The issuer’s responsibility to keep records correctly reflecting the status of its liabilities and equities is no less than its obligation to maintain such records concerning its assets. The word “transactions” in the bill encompasses accuracy in accounts of every character.

Records such as corporate minutes, transactional documents, and authorizations for expenditures are all incidental to the preparation of financial statements or recording economic events.  Records that may relate to internal controls, such as compliance programs, fall within the scope of records subject to the record-keeping provisions since such records bear on the accuracy of the financial statements.  Similarly, records that may bear on the auditing of financial statements are likely to be extremely broad in scope.

The particular circumstances will ultimately dictate what records are subject to the terms of the FCPA’s record-keeping provisions.  Generally, the greater the degree to which a record may relate to the preparation of financial statements, the adequacy of internal controls, or the performance of audits, the more courts are likely to find the record to be subject to the terms of the record-keeping provisions.

[1]Sec. & Exch. Comm’n v. World-Wide Coin Inv., Ltd., 567 F. Supp. 724, 748-49 (N.D. Ga. 1983).

[2]H.R. CONF. REP. NO. 576, 100th Cong., 2d Sess. 917 (1988), reprinted in 1988 U.S.C.C.A.N. 1547.

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