Record-Keeping: The Role of Traditional Accounting Offenses

Whatever the country seeking to enforce its prohibition against the bribery of foreign officials, the importance of accurate record-keeping cannot be overstated.  Even in countries where accurate record-keeping has not been made specifically mandatory relative to the bribery of foreign officials, instances have arisen where existing laws relative to accounting practices have been applied to address the underlying conduct associated with the bribery of foreign officials.

Among the more notable cases was the resolution with BAE Systems PLC by the UK’s Serious Fraud Office.  The underlying activity related to the bribery of foreign officials. But the ultimate resolution was a plea to aiding and abetting the offense “contrary to section 221(5) of the Companies Act 1985 by the officers of British Aerospace Defence Systems Limited.”1  Specifically, BAE failed to “keep accounting records which were sufficient to show and explain payments made pursuant to” certain contracts.2

More recently, Australia’s Commonwealth Director of Public Prosecutions secured a plea based upon a state record-keeping violation arising out of a probe of an “alleged international bribery racket involving overseas politicians and government officials.”3  A former employee of Reserve Bank of Australia (RBA) and Securency International Pty Ltd (Securency), Clifford Gerathy was charged with one charge of false accounting, contrary to section 83 of the Crimes Act 1958 (Vic).4

Mr. Gerathy  was convicted of having acted “without any belief that [the Malaysian agent’s company] was legally entitled to make a debit note describing costs payable as related to marketing and other expenses in the amount of $79,502.00.”5  “The payment was mis-described as marketing and other expenses and was paid to [its Malaysian agent] as part of his role in securing banknote contracts in Malaysia for RBA subsidiaries Secrecy and Note Printing Australia Ltd (NPA).6

This pattern will continue regardless of whether legislation has been adopted to address record-keeping practices related to improper payments to foreign officials.  Capable prosecutors can be expected to come up with new and legitimate ways to address underlying conduct deemed to be prohibited.

_________________

1Regina v. BAE Systems PLC, Charge – Statement of Offence (Dec. 20, 2010).

2Id.

3Press Release, Australia’s Commonwealth Director of Public Prosecutions, “Former RBA and Securency employee sentenced,” (June 1, 2018).

4Id.

5Id.

6Id.

Menu