Global Anti-Bribery Compliance: Material Contingent Liabilities

From the perspective of global anti-bribery compliance, especially for attorneys, in-house counsel, and accountants providing advice, particular attention must always be placed on the collateral consequences associated with the anti-bribery legislation being implemented as a result of the OECD’s Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions (OECD Convention) as well as the other anti-bribery conventions, like the United Nations Convention against Corruption, the Inter-American Convention Against Corruption, and the Council of Europe Criminal Law Convention on Corruption.

As Commentary 28 to the OECD Convention points out, “one immediate consequence of the implementation of the [OECD Convention] . . . will be that companies which are required to issue financial statements disclosing their material contingent liabilities will need to take into account the full potential liabilities under [the OECD] Convention, in particular its [provisions relating to bribery of foreign official and accounting and record-keeping issues], as well as other losses which might flow from conviction of the company or its agents for bribery. This also has implications for the execution of professional responsibilities of auditors regarding indications of bribery of foreign public officials. In addition, the accounting offences referred to in Article 8 [of the OECD Convention] will generally occur in the company’s home country, when the bribery offence itself may have been committed in another country, and this can fill gaps in the effective reach of the [OECD] Convention.”

As the negotiators of the OECD Convention well understood, the ramifications associated with the implementation and enforcement of anti-bribery legislation, like the Foreign Corrupt Practices Act, the UK Bribery Act, and Canada’s Corruption of Foreign Public Officials Act, may implicate material contingent liabilities requiring disclosure in financial statements. The implications are even greater with respect to material contingent liabilities when the prospect of debarments are also taken into consideration.  Whether in the United States or elsewhere, no attorney, in-house counsel, accountant, or consultant providing advice can or should limit his or her considerations to anti-bribery issues.

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