According to the SEC press release, Goodyear failed to prevent or detect more than $3.2 million in bribes during a four-year period due to inadequate FCPA compliance controls at its subsidiaries in sub-Saharan Africa. Bribes were generally paid in cash to employees of private companies or government-owned entities, as well as other local authorities. The improper payments were falsely recorded as legitimate business expenses in the books and records of the subsidiaries, which were consolidated into Goodyear’s books and records, according to the SEC. While the SEC recognized that Goodyear’s foreign subsidiaries engaged in bribery, the fine issued was based on Goodyear’s violation of the books and records and internal control provisions in the FCPA.
“Public companies must keep accurate accounting records, and Goodyear’s lax compliance controls enabled a routine of corrupt payments by African subsidiaries that were hidden in their books,” said Scott W. Friestad, associate director of the SEC’s Enforcement Division.
The Goodyear case is instructive for all companies with foreign subsidiaries. Here are some tips for complying with the FCPA:
- Establish a robust FCPA compliance policy;
- Assess the level of FCPA risk your company faces in light of the countries you do business in;
- Maintain accurate books and records, and implement strict accounting controls that will detect irregularities;
- Regularly train employees on FCPA compliance requirements; and
- Promptly and thoroughly investigate (with outside counsel) any FCPA issues that come to light.
