James Tillen Quoted Regarding FCPA Application to Travel and Entertainment Expenses in Compliance Week

"T&E Controls That Won’t Get You Busted"
Compliance Week

James Tillen was quoted regarding the Securities and Exchange Commission's (SEC) recent actions under the Foreign Corrupt Practices Act (FCPA) for bribery payments hidden within travel and entertainment (T&E) expenses. "A lot of times, T&E abuses are add-on charges to an FCPA enforcement action involving a larger pool of improper activity, including allegations of significant cash bribes," Tillen said. These types of actions serve as a cautionary tale of what can happen to companies without proper established internal controls.

According to Tillen, companies need to get a better grip on T&E expenses in general. He said preventive controls include pre-approvals for expenses over a certain threshold, pre-approved vendors and requiring employees to provide receipts. T&E abuses can also lead to an enforcement action when companies do a poor job on anti-corruption training, and employees don't understand what improper T&E practices are. Tillen said the DOJ and SEC will not hesitate to prosecute a company with a systematic pattern of T&E abuses, and the recurring pattern raises alarms that the company's internal controls or culture are insufficient to stop the behavior. If the misconduct is a single instance where an employee provided a lavish trip to an official, "that's not likely to result in a prosecution" he said, "but if it's happening time and time again, that is what's going to get their interest."

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