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."