James Tillen and Matteson Ellis Interviewed on Dangers of Lavish Hospitality Programs in Latin America in the Anti-Corruption Report

"Telefônica's Settlement Demonstrates the Dangers of Lavish Hospitality Programs"

The Anti-Corruption Report

05.15.2019

James Tillen and Matteson Ellis were interviewed regarding the dangers of hospitality programs and importance of the internal controls mechanisms designed within the quality compliance program to ensure transparency and confirm the expenditure's legitimacy. "It is difficult to think of a scenario where it would be acceptable to extend hospitality to an official's family members," Tillen said, adding that a company needs to confirm "the officials are not currently considering issues involving the company's interests, no improper benefit is being sought from the officials, the expenditure is consistent with local law." Ellis agreed. "The company could have disclosed the hospitality plan to the government agencies themselves and even sought their acquiescence to ensure transparency," he said, or "other controls could have been in place to ensure accurate descriptions of the expenditures in the company's books and records." 

According to Tillen, "The facts as summarized by the SEC are not entirely clear as to whether the elements of the anti-bribery provisions would be satisfied for the majority of the tickets. Telefônica provided many of the tickets to officials in appreciation for officials' past support of the company and the SEC did not allege they were provided to influence a specific act of the officials. The resolution, therefore, reinforces the lesson that the accounting provisions of the FCPA present more risk to public companies because their scope is significantly broader than the anti-bribery provisions."