Elbit Settlement Shows Breadth Of FCPA Accounting Rules

Law360

05.09.2018

In this article, Alice Hsieh discusses the March 9 settlement paid by Elbit Imaging Ltd. to the Securities and Exchange Commission (SEC) to resolve allegations that the company violated the U.S. Foreign Corrupt Practices Act’s (FCPA's) books-and-records and internal accounting controls provisions. "It is noteworthy that the SEC does not allege that a portion of the funds paid to the consultants were in fact given to government officials or embezzled," Hsieh wrote, adding, "the lack of confirmation that fees paid to the consultants and agents were in fact given to a foreign official is yet another example of the broad reach of the FCPA accounting provisions in comparison to the anti-bribery provisions." Overall, "the settlement suggests that making payments without documenting the legitimacy of the payments is sufficient for the SEC to find that a company has inadequate internal accounting controls," she wrote. "Interestingly, the case also shows the reach of accounting provisions with respect to activity in the United States (the payments to the sales agents) — even if the agents had paid officials, those payments would have been out of scope for the FCPA's anti-bribery provisions."