A recent case serves as a vital example of what small and medium sized businesses wanting to expand globally must first achieve in terms of governance, risk and compliance measures, to avoid bribery and corruption activities taking its toll on global operations.
In an out-of-court dispute between Smith & Wesson Holding Corporation and the US Securities and Exchange Commission to resolve Foreign Corrupt Practices Act offences, Smith & Wesson cooperatively agreed to pay a fine of $2 million.
Smith & Wesson, a US-based company was found guilty of paying bribes across the globe. According to the SEC, “Smith & Wesson’s international sales staff engaged in a pervasive effort to attract new business by offering, authorising, or making illegal payments or providing gifts meant for government officials in Pakistan, Indonesia and other foreign countries.”
Smith & Wesson consented to the order without admitting or denying the findings that show evidence of violating the anti-bribery, internal controls and books and records provisions of the Securities Exchange Act of 1934.
In addition to this large fine, Smith & Wesson has also been ordered to report to the SEC on its FCPA compliance efforts for the next two years.
This case demonstrates the challenges faced by corporations operating in multiple countries, no matter how well recognised they are. Even after 4-years of international operations keeping on top of compliance in all areas can be a struggle. This large penalty of $2 million serves as a warning to other organisations who are not vigorously looking into a compliance training program to educate their staff.
It is important to note that the SEC took into consideration Smith & Wesson’s cooperation with the investigation when determining an appropriate penalty. Smith & Wesson took effective remedial action straight after the conduct came to light by improving its internal controls and compliance process and also fired its entire international sales staff.
Don’t let undiscovered, illegal activities take place throughout your organisation. Ensure you are covered with an Anti-bribery and Corruption course.
Source: The FCPA Blog