Legal Document Translation Services for Compliance with the FCPA
Our legal translation team has written several blogs discussing the requirements for compliance with the Foreign Corrupt Practices Act (FCPA). Recall that the FCPA is a federal law which, among other things, prohibits companies and its employees from bribing foreign officials. When doing business in a country where English is not commonly spoken by a company’s employees, in order to ensure compliance with the FCPA, translation services may not only be recommended, but required.
In December of 2014, the United States Securities and Exchange Commission (SEC) charged the Bruker Corporation (Bruker) with violating the FCPA in two ways. First, Bruker made approximately $231,000 in improper payments to Chinese officials who were employed by Bruker’s customers in China. Due to these improper payments, Bruker received about $1.7 million in profits. Second, Bruker failed to implement adequate internal controls for preventing and detecting these improper payments. As a result, the improper payments took place over a course of years and were not discovered until Bruker undertook an internal investigation regarding the misappropriation of company funds at a Bruker office in China. It is this second violation which concerns legal language translation services.
In fundamental terms, Section 13(b)(2)(B) of the Securities and Exchange Act of 1934 requires that companies create and maintain a system of internal controls that are substantial enough to reasonably prevent unauthorized transactions and provide for proper accounting of company assets. This includes making sure FCPA compliance policies and training materials are effectively conveyed to its employees. If the employees do not speak English, the necessary materials and training programs must be translated into the employees’ native language. In the case of Bruker, this translation did not take place. For example, Bruker implemented its own internal FCPA policy in 2006, but did not provide a copy of it in the local languages of its overseas Chinese employees. Bruker also did not translate its Code of Conduct or employee handbook to local languages. Finally, Bruker’s toll free anonymous complaint hotline, which could be used to report improper conduct such as bribery, was not available to those who spoke Chinese or another local language. Basically, Bruker had internal controls, but without proper translation of those controls to Bruker’s non-English speaking employees, the internal controls were unable to prevent or detect the bribery. This was a violation of Section 13(b)(2)(B).
So what happened to Bruker? Due to their violations of the FCPA, they were ordered to pay almost $2.4 million in fines, penalties and interest. The civil penalty made up only $375,000.00 of the overall penalties paid by Bruker because of Bruker’s cooperation with the SEC as well as its remedial actions. These actions included an FCPA policy which was translated into local languages, FCPA training programs conducted in local languages and a new toll free anonymous complaint hotline which could accommodate non-English speakers.
In addition to the common sense requirement that employees cannot be expected to follow policies written in a language they cannot understand, this SEC enforcement action represents the legal requirement that in order for internal controls to be reasonably expected to stop bribery or other conduct in violation of the FCPA, translation into the local languages of a company’s employees is required.