434 NEWSLETTER 2021 China employees reported to PTC employees, both based in China and in the United States. Finally, the PTC set the business and financial goals for its subsidiaries, including PTC-China, and provided a budget for allocation amongst its various subsidiaries. To that end, the SEC concluded that under applicable agency principles, PTC-China and its employees acted as agents and for the benefit of the PTC during the relevant time, when participating in the bribery scheme. Conclusion Pursuant to the FCPA, parent companies can be held accountable, directly or indirectly, for their subsidiaries’ actions resulting in a violation. In this context, the parent company may be directly responsible where it gives instructions for activities that involve violation. However, even if the parent company does not give the instructions regarding the act of the infringement itself, indirect responsibility of the parent company may arise in cases where it has a certain control mechanism over the subsidiary, and therefore, is aware of the subsidiaries’ activities and actions. While evaluating whether the parent company has a control mechanism, factors such as having directors in dual positions and intertwined reporting lines are considered. While examining whether the parent company has knowledge regarding its subsidiary’s actions, factors such as whether the possibilities of corruption were ignored, and whether adequate due diligence processes were adopted, are examined, rather than real and objective information.
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