How Are Foreign Corrupt Practices Act Cases Prosecuted?

The main purpose of the Foreign Corrupt Practices Act (FCPA) is to eliminate bribery designed to influence foreign officials and negatively impact fair market competition.

Often, the question of whether a payment to a foreign official falls into a permissible or prohibited category is a matter for extensive legal review.

Who can be held liable?

The FCPA anti-bribery and accounting provisions can be used to prosecute and punish U.S. businesses and individuals, as well as certain foreign entities involved in issuing securities.

Broadly, the FCPA states that “any persons” can be held liable for acting to further a corrupt payment. In effect, that means individual officers, directors, agents and employees may be held liable, and an individual’s employer need not be found guilty in order for the employee to be prosecuted.

The Department of Justice and the Securities and Exchange Commission handle FCPA cases.

The DOJ handles criminal prosecutions, and the SEC handles civil prosecutions. Each agency may conduct a separate investigation, and information may be shared between the agencies. The penalties sought by each agency may also be separate and distinct.

Private causes of action from business competitors are also allowed under the FCPA. A business competitor may claim to have lost business due to an FCPA violation, and the plaintiff may seek treble (triple) damages.

What are the possible penalties?

If a business is found to have violated FCPA bribery provisions, the fine can be up to $2 million. If an individual is found to be in violation of bribery provisions, the penalty can include a fine of up to $100,000, as well as a prison sentence of up to five years.

For each accounting violation, a business can be fined up to $25 million, and an individual can be fined up to $5 million. An individual accused of an accounting violation also faces the possibility of up to 20 years in prison for each offense.

The court may increase FCPA fines if the evidence supports doing so, and if the defendant is found guilty or pleads guilty.

For more on defending against FCPA allegations, please see Hilder & Associates’ FCPA overview.