The Foreign Corrupt Practices Act of 1977 makes it unlawful for businesses and individuals to make payments to foreign government officials in an attempt to seek or retain business. For instance, it would be illegal to pay and bribe the president of a country to obtain his or her support of your technology company over other potential competing companies.
Essentially, it is against the law for certain people to bribe foreign officials because it could disrupt interstate commerce and give a business or individual an unfair advantage. The 1977 anti-bribery provisions apply to all people in the United States as well as foreign issuers of securities. In 1998, the act was extended to include foreign firms and people who make corrupt payments within the United States.
Under the FCPA, all companies with securities in the Untied States must meet the United States’ accounting transparency requirements. This includes keeping accurate records and books reflecting all transactions and maintaining a system of internal accounting controls.
Are there any exceptions to the rules above?
There is one narrow exception, which is that facilitation payments are allowed to be made to foreign officials. These payments must be for the purpose of expediting or facilitating routine governmental actions. These payments have to be properly documented. If they are not, then someone could be accused of violating the FCPA.
What should you do if you’re accused of violating FCPA?
If you’re unable to show a good reason for a transaction and potentially violated the FCPA, you could face severe penalties. The first consideration in assessing which penalties apply are whether you are part of a corporation or an individual. U.S. companies face charges of up to $2 million for violating the law, while individuals face fines of up to $100,000. Individuals may face up to five years imprisonment on top of heavy fines.
In addition to these penalties, other civil penalties can be applied. The majority of additional penalties increase only monetary fines instead of adding onto the previous criminal penalties.
The laws regarding FCPA are complex. It’s a smart idea for anyone accused of violating them to get to know their legal rights and to take immediate action in creating a defense against the allegations.