The Foreign Corrupt Practices Act is a federal law that prohibits people in the United States from making corrupt payments to foreign officials for business purposes. Alleged FCPA violations may result in criminal prosecutions. Additionally, civil actions are also possible at both the private and governmental levels.
It is important to understand the provisions of the FCPA to avoid committing any violations. What follows is a general overview.
What constitutes a violation of the FCPA anti-bribery provisions?
Making a payment to a foreign official in an attempt to persuade him or her to wrongfully direct business through misuse of an official position violates the anti-bribery provisions of the FCPA. However, it may be permissible to hire police protection from a facility, obtain permits and licenses or make payments related to other routine governmental actions.
What does the FCPA require of publicly traded companies?
Under FCPA, publicly traded companies must ensure that authorization from management applies to access to assets and all transactions. To this end, such companies must have a system of internal controls in place and maintain accurate records and books.
What government agencies are responsible for enforcing the FCPA?
The U.S. Department of Justice and the Securities and Exchange Commission enforce the FCPA jointly. The SEC is responsible for civil prosecutions, while the Department of Justice has jurisdiction over criminal violations. Each agency conducts its own investigation but may share the information uncovered with the other agency.
What are the potential penalties for FCPA violations?
Individuals and companies found to have committed FCPA violations may have to pay substantial civil penalties and prejudgment interest in addition to repaying any ill-gotten gains. An independent consultant may need to conduct oversight over a company after an FCPA violation. Incarceration is a possible criminal penalty.
FCPA includes a broad definition of “foreign official.” Anything of value given to a foreign official, not just money, may count as a corrupt payment and potentially violate anti-bribery provisions.