The 1977 Foreign Corrupt Practices Act prohibits bribing foreign officials to obtain an advantageous business deal. This federal law establishes transparency guidelines for transactions with foreign officials and mandates prosecution for bribes regardless of amount.
If you are facing prosecution for this type of offense, learn about the potential impact of prosecution.
Who is subject to the FCPA?
This law has jurisdiction over publicly traded companies and their employees, agents, stock owners, officers and directors. Companies are also responsible for the actions of third parties that they have hired and firms with whom they are in partnership. This prevents the use of proxies to conduct criminal acts.
Firms that engage in foreign financial transactions must keep thorough and accurate records of their assets. They must also demonstrate internal controls to ensure proper accounting of foreign transactions.
What constitutes a violation?
To prosecute for this type of offense, the government must prove that the company willfully and/or knowingly tried to gain an advantage over or influence a foreign official, political party or candidate. The person must have offered cash or an item of value through interstate commercial means, including mail, email, internet or phone.
What are the penalties for violating the FCPA?
The Justice Department and the Securities and Exchange Commission work together to investigate and prosecute foreign bribery. Penalties for conviction may include:
- Fines of up to 200% of the gain that resulted from criminal action
- Up to five years in prison for individuals who took part in the criminal action
- Future third-party oversight to ensure ongoing compliance with the FCPA
Also, employees and others who had a role in bribing foreign officials could have financial liability in a civil action by the SEC. Violating FCPA accounting requirements as part of the offense results in additional penalties.
Public companies that do business with other nations must have a robust record-keeping system in place to avoid charges under the FCPA. In the case of prosecution, these documents can help prove that all transactions were legal and included the required due diligence.