The anti-bribery provisions of the Foreign Corrupt Practices Act (“FCPA”) make it unlawful for a U.S. person, and certain foreign issuers of securities, to make a corrupt payment to a foreign official for the purpose of obtaining or retaining business for or with, or directing business to, any person. The anti-bribery provisions also apply to foreign firms and any person who performs an action in furtherance of making a corrupt payment within the United States.
The FCPA also requires companies that are publicly traded in the United States to maintain internal accounting controls so that their transactions are accurately reflected. These “books and records” provisions are a separate offense, but were designed to be read with the anti-bribery provisions.
What Constitutes A Violation?
The FCPA applies to any individual, including the U.S. parent corporation of a foreign subsidiary if the parent authorized the activity in question. For the payment to be corrupt, it must be intended to induce the recipient to misuse his official position to direct business wrongfully. The payment need not succeed, and a violation may occur by simply offering to make a payment. A payment includes money or anything of value.
A foreign official is broadly defined under the FCPA. Although the Department of Justice recommends using its FCPA Opinion Procedure for determining whether a person is an “official,” it is relatively clear that the term includes diplomats, politicians, candidates for office, customs agents, employees of public-private joint enterprises, and may include members or affiliates of royal families. Also, it must be noted that the use of an intermediary to make an offer the payment to the official does not cleanse the violation.
Lastly, the payment must be made to obtain or retain business. A payment’s business purpose is broadly defined, such that the term includes more than the award of a contract, but also the maintenance of an already existing contract. Also, business transactions need not involve a government contract.
All criminal FCPA prosecutions fall under the jurisdiction of the Department of Justice. Civil prosecutions for FCPA violations may be brought by the SEC. These executive agencies may run parallel investigations and share information, yet seek distinct penalties. There are also private causes of actions for FCPA violations, which may be brought by a business competitor who lost business due to the corrupt payment. In such a situation, the plaintiff may seek treble damages.
Defending Against Allegations
There are affirmative defenses to alleged FCPA violations. The FCPA expressly provides that payments for routine governmental action, such as obtaining licenses or permits, may be permissible. Hiring police protection for a facility may also be permissible. However, whether a payment to an official falls into a permissive category is a question that may require the skill of legal counsel.
In the past decade, Hilder & Associates, P.C., has extensively represented persons accused of FCPA violations or have been targets of FCPA investigations. In FCPA investigations, experience is requisite and all situations are unique.
If you have a question about the FCPA, need assistance establishing a compliance program or have concerns about another white collar criminal matter, please email our Houston firm. You can also call us toll-free at 888-659-8742 or locally at 713-234-1416.