Understanding the Foreign Corrupt Practices Act (FCPA)

The Foreign Corrupt Practices Act (FCPA) is a law originating from the United States that targets international corruption. Specifically, the FCPA forbids bribery of foreign officials and requires certain accounting practices in order to prevent covering up corrupt activities. The FCPA received strong backing from American companies who were not able to keep up in the international marketplace, where bribes and other corrupt acts were common and generally accepted. The anti-bribery provision of the FCPA outlaws payments of bribes or gifts to officials of foreign governments, politicians, and political parties. Certain types of payments are allowed under the FCPA if the actions are lawful under local written law or the expenditure is a reasonable and bona fide one. Payments made to facilitate or “grease the wheels” are allowed in very limited circumstances and are exempt under the FCPA.

FCPA IN PRACTICE

Federal public corruption as a violation of the FCPA can be established if certain elements are present and proven by the government against you. Violations of the FCPA can result in both criminal and civil liability. In order to establish a violation of the FCPA, the government has to prove three main elements:

• The accused used a form of interstate commerce, such as a telephone, the internet, or the mail;
• The accused offered to give something of monetary value to a sitting foreign official, politician, or political party; and
• The accused sought to influence a government action or gain an unfair advantage, and did so knowingly, willfully, and/or corruptly.

The FCPA has provisions that require businesses to have specific requirements on recordkeeping and other internal controls designed to make it more difficult to hide corrupt and illegal activities. Surprisingly, the FCPA doesn’t actually outlaw the acceptance of an alleged bribe by a foreign official. This doesn’t mean that the United States has not gone after officials it suspects of accepting bribes, they just do it a little more creatively. One approach federal prosecutors have used in order to combat the acceptance of bribes by foreign officials is prosecution under the United States money laundering statute.

HOW DOES THIS AFFECT ME?

If you own or work in a business that has dealings in foreign countries, then you might be at risk. Bribery and other forms of corruption are unfortunately too common in other countries and are sometimes seen as simply the cost of doing business. While foreign officials may be more insulated from the long reach of American law, you, as an American, are not. The FCPA was designed to keep American businesses in line and under control even when they are doing business in other countries. Even if non-Americans might be profiting around you from bribery and other forms of corruption when doing business overseas, you and your company are barred from doing so under the FCPA and other applicable federal law. Your role in these situations will be scrutinized by investigators as they try to build their cases against those it suspects of corrupt behavior. If you have any questions relating to public corruption, it is important that you speak to an experienced federal public corruption attorney as soon as possible. Ignorance of the law is not a defense. It is your responsibility to understand your role and the limitations you have by law. If you have a business that operates in other countries, then you will need to understand the detail and nuance of the FCPA to make sure you remain in compliance and out of trouble.