FOREIGN CORRUPT PRACTICES ACT (FCPA)

The FCPA is enforced Criminally by the Department of Justice and Civilly by the Securities and Exchange commission.

FCPA enforcement has experience a surge in recent years. In 2004, five actions were initiated by either the DOJ or SEC. Less than six years later in 2010, the DOJ or SEC initiated 74 actions.

Updates on Recent Enforcement Actions can be found here.

The Foreign Corrupt Practices Act of 1977 ( 15 U.S. C. §§ 78dd-1) regulates international business interactions by making it  unlawful for certain persons and entities to make payments to foreign government officials in the course of obtaining or retaining business.

The anti-bribery provision of the FCPA prohibits the willful use of the mails or any means of instrumentality of interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a foreign official to influence the foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty , or to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person.

An amendment in 1998, adjusted the anti-bribery provision of the FCPA , now applying it to foreign firms and person who cause, directly or through agents, an act in furtherance of such a corrupt payment to take place within the territory of the United States.

FCPA also requires companies whose securities are listed in the United States to meet its accounting provisions. (15 U.S.C.§78m) . These accounting provisions, which were designed to operate in tandem with the anti-bribery provisions of the FCPA, require corporations covered by the provisions to (a) make and keep books and records that accurately and fairly reflect the transactions of the corporation and (b) devise and maintain an adequate system of internal accounting controls.

Summaries of DOJ FCPA opinions can be found here

The goal is to reach a settlement agreement with the government before court action is taken, either civilly or criminally.  This is often referred to as a “non-prosecution agreement” or a “deferred prosecution agreement”. In these agreements, the corporation typically admits to the violations and agrees to change its policies and practices.  If the process is handled appropriately, the charges against the corporation are typically dismissed.

For blog postings delving into further detail on the Foreign Corrupt Practices Act, please click here.

Disclaimer: The information provide here is a brief /general s summary of the FCPA. It has not yet been updated from the date of its publication. Analysis, developments, and defenses are subject to change in accordance with legal development which may have occurred. Please do not rely on the summary as a source of legal advice. When dealing with such significant legal questions, always consult a federal criminal attorney who is licensed to practice in your jurisdiction.