by Source Intelligence
on July 9, 2015
The US Foreign Corrupt Practices Act (FCPA) is a widely enforced anti-corruption law that was enacted in 1977. It is the first to bring to light corporate liability, responsibility for third parties and extraterritoriality for corruption offenses. This means companies and persons can be held criminally and civilly responsible for corruption and bribery offense either here in the United States or abroad.
The FCPA also requires issuers to maintain accurate books and records and have a system of internal controls sufficient to, among other things, provide reasonable assurances that transactions are executed and assets are accessed and accounted for in accordance with management’s authorization. This also extends to any 3rd parties that your organization is conducting business relationships with.
There are many laws put into place in order to stop the unethical business practices that happen all global markets.
Below are a few links, which you can access, that will help in understanding many of the different worldwide regulations, focusing on corruption and bribery. Particularly, the Securities and Exchange Commission (SEC) and Department of Justice (DOJ) offer an expansive base of information on their website as well.
The FCPA is a federal law, enforced by the U.S. Department of Justice, which prohibits payments, gifts, or even offers of “anything of value” to a “foreign official” for the purpose of influencing the official or otherwise “securing any improper advantage” in obtaining, retaining or directing business.
Yes, certain provisions of the FCPA apply to all “domestic concerns” and their officers, employees and agents. Thus, the FCPA applies to Universities, and anyone working for a University or on behalf of a University — including vendors and consultants. (A “domestic concern” under the statute can include U.S.-based non-profits, NGOs, and educational institutions.)
No. The FCPA applies both to the conduct of a U.S. citizen while that citizen is in a foreign country, as well as to actions taken in the U.S. “in furtherance of” the corruption of a foreign official.
For an act to violate the FCPA, three elements must be present: (1) A payment or something of value is offered, promised, or given (2) to a foreign official (3) for a corrupt purpose.
A “foreign official” is defined very broadly under the FCPA. The official can be employee or agents of a foreign government; an official need not be high-ranking. The following persons would likely qualify as foreign officials:
• Administrators and faculty at foreign state universities.
• Advisors to ministries, government agencies or government officials.
• Members of government committees or panels.
• Healthcare professionals at government-owned or controlled hospitals.
• Employees of a public international organization (such as the World Bank).
• Members of a royal family.
The proscriptions of the FCPA also extend to bribery of a “foreign political party or official thereof or any candidate for foreign political office.”
“Anything of value” is broadly construed and may include cash payments, non-cash gifts or other benefits, including:
• Travel, meals, entertainment or gifts, including for friends or relatives of a foreign official.
• Training, scholarships, internships.
• Employment (e.g., paid internships for the child of an official).
• A promise to use certain vendors or intermediaries (e.g., a vendor owned or selected by a foreign official).
• Conference and event scholarships.
• Charitable donations.
One is acting with a corrupt purpose if he/she offers, promises, or provides something of value to a foreign official — either directly or through a third party — to improperly influence the foreign official in order to obtain, retain, or direct business or to secure any improper business advantage.
Yes, payments for legitimate services are acceptable. But care should be given to avoid payments that could be construed as having a corrupt purpose.
To that end, each payment for goods or services should follow the entity Purchasing policies and processes and be documented with the appropriate detail so such that it is clear that the transaction was bona fide in all respects.
When hosting a foreign official, it may be appropriate to pay for the official’s reasonable lodging and dining expenses – so long as these payments are not being done to improperly influence the foreign official.
The FCPA applies to any and all “things of value,” including gifts. Whether giving a gift may be seen as a violation of the FCPA requires a factual analysis of the circumstances under which the gift is given.
No. One cannot make a payment to a third party if he/she knows (or should know) that some or all of that payment will be used in a way that violates the FCPA. In other words, you cannot ask or hire someone else to do something you are not legally allowed to do yourself.
Yes, there are certain limited situations where payments to foreign officials may be acceptable under the FCPA. One of those exceptions is referred to as “facilitation payments” – these are payments to a foreign official for purposes of facilitating or expediting or securing the performance of routine government action. For example, it may not be a violation of the FCPA to make a payment to a foreign official to expedite the granting of a permit or license that you are otherwise entitled to receive. These payments are for non-discretionary, ministerial government actions.
In addition, payment to a foreign official may be acceptable when it is necessary to prevent imminent personal injury or harm—for instance, if a colleague requires emergency medical care and a payment will expedite the dispatch of an ambulance.
The penalties for FCPA violations are stiff and enforcement activity by the U.S. government is on the rise. Individuals who violate the FCPA’s anti-bribery provisions face penalties up to $100,000 fine per violation, and up to a 5-year prison sentence per violation. (Note: Wherever the government pursues criminal charges, it may seek additional fines under the Alternative Fines Act (“AFA”). Accordingly, pursuant to the AFA, all criminal fines imposed under the FCPA may be increased to twice the improper gain obtained or twice the loss incurred by another person.)
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