The Foreign Corrupt Practices Act (FCPA) was enacted in 1977 and is the most widely enforced anti-corruption law in the United States. The Act was passed in response to the discovery of widespread corruption of foreign officials by companies based in the United States. Within the FCPA, there are two main provisions: the anti-bribery component and the accounting component. The anti-bribery clauses prohibit bribery to foreign officials in order to gain new business or keep existing business. The accounting clauses require issuers to keep up to date and accurate records thereby maintaining secure internal accounting controls. The FCPA applies to two distinct groups, those with formal relations to the United States and those who participate in violating the FCPA within territory of the United States. Outside U.S. territory, “issuers” and “domestic concerns” must also adhere to the FCPA. An “issuer” is a person or company that has securities within the U.S. or is required to occasionally file reports with the SEC. “Domestic concerns” include anyone who is a citizen, national, or resident of the United States, as well as businesses that are based in the U.S. or a territory, possession, or commonwealth of the U.S. The FCPA is enforced by the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ).
The FCPA prohibits five “elements” which the government must prove a person or organization guilty of in order to show FCPA violation. These elements are 1) a payment, offer authorization, or promise to pay money or anything of value; 2) to a foreign government official (including a party official or manager of a state-owned concern), or to any other person, knowing that the payment or promise will be passed on to a foreign official; 3) with corrupt motive; 4) for the purpose of (a) influencing any act or decision of that person, (b) inducing such person to do or omit any action in violation of his lawful duty, (c) securing an improper advantage, or (d) inducing such person to use his influence to affect an official act or decision; 5) in order to assist in obtaining or retaining business for or with, or directing any business to, any person. Persons or organizations found guilty of all five elements may be have to answer to criminal charges by the DOJ, resulting in prison time or fines. The SEC can add further penalties of up to $500,000 on top of any punishment decided upon by the DOJ. One point to note is that a bribe does not need to actually be paid in order to violate the FCPA, just the promise or offer of a bribe violates the Act. Additionally, the individual making or approving the payment must have a “corrupt intent” meaning the payment would influence the beneficiary to exploit his official position to direct business unlawfully to the payer or someone else. The FCPA specifies that the recipient of the payment only extends to “a foreign official, a foreign political party or party official, or any candidate for foreign political office” in terms of violating the Act.
In recent years, the SEC and the DOJ have participated in an increasing rate of enforcement actions regarding violations of the Foreign Corrupt Practices Act. More and more cases are surfacing of violations of the FCPA. This makes it essential for attorneys of insurers and insureds are familiar with the Act so that they may be able to most effectively defend their clients.
If you may have information regarding the Foreign Corrupt Practices Act and would like to speak to an attorney in confidence, give one of our experienced whistleblower attorneys a call for a case consultation.
Cook, R. Christopher, and Stephanie Connor. “The Foreign Corrupt Practices Act: An OverviewThe Foreign Corrupt Practices Act: An Overview Sole Proprietorship with Its Principal Place of Business in the.” Jones Day (n.d.): n. pag. Web. 20 July 2016.
McGraw, Stacey L., and Stacey E. Rufe. “The Foreign Corrupt Practices Act.” American Bar Association. N.p., 21 Mar. 2014. Web. 20 July 2016.