FCPA
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DC FCPA Attorneys
The Foreign Corrupt Practices Act (FCPA) of 1977 is a federal legislation that prohibits certain individuals and entities from making payments to foreign government officials to gain or retain business. While the law aims to prevent bribery and corruption, there are still questions about its specific definitions and compliance requirements. To address compliance concerns or if you find yourself under federal investigation, it is advisable to consult with a dedicated FCPA lawyer.
An experienced federal criminal defense attorney familiar with the FCPA and anti-bribery laws can assess your alleged FCPA violation and guide you through the complex federal court process. For a comprehensive understanding of the FCPA’s history and provisions, continue reading.
The FCPA was enacted to prevent American businesses from making illegal payments to foreign government officials for business and contracts in foreign countries. It was signed into law after investigations revealed widespread illegal payments totaling over $300 million by more than 400 U.S. companies and executives. The FCPA aimed to eliminate the double standard of prohibiting bribery within the United States but tolerating corruption in foreign business. However, American business leaders raised concerns that the FCPA placed them at a disadvantage compared to countries that allowed bribery and even permitted its tax deduction as “business expenses.”
In response to these concerns, Congress and the federal government, after nearly a decade of negotiations with the Organization for Economic Cooperation and Development (OECD), signed the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions in 1998. The cooperation of U.S. trading partners led to changes in the FCPA, effectively leveling the international playing field. Notable FCPA cases provide additional insight into the application of the law.
What does the FCPA do?
The FCPA prohibits businesses, including American citizens and corporations, as well as foreign businesses listed on U.S. Stock Exchanges and those operating within the United States, from making payments or promises of payment to foreign officials, political parties, party officials, or candidates for foreign office. The purpose of such payments must be to influence the recipient to use their position for the company’s benefit in obtaining or retaining business or directing business to another person.
The FCPA also covers third-party payments, such as joint-venture partnerships, where payments are made to a third party with the knowledge that some or all of the payment will be passed on as a bribe to a foreign government official. Therefore, the FCPA applies not only to bribery but also to money laundering.
Anti-Bribery Provisions of the FCPA
The FCPA prohibits any payment, offer, promise, or authorization of payments (including money or “anything of value”) to a foreign official with the intent to influence their decision-making in facilitating or enabling new business or retained business. The anti-bribery provisions apply to issuers, domestic concerns, and territorial jurisdiction.
Issuers: Businesses or corporations listed on U.S. national securities exchanges or trading on U.S. financial markets are considered “issuers.” Officers, directors, employees, agents, or stockholders acting on behalf of an issuer can also be prosecuted under the FCPA.
Domestic Concerns: Entities that do not meet the definition of an issuer may still be classified as “domestic concerns” and are subject to the FCPA. This includes U.S. citizens, nationals, residents, or entities established and organized under American laws.
Territorial Jurisdiction: Foreign individuals or non-issuer entities engaging in corrupt payments or offers within U.S. territory are subject to the FCPA under territorial jurisdiction.
Accounting Provisions of the FCPA
In addition to bribery prohibition, the FCPA requires issuers to maintain accurate and detailed records of assets, accounts, and financial transactions (books and records provision). Issuers must establish internal controls to prevent and detect corruption, bribery, and fraud within their organizations.
Penalties for FCPA Violations
Violating the FCPA can result in civil and criminal penalties enforced by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). Civil penalties include fines of up to $10,000, additional fines based on pecuniary gain, and potential business restrictions with the federal government. Criminal penalties for businesses can reach up to $2 million in fines, while individuals, including officers, directors, stockholders, and employees, may face fines up to $100,000 and imprisonment for up to five years. Enforcement of the FCPA provides further insight into penalties and consequences.
Affirmative Defenses Against FCPA Charges
FCPA defendants have two affirmative defenses available: the “local law defense” (lawful under the written laws of the foreign country) and the “reasonable and bona fide business expenditure defense” (expense related to product demonstration or contractual obligation). The burden of proving these defenses lies with the defendant. A skilled FCPA attorney can assess whether these defenses apply to the case or if other legal options exist.
Given the complex nature of the FCPA, it is crucial to seek representation from an attorney experienced in FCPA and anti-bribery laws. If you are facing FCPA charges, contact us today for expert guidance and defense tailored to your case.