Foreign Corrupt Practices Act (FCPA) Lawyers

The Foreign Corrupt Practices Act (FCPA) of 1977 and its amendments enacted in 1998 are comprehensive pieces of federal legislation intended to eliminate corruption and bribery in business conducted between U.S. and foreign businesses.

Comparatively speaking, the FCPA is still a relatively new piece of legislation. Its provisions are largely unknown by many; however, that does not reduce the intensity with which the federal government will prosecute Foreign Corrupt Practices Act violations. There are several Foreign Corrupt Practices Act cases in which defendants were utterly unaware of FCPA regulations (and their violations) until they were charged with a crime.

The legal experts at SKJM, a Houston area law firm, have extensive experience serving as defense attorneys in FCPA cases. If you or your company is under regulatory investigation for FCPA violations, you need a knowledgeable FCPA lawyer prepared to mount a solid criminal defense on your behalf. Even if you have questions regarding compliance with the Federal Corrupt Practices Act, it is critical that you only trust an expert FCPA legal team to provide the answers and counsel you deserve.

FCPA laws are complex, and the criminal and civil penalties are severe. Make sure you have an FCPA defense lawyer equipped to advocate for you in federal court; partner with one of the FCPA attorneys from Schaffer Kennedy Johnson.

What Does the FCPA Do?

At its core, the FCPA makes it illegal to provide or promise bribes to foreign government officials to obtain or continue business in their respective countries. FCPA mandates require accurate and detailed records to prevent fraud, bribery, and corruption via “internal controls.”

These regulations apply to United States citizens and corporations, as well as foreign businesses listed on the U.S. Stock Exchange and those that conduct business from operations within the U.S. Under FCPA regulations, companies are prohibited from making or promising payment of anything of value to a foreign official, foreign political party or party official, or foreign political candidate, specifically with the intent to influence the individual to utilize their position to assist the corporation in obtaining, retaining, or directing business in any way.

Third-party payments (including joint-venture partnerships) are also prohibited if the payment is made with the knowledge that some or all will be passed on as a bribe to a foreign official. Therefore, the FCPA enforcement policies are designed to prevent money laundering in addition to bribery.

When the FCPA was initially passed in the late 1970s, it was considered by many American business leaders to be an unbalanced effort to resolve issues of corruption that were occurring on a global scale. Although the legislation prohibited U.S. businesses from paying bribes, bribery remained consistent in many other countries – primarily because it was not just allowed but officially sanctioned. Leaders in U.S. business argued that the FCPA might have been intended to fight against corruption. Still, it had the unintended effect of putting the U.S. at a disadvantage in the international market.

So, after nearly a decade of negotiations with the Organization of Economic Cooperation and Development (OECD), the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions was signed by the U.S. and 33 other countries. The resulting changes to the Foreign Corrupt Practices Act were passed as amendments in 1998.

According to the U.S Department of Justice:

The Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §§ 78dd-1, et seq. (“FCPA”), was enacted to make it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.

The FCPA’s full text describes the relevant anti-bribery and accounting provisions in great detail.

FCPA Anti-Bribery Provisions

Under the FCPA, making any payment, offering a promise of income, or authorizing payments to a foreign official to influence their decision-making and secure new or retained business is illegal. A “payment” can be money or anything of value.

The anti-bribery provisions in the FCPA apply to a broad range of individuals and entities; that is to say, issuers, domestic concerns, and territorial jurisdiction are all subject to FCPA measures.

• “Issuers” (15 U.S.C. section 78dd-1): Any business or corporation that (1) has securities listed on the U.S. national securities exchange and (2) is therefore legally obligated to file the appropriate financial reports with the Securities and Exchange Commission. This ensures that the provisions of the FCPA apply not only to American businesses but also to any foreign companies that participate in trading securities on U.S. financial markets. Officers, directors, agents, employees, and stockholders who act on behalf of an issuer are also expected to abide by FCPA regulations.
• “Domestic concerns” (15 U.S.C. section 78dd-2): Any U.S. citizen, resident, or national, as well as any corporation, business, partnership, sole propriety, association, or unincorporated organization that has been established under the laws of the U.S. or any U.S. territory, commonwealth, or possession. Essentially, any entity that maintains its principal place of business within U.S. territory can be labeled as a “domestic concern” and prosecuted for FCPA violations.
• “Territorial jurisdiction” (15 U.S.C. section 78dd-3): A provision that makes any foreign individual or non-issuer entity that engages in an act that furthers a corrupt payment liable to FCPA law. This provision was passed in 1998 and applied to actions made by a person or through an agent about a bribe or the offer/promise while in U.S. territory.

FCPA Accounting Provisions

The accounting provisions of the FCPA, in a portion referred to as the “books and records provision,” demand that all issuers maintain honest and appropriately detailed records of all accounts, financial transactions, and accounts. Records must accurately indicate the nature of every transaction. Violations of the FCPA “books and records provision” can include writing off a bribery payment as something like “consulting fee,” “petty cash,” or “travel expenses.”

Under these laws, companies are also required to establish oversight systems to prevent asset misuse. These systems must be equipped to avoid fraud and detect any incidents of fraud, bribery, and corruption. This stipulation is commonly known as the “internal controls provision.” The law specifies that the internal controls implemented should be reasonably suited to a company’s vulnerability to facilitating or hosting corrupt behavior. For example, a large corporation with frequent dealings with foreign governments would be expected to uphold stricter internal investigation and controls than a company that mainly conducts domestic business.

Terms and Definitions Relevant to the FCPA

Several specific qualifications must be met for a payment or transaction to be categorized as an FCPA violation. The following terms and definitions are intended to define and clarify those qualifications and how they relate to FCPA regulations.

A bribe is considered “anything of value” that is “willfully” and “corruptly” provided or offered to a “foreign official” or “third parties,” in opposition to the “Principles of Corporate Liability for Anti-Bribery Violations” and within the specified “statute of limitations.”

• “Anything of value”: The bribe can take many forms, such as cash, travel, gifts, or charitable contributions
• “Willfully”: The accused must have explicitly known that their action(s) violated federal law.
• “Corruptly”: The bribe was intended to persuade the recipient to misuse their position of power.
• “Foreign official” Can include any officer/employee of a foreign government, department, or agency, as well as anyone acting on behalf of the above.
• “Third parties”: Any person who is provided with a bribe to pass on to a foreign official
• “Principles of Corporate Liability for Anti-Bribery Violations”: The general principles of corporate liability apply to the FCPA, making a company liable if/when its directors, agents, officers, or employees commit violations within the scope of their employment intending to benefit the company
• “Statute of limitations”: There is a five-year statute of limitations for criminal violations of the FCPA

What are the Penalties for FCPA Violations?

Foreign Corrupt Practices Act violations can result in civil and criminal penalties, including:

• Civil fines of up to $10,000, plus an additional fine that can range from $5,000 to $500,000
• Barring future privileges of conducting business with the federal government
• Criminal penalties of up to $2 million for companies and corporations and $100,000 for individuals
• Up to five years in federal prison

Affirmative Defense against Charges of FCPA Violations

Two affirmative defenses are outlined within the FCPA’s anti-bribery provisions, but the burden of proving them lies on the defendant. As a result, it is imperative to partner with a highly experienced and skilled attorney equipped to navigate the intricacies of the FCPA on your behalf. Otherwise, you risk missing the opportunity to mount a proper defense in court and protect yourself from penalties.

Contact a Foreign Corrupt Practices Act (FCPA) Law Firm Today

If you have been informed that you or your business are being investigated for FCPA violations, now is the time to act. Contact the federal defense lawyers at SKJM to request a free case consultation and take the proper steps toward safeguarding your rights today. Call 713-228-8500

We are located in Houston and serve the entire United States.