Download - Foreign Corrupt Practices
The U.S. Foreign Corrupt Practices Act
Thomas O’DeaVP International Sales
March 15, 2010
5 Elements• Five elements must be met to constitute a violation of the act:
1. Who (is acting)
2. Corrupt Intent
3. Payment
4. Recipient
5. Business Purpose
1. Actor• Individual, firm, officer, director,
employee, agent or any stockholder acting on behalf of a firm
– Individuals and firms may be penalized if they order, authorize or assist someone else to violate the anti-bribery provisions or if they conspire to violate those provisions
2. Corrupt Intent• Inducing a foreign official to do or omit to do any act in violation of
his or her lawful duty to obtain improper advantage
• To induce a foreign official to use his or her influence to affect or influence any act or decision
– Attempt does not have to be successful
3. Payment• Paying or offering to pay (or
authorizing to pay or offer) money or “anything of value”
4. Recipient
• Foreign official
• Foreign political party
• Candidate for foreign political office
• Public international organization
• Any person acting in an official capacity for a foreign government
• Obtaining or retaining business
• Directing business to any person
5. Business Purpose
Intermediaries
• Unlawful to make a payment to a third party while knowing that all or a portion is going to a foreign official
– Includes “conscious disregard and deliberate ignorance”
• Intermediaries include:
– Agents, partners
Due Diligence• To avoid being held liable, U.S.
companies are encouraged to exercise due diligence:
– Investigating potential partners and agents
– References and reputation
– Banking information
Red Flags• Unusual payment or financial arrangements
• History of corruption in the country
• Refusal to provide FCPA certification
• Unusually high commission
• Lack of transparency in accounting records
• Lack of qualifications or resources on the part of the partner to perform the services offered
• Partner has been recommended by an official of the potential foreign customer
Sanctions• Criminal:
– Fines of up $2M or more
– Employee fines of $100k or more & imprisonment of up to 5 years
• Firms are barred from paying employees’ fines
• Civil
– SEC may bring a civil action against firm and individuals & impose fine
• Private cause of action
– RICO
Sanctions• Other Governmental Action
– Barring from doing business with the govt
– Indictment alone can lead to suspension of the right to do business with the government
– Ineligibility to receive export licenses
Ethics Hotline• 954-xxx-xxxx
• Fraud
• Abuse
• Improper Behavior
• FCPA Red Flags
• Violations