What is FCPA Compliance?
Per The U.S. Department of Justice, the Foreign Corrupt Practices Act (FCPA) was passed into law to make it a crime “for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.” This Act outlaws bribery to foreign officials through the mail or any other means of interstate commerce. Under the FCPA, bribery consists of making an offer, a payment, promise to pay, or authorization of payment of money or anything else of value done in a corrupt manner. These types of payments or offers are done to influence the official in his office, to induce the official to do or not do something that violates his duty, or to attempt to secure an advantage for one’s business.
The FCPA is divided into three parts, these include:
- A requirement for corporations to maintain accurate accounts and records
- A requirement for those groups registered with the Securities and Exchange Commission (SEC) to keep internal accounting systems that are maintained in a responsible manner
- A prohibition against bribery of foreign officials by U.S. corporations
The FCPA is enforced by The Department of Justice and the Securities and Exchange Commission. The Justice Department mainly enforces criminal violations of the FCPA while the SEC handles civil cases. Violations of the FCPA can result in significant penalties, both civil and criminal. Criminal fines can range up to $100,000 per count of FCPA violation as well as up to five years in a federal prison. In the past, other sanctions have included suspension or banishment of the ability to procure federal contracts for offenders.
The FCPA became law in 1977 when it was discovered that hundreds of American companies had made what consisted of bribes to foreign officials or politicians. These exceeded $300 million and were for various purposes, from obtaining official favors such as getting business licenses issued or to secure other favorable actions. The law applies to any person, agent, employee, or stockholder of a U.S. firm. It also applies to foreign nationals operating in the U.S. under our court system who receive such bribes. Under the FCPA, payments made must have been done so to have the recipient provide an advantage that constitutes a misuse of his authority.
To be found guilty of a FCPA violation, it is not necessary to have actually paid the bribe. An offer of a bribe by itself violates this federal law. Violations of the FCPA can also include more than just offers of money; offers of gifts, loans, offers of jobs, educational fees/tuitions, business interests, and more can be considered valid violations as well. It can also include making these offers through third parties without full knowledge of whether or not the offer or payment will go through; it is the intent that the offer could reach its target that is enough to act as a violation.
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Because of the danger of being found guilty of even an inadvertent or unwitting violation of this law, it is vital that companies institute a compliance program to ensure against it. Companies who create and maintain such programs have far less of a chance of violating its terms. Should they still be found to have committed a violation, they will likely be faced with only reduced penalties. Compliance guidelines should be put into effect for all employees, officers, and directors that can detect and handle any payments that could be construed as violations.
At Martin G. Weinberg Attorney at Law in Boston, our federal defense attorney has four decades of experience in defending individuals and corporate entitles against both common and sophisticated white collar crimes. Attorney Weinberg has been repeatedly recognized for his distinguished record as a trial lawyer as well as an appellate attorney; he is the attorney of choice for industry professionals and leaders across the nation.
Need help understanding federal law, compliance programs, or how to defend yourself in federal court? Call us at (617) 227-3700 to schedule a consultation today.