The Foreign Corrupt Practices Act (FCPA), 15 U.S.C. §§ 78dd-1, et seq., prohibits U.S. companies, executives, and certain foreign persons from offering or paying anything of value to foreign officials to obtain or retain business.

The law also extends liability to payments made through third-party consultants, distributors, sales agents, joint venture partners, and other intermediaries when prosecutors claim corporate leaders knew, consciously avoided knowing, or ignored warning signs that bribes would be paid.

International business rarely occurs without local representatives. Companies often rely on customs brokers, regional consultants, licensing specialists, and market-entry partners who understand local regulations and business culture.

When one of those intermediaries becomes the subject of a federal investigation, however, the Department of Justice (DOJ) FCPA Unit and Securities and Exchange Commission (SEC) frequently examine whether corporate officers, directors, compliance personnel, or business owners approved payments while disregarding obvious corruption risks.

Federal FCPA investigations involving intermediaries often extend well beyond the individual who allegedly made an improper payment.

Prosecutors may pursue executives who never met the foreign official, never authorized an explicit bribe, and never participated in overseas negotiations if they believe company leadership intentionally ignored evidence suggesting a third party was acting unlawfully.

What Makes Intermediary FCPA Cases Different from Direct Bribery Allegations?

Direct bribery cases generally involve evidence showing an individual personally offered money or gifts to a government official. Intermediary cases are substantially different because prosecutors attempt to prove criminal liability through relationships several steps removed from the executive under investigation.

The government may argue that an executive approved payments to a consulting company while deliberately avoiding information showing the consultant intended to bribe customs officials, procurement officers, regulators, or employees of state-owned enterprises.

These cases often focus on questions such as:

• Whether due diligence identified corruption risks
• Whether compliance concerns were ignored
• Whether invoices reflected legitimate business services
• Whether commissions greatly exceeded industry standards
• Whether executives approved unusual payment structures
• Whether communications suggested awareness of improper conduct
• Whether company personnel questioned the intermediary before payments continued

Rather than relying upon one document or conversation, prosecutors frequently build their theory using thousands of emails, accounting records, contracts, travel records, compliance reports, encrypted communications, and witness interviews conducted across several countries.

Can Executives Face Criminal Liability for Another Company's Actions?

Yes, one company's executive can face criminal liability for another company's actions under FCPA. One of the defining features of the FCPA is that liability is not limited to individuals who personally transfer money to a foreign official.

Under the statute, prosecutors frequently examine whether an executive knowingly used an intermediary as an indirect method of providing something of value to influence an official decision. The government may argue that an individual deliberately avoided confirming what everyone else suspected.

This concept is sometimes referred to as conscious avoidance or willful blindness.

Rather than proving direct knowledge through an admission, prosecutors attempt to establish that company leadership intentionally ignored obvious warning signs because learning the truth would interfere with business objectives. Examples may include:

• Consulting agreements with vague descriptions of services
• Success fees tied to obtaining government contracts
• Requests for payment through offshore companies unrelated to the transaction
• Cash withdrawals without adequate documentation
• Excessive commissions compared to industry norms
• Invoices lacking supporting work product
• Repeated compliance warnings from employees or auditors

What Evidence Does the DOJ Examine During an Intermediary Investigation?

Federal investigators often reconstruct years of international business activity before deciding whether criminal charges are appropriate. Evidence frequently includes:

• Internal accounting records
• Foreign bank transfers
• Email correspondence
• Messaging applications
• Corporate board materials
• Compliance manuals
• Internal audit reports
• Due diligence files
• Contracts with consultants
• Government procurement records
• Witness testimony
• Travel records
• Tax filings
• Corporate expense reports

Investigators also compare internal communications with accounting entries. For example, a payment described as consulting services may receive additional scrutiny if emails discuss obtaining regulatory approvals or government contracts immediately before funds were transferred.

International investigations frequently involve cooperation between U.S. authorities and foreign enforcement agencies, increasing the amount of documentary evidence available to prosecutors.

Why Do Third-Party Consultants Create Substantial FCPA Exposure?

Many multinational companies depend upon intermediaries because local representatives understand licensing requirements, import procedures, government procurement systems, and regional regulations.

Those legitimate business relationships become problematic when compensation structures, payment methods, or business practices suggest an intermediary may have been retained primarily to influence foreign officials. Prosecutors frequently examine:

• How the consultant was selected
• Whether background investigations were completed
• Who approved retention
• Whether written contracts accurately described services
• How compensation was calculated
• Whether invoices matched documented work
• Whether payments followed ordinary accounting procedures
• Whether compliance personnel raised concerns before payments continued

Companies with formal compliance programs are not automatically protected from prosecution. Federal investigators often evaluate whether those policies were actually followed or existed on paper.

Related Federal Laws

In federal white-collar investigations, prosecutors rarely charge an FCPA intermediary violation in isolation. When investigating third-party bribery schemes, the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) leverage interconnected federal statutes to broaden the scope of liability, access longer statutes of limitations, and increase potential penalties.

Understanding related statutory provisions is critical for corporate leadership and defense counsel because a strong compliance defense against foreign bribery can still fall short if the conduct triggers underlying accounting violations, money laundering, or fraud charges.

• FCPA Accounting Provisions (15 U.S.C. § 78m(b)); Requires publicly traded companies (issuers) to maintain accurate books, records, and internal accounting controls. If the government cannot establish direct knowledge of an overseas third-party bribe, it often uses this statute to prosecute executives for mischaracterizing agent payments (e.g., disguising bribes as "consulting fees") or failing to maintain adequate oversight controls.

• Foreign Extortion Prevention Act (FEPA) (18 U.S.C. § 1352); Complements the FCPA by criminalizing the "demand side" of foreign public corruption. While 15 U.S.C. §§ 78dd-1 targets the U.S. companies and intermediaries who offer or pay bribes, FEPA targets foreign officials who corruptly demand, seek, or accept payments from U.S. entities.

• Money Laundering Control Act (18 U.S.C. §§ 1956 & 1957); Prohibits conducting financial transactions involving the proceeds of specified unlawful activity, which explicitly includes FCPA violations. Prosecutors frequently attach money laundering charges to third-party intermediary schemes when funds are wired through domestic or international financial institutions to cover up illicit payments.

• Mail and Wire Fraud Statutes (18 U.S.C. §§ 1341 & 1343); Penalizes using interstate wire communications or postal services to execute any scheme to defraud. In FCPA investigations, federal prosecutors routinely add mail and wire fraud charges when executives use electronic communications—such as emails, bank wire transfers, or messaging apps—to facilitate or conceal third-party corruption.

• Travel Act (18 U.S.C. § 1952); Prohibits traveling in interstate or foreign commerce, or using facilities of interstate commerce (like telephone or internet), to distribute proceeds or promote unlawful activity, including state commercial bribery laws. This allows federal prosecutors to target commercial, business-to-business bribery involving intermediaries that falls outside the FCPA's strict requirement of a foreign government official.

Frequently Asked Questions (FAQs)

What is an intermediary FCPA violation under 15 U.S.C. §§ 78dd-1, et seq.?

An intermediary Foreign Corrupt Practices Act (FCPA) violation occurs when a U.S. company, executive, or citizen pays or provides anything of value to a foreign official indirectly through third parties—such as local consultants, customs brokers, distributors, or sales agents—to gain or retain business.

Can an executive be convicted if they never personally authorized a bribe?

Yes. Under the FCPA, executives can face criminal liability if they act with knowledge or "conscious avoidance" (willful blindness). If prosecutors prove leadership deliberately ignored obvious red flags or corruption risks associated with a third party, the executive can be held criminally liable even without authorizing an explicit bribe.

What are common "red flags" prosecutors look for in third-party FCPA cases?

Key warning signs include unusually high commission rates, vague invoices without supporting work product, requests for payments to offshore accounts, success fees tied to government contracts, cash withdrawals, and hiring consultants with close ties to foreign officials or state-owned enterprises.

How does the DOJ prove "conscious avoidance" or "willful blindness"?

Prosecutors attempt to show that company leadership intentionally turned a blind eye to third-party corruption to avoid learning the truth. They construct these theories using internal emails, compliance warnings, board minutes, audit reports, and selectively quoted communications indicating awareness of suspicious activity.

What is the difference between direct bribery and third-party intermediary liability?

Direct bribery involves evidence showing an individual directly offered money or gifts to a foreign official. Intermediary cases rely on circumstantial evidence showing that corporate officers knew—or consciously avoided knowing—that a third-party consultant, agent, or joint venture partner was bribing officials on the company's behalf.

Can accounting and record-keeping errors lead to federal charges even if bribery isn't proven?

Yes. Under the FCPA's books and records and internal accounting controls provisions, publicly traded companies must maintain accurate books and robust controls. If the government cannot prove a bribery scheme, it may still charge executives or companies with falsifying corporate records, wire fraud, conspiracy, or money laundering.

What role does third-party due diligence play in an FCPA defense?

Documented due diligence provides strong evidence that corporate leadership acted in good faith. Showing that the company conducted background checks, required compliance certifications, paid market-rate commissions, and relied on independent legal opinions directly counters claims of intentional wrongdoing or willful blindness.

How do foreign document translations and cross-border evidence affect FCPA defenses?

Because intermediary cases rely heavily on international evidence, prosecutors often depend on foreign bank records, overseas witness interviews, and translated communications. Defense teams can challenge charges by demonstrating incomplete translations, lack of witness credibility, context missing from selective quotes, or procedural defects in how foreign evidence was gathered.

What Defenses May Apply in an Intermediary FCPA Case?

Every investigation presents unique facts, making defense strategy highly dependent upon the available evidence rather than a single legal argument. Potential issues that may become important include:

• Whether prosecutors can establish the required level of knowledge
• Whether the intermediary actually made an improper payment
• Whether the recipient qualified as a foreign official under the statute
• Whether the payment was intended to obtain or retain business
• Whether communications have been interpreted accurately
• Whether witnesses have credibility issues
• Whether investigators relied upon incomplete translations of foreign documents
• Whether evidence obtained overseas complied with applicable legal procedures
• Whether accounting records support legitimate business purposes

Federal prosecutors carry the burden of proving every required element beyond a reasonable doubt. Complex international business relationships often generate competing explanations for transactions that initially appear suspicious when viewed in isolation.

Can Accounting Records Create Separate Federal Charges?

Yes. Many FCPA intermediary investigations expand beyond bribery allegations and include accounting-related offenses. Publicly traded companies are subject to the FCPA's books and records and internal accounting controls provisions.

Even if prosecutors encounter obstacles proving an underlying bribery scheme, they may pursue allegations that corporate records concealed the true purpose of payments or failed to document transactions accurately. Related allegations sometimes include, but are not limited to:

• False statements
• Obstruction of justice
• Books, records, and internal controls violations
• Money Laundering
• Wire fraud
• Conspiracy

Hypothetical Case Study: Challenging Alleged Knowledge of an International Consultant's Bribery Scheme

A publicly traded manufacturing company expanded into several Southeast Asian markets through an established regional consulting firm.

The consultant assisted with licensing, customs clearance, and introductions to government purchasing agencies. Over several years, the company secured numerous contracts with state-owned entities.

Federal investigators later alleged the consultant paid millions of dollars in bribes to foreign procurement officials.

Rather than charging only the consultant, prosecutors focused on the company's chief operating officer, chief financial officer, and regional vice president, asserting they consciously ignored repeated warning signs because international sales continued to increase.

The government relied upon unusually high commission payments, offshore bank transfers, incomplete invoices, and emails questioning the consultant's compensation structure. Prosecutors argued these circumstances demonstrated deliberate avoidance of obvious corruption risks. Our attorneys at Eisner Gorin LLP conducted a detailed review of the company's internal compliance process, interview memoranda, board materials, outside legal opinions, and years of due diligence records.

The review demonstrated that multiple compliance reviews had been conducted before the consultant's retention, independent accounting professionals had approved payment procedures, and foreign legal advisors had repeatedly confirmed that the consultant performed substantial legitimate services unrelated to government officials.

Additional evidence established that several internal emails cited by investigators had been quoted selectively, omitting discussions explaining the consultant's extensive logistical responsibilities throughout the region.

Financial analysis also showed that commission rates closely matched comparable international consulting agreements used by competitors operating in the same countries.

As additional records and witness testimony were presented, prosecutors encountered increasing difficulty establishing that company leadership possessed the criminal intent required under the FCPA.

The investigation concluded without criminal convictions against the executives, while separate proceedings continued against individuals directly involved in overseas bribery activity. Eisner Gorin LLP can help you. Schedule your consultation by using the contact form.

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