The Foreign Corrupt Practices Act (FCPA) was passed by Congress in 1977 to make it unlawful for certain classes of people and entities to make payments to foreign government officials to assist in obtaining or retaining business.
The FCPA includes anti-bribery provisions and books and records provisions that criminalize covering up “corrupt” practices using false entries in company books.
The FCPA “anti-bribery” provisions prohibit people and entities and individuals from making any payments to foreign officials in an effort to obtain or maintain business. The FCPA "books and records" provisions prohibit anyone from knowingly making materially incorrect entries in corporate books and records with intent to hide foreign payoffs.
It should be noted the Foreign Corrupt Practices Act is a wide-ranging law and interpreted broadly by the U.S. Department of Justice. It should also be noted that it's not uncommon for companies to start internal investigations associated with the Foreign Corrupt Practices Act. These type of criminal investigations are very serious, with potentially devastating consequences for the company employees.
Internal FCPA investigations are normally handled by outside lawyers who will report to an audit committee and upper-level management.
If you are the target of a federal investigation involving the FCPA, you need to seek legal representation from an attorney with experience in dealing with these type of federal crimes. There are questions that remain about what exactly constitutes bribery and corruption and what people or businesses need to do to be in compliance with FCPA laws.
A federal criminal defense attorney who is experienced with the Foreign Corrupt Practices Act and other anti-bribery legislation can thoroughly review your alleged FCPA violation and guide you through the complex federal court process.
To give readers a better understanding of the Foreign Corrupt Practices Act and what you are facing, our federal criminal defense lawyers are providing an overview below.
What Does the Foreign Corrupt Practices Act Do?
The Foreign Corrupt Practices Act under 15 U.S. Code § 78dd–1 makes it a crime to bribe foreign government officials to obtain or retain business in their country. It should be noted the FCPA applies to U.S. citizens and businesses and foreign businesses listed on the U.S. Stock Exchange and who conduct their business within the United States.
The FCPA prohibits a business from making a payment, or a promise of payment for anything of value to a foreign official, political party, or a candidate for foreign office with intent to influence them to provide assistance in obtaining or retaining business.
It also prohibits any third-party payments where payments are made to an outside party knowing some or all of the payments will be sent to a foreign government official as a bribe. This type of third-party transaction could be considered a form money laundering.
Thus, the primary purpose of this law is largely to prevent U.S. corporations from bribing foreign officials. The FCPA has accounting language that requires public companies to maintain records that show their transactions.
FCPA Anti-Bribery and Accounting Provisions
The FCPA applies to “issuers,” who is typically a domestic company that has securities traded or required to submit filings with the Securities and Exchange Commission. A domestic concern is normally a company within the United States, or a person who is a resident or citizen. However, as stated above, the FCPA also applies to foreign people and foreign firm if they meet certain jurisdictional requirements.
The term “anything of value” is wide-ranging and covers many types of payment, such as cash, property, jewelry, vehicles, company shares, travel expenses, and more. The term “obtain or retain business” is usually connected with government contracts, but the federal statute also prohibits a wide-range of business activities.
The FCPAs accounting provisions requires “issuers” to keep honest and accurate records of accounts and financial transactions, commonly known as the “books and records” provision. Companies are required by law to maintain oversight make sure assets are appropriately used and to prevent fraud, corruption, and bribery.
Penalties for the Foreign Corrupt Practices Act
The FCPA is enforced civilly by the Securities and Exchange Commission. Criminal penalties are enforced by the United States Department of Justice.
Civil penalties normally include a fine of up to $10,000, along with an additional fine that can't exceed the amount of gain, or a specific dollar amount depending on the level violation. Additionally, any person or business found in violation of the FCPA could be prohibited from conducting further business with the federal government.
Criminal penalties for a Foreign Corrupt Practices Act violation by an individual includes up to five years in a federal prison, and a fine up to $100,000. This includes employees, stockholders, and management. FCPA penalties for violations by a business include huge fines up to $2 million dollars.
CPA violations include fines of up to $2 million for businesses and corporations. For individuals, including officers, directors, stockholders, and employees, the criminal penalties include fines of up to $100,000 and up to five years in prison.
How an investigation FCPA proceeds differs greatly as it will depend on if the target is an individual or a business. FCPA investigations involving a business won't result in criminal charges, rather they normally reach a settlement agreement before court action is taken.
Federal criminal charges under the Foreign Corrupt Practices Act are more likely to be pursued against an individual, including any officer, director, employee, or agent of an issuer or stockholder who was acting on behalf of such issuer, who willfully violates the anti-bribery provisions.
Fighting Foreign Corrupt Practices Act Cases
Our federal criminal defense lawyers will thoroughly review the alleged FCPA violating in order to determine an appropriate strategy to fight the case.
The FCPA provides for two affirmative defenses. One affirmative defense is that the payments were lawful under the written laws of the foreign official's country. The other is that the payment was a “reasonable and bona fide expenditure,” like travel expenses on behalf of the foreign official and it related to promotion of products or services or executing a contract with a foreign government.
Other potential defenses include that an individual didn't have any knowledge there were unlawful payments, or they were made in good faith.
However, it's important to note that every Foreign Corrupt Practices Act case is unique and effective defenses will always depend on the specific facts and circumstances of each case.
Our federal criminal lawyers represent clients nationwide for all types of federal offenses, including alleged FCPA violations. Early intervention into your case can be crucial and our lawyers may be able to help you avoid prosecution.
Eisner Gorin LLP is a nationally recognized criminal defense law firm located at 1875 Century Park E #705, Los Angeles, CA 90067. We also have an office in the San Fernando Valley area of Los Angeles County located at 14401 Sylvan St #112 Van Nuys, CA 91401. Contact us for a consultation at (877) 781-1570.