Q. 1. WHAT IS THE FOREIGN CORRUPT PRACTICES ACT (“FCPA”)?
Congress enacted the FCPA in 1977 to bring a halt to the rampant bribery of foreign government officials. The FCPA has two main areas of focus:
• Anti-Bribery Provisions: Prohibits the offering or paying of a bribe or anything else of value to a foreign government or political party official in order to obtain or retain business or secure any improper advantage.
• Books and Records Provisions: Requires companies that trade on U.S. exchanges to make and keep accurate books, records and accounts of all payments, and to devise and maintain reasonable internal accounting controls for preventing and detecting FCPA violations.
Q. 2. DOES THE FCPA APPLY TO ME?
The FCPA applies to U.S. companies conducting business abroad, most foreign subsidiaries of U.S. companies, and U.S. subsidiaries of foreign companies. Even non-U.S. companies with securities that trade on U.S. exchanges are subject to the FCPA. The FCPA also applies to all U.S. citizens and any resident aliens. Even if none of the above applies, any U.S. nexus to a corrupt payment, such as an e-mail or phone call to the U.S. or even a dollar denominated banking transaction, may be enough to confer jurisdiction.
The scope of the anti-bribery provisions of the FCPA is broad. What many would consider normal business entertainment or accommodations may run afoul of the statute. Furthermore, the acts of independent sales representatives, consultants, other agents, joint venture partners and the like that violate the FCPA will be attributed to any company that falls under the statute’s jurisdiction. And, surprisingly, companies acquiring another company, even minority positions, are expected to perform FCPA due diligence or face potential liability. In a very real sense, you can buy another company’s FCPA problem.
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