The news this month that the FBI will continue to use sting operations to net Foreign Corrupt Practices Act (FCPA or the Act) violators only serves to emphasize that the FCPA is best viewed broadly. The net cast by the federal statute with provisions that aim to prevent bribery of foreign officials and to standardize accounting among companies with listed securities in the United States is a wide one.
Dow Jones, publisher of The Wall Street Journal, and a company whose website promises “News to Profit By,” announced last month that a thorough review of its operations in China found no impropriety. The Journal itself reported that the DOJ has investigated allegations that staffers in its China bureau had bribed local officials in a gifts-for-information arrangement. Mere meals and drinks between reporters and sources would not typically violate the FCPA; the allegations included that expensive entertainment and travel were lavished on the officials.
The Wall Street Journal allegations show that enterprises whose leaders likely never contemplated that they would have occasion to be viewed as attempting to corrupt a foreign official can find themselves ensnared in a government investigation, potentially preceded by a federal sting operation. Or, perhaps because of its well-known financial constraints, the media may be particularly ripe for FCPA scrutiny. Desperation for business or information leading to it can tend to set the climate for improper bribes.
As the DOJ states, the FCPA was enacted to make it unlawful for certain classes of persons and entities to make payments to foreign officials to assist in obtaining or retaining business. The business of information is not excepted, and though journalists are not usually viewed as those trying to grease the wheels of business, the government tends to view payments to foreign-official sources for publishable information the same as payments to foreign officials for other business reasons.
Business interests, including the U.S. Chamber of Commerce, have called for reforms to the Act, including the building in of a compliance defense for companies that believe a charged bribery occurred despite all possible efforts to prevent it. But many see any reform as unlikely during the current administration.
Meanwhile, FCPA charges and settlements have more than tripled over the past decade. The DOJ’s somewhat aggressive interpretation of the FCPA’s terms and its vow to continue using intensive enforcement techniques, like sting operations, should put all types of businesses on notice that dealings with foreign officials can have weighty consequences.
Knowledgeable counsel, familiar with the FCPA and the government’s use and interpretation of it, can assist enterprises in navigating the Act before issues arise, even with no compliance defense on the horizon. Specifically, even though there may not be a “compliance defense,” companies can mitigate possible risk through a good compliance program that involves senior management buy-in, a strong policy, an active training program and effective contractual agreements.