The New FCPA Guidance: It Only Took 35 Years to Get Here


On November 14, 2012, the Department of Justice (“DOJ”) and Securities Exchange Commission (“SEC”) issued a much anticipated Resource Guide to the U.S. Foreign Corrupt Practices Act. Despite the fact the Guide is 130 pages, it is a surprisingly easy read. It provides a rare glimpse into the DOJ and SEC’s interpretation of the FCPA and the guiding principles for enforcement. Although the Guide will undoubtedly provide much awaited guidance on existing issues with which companies are currently grappling, it also serves to reinforce the well held belief that the DOJ and SEC are taking a hard line view on the FCPA.  

The Guide provides insights into the government's view on various aspects of the FCPA and covers issues surrounding both the Anti-Bribery Provisions as well as Books and Records and Internal Controls Provisions. Below are just a few key highlights.

Anti-Bribery Provisions

The Guide lays out explanations of the key provisions of the FCPA, and offers hypothetical examples that highlight the DOJ and SEC’s interpretation of those key provisions. For example, in a lengthy discussion regarding what “anything of value” means, the guide discusses the various forms that an improper benefit can take–from travel expenses to payments of cash through “consulting fees” or “commissions” to expensive gifts. Examples of proper gifts is also discussed: “Some hallmarks of appropriate gift-giving are when the gift is given openly and transparently, properly recorded in the giver’s books and records, provided only to reflect esteem or gratitude, and permitted under local law. Items of nominal value, such as cab fare, reasonable meals and entertainment expenses, or company promotional items, are unlikely to improperly influence an official, and, as a result, are not, without more, items that have resulted in enforcement action by DOJ or SEC.”

A hypothetical describes situations where payment of travel expenses for a foreign government Electricity Commission official would or would not be improper. In one example, a foreign official indicates they would like to inspect company facilities in the United States where goods are produced that are provided to the Electricity Commission per a contract. The payment of the foreign official’s international flight, as well as expenses for a moderately priced dinner, a baseball game, and a play, are described “reasonable and bona fide expenditures” and therefore not in violation of the FCPA. In contrast, where the hypothetical Electricity Commission official brings his spouse on a trip to the Las Vegas, where the company does not have any facilities, payments of travel and other expenses is in violation of the FCPA.

Interspersed throughout the discussion of these provisions are examples of the types of improper activities that have been uncovered. Without naming companies or individuals involved, the Guide discusses real-world situations where improper payments have been discovered.  

Books and Records and Internal Controls

Even if all elements of the anti-bribery provisions are not met, a company may still face a violation of the books and records provisions of the FCPA if a payment is inaccurately recorded. Often this improper recording occurs where there is a weak internal controls environment. The Guide offers “hallmarks” of successful compliance policies. Acknowledging that there is no one-size-fits-all approach, the hallmarks of a strong program include:

  • commitment from senior management
  • a clearly articulated policy against anti-corruption
  • code of conduct and compliance policies and procedures
  • oversight
  • access to resources
  • routine risk assessment procedures
  • training
  • incentives
  • discipline


The Guide also discusses the guiding principles for enforcement of the FCPA, as well as commentary regarding fines and sanctions. However, the guiding principles do not go far beyond what is already laid out in the Principles of Federal Prosecution (in the case of individuals) and the Principles of Federal Prosecution of Business Organizations (in the case of companies.)

For further information regarding the Guide, or other issues your company is facing with respect to the FCPA, please contact Orrick's FCPA team.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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