Conducting Business Abroad: What Are the Risks Under the Foreign Corrupt Practices Act?

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Your company is entering a new market overseas. You hire a local lawyer to help you navigate the steps necessary to obtain a license to conduct business in that country. Once you get your license, you hire third-party sales agents to sell your products and/or services. Your sales agents go out in the field and wine and dine potential clients.

Ultimately, the new clients, after several very lavish dinners, much-sought-after tickets to sporting events, and a trip to the United States, agree to enter into a contract to purchase your products and/or services. Win-win? That depends. Who is the lawyer? Is she married to an official who works in the government agency that can provide an advantage to your company, such as a favorable tax or customs ruling? Is that the reason she was hired? Is she being paid more than others charge in the same market? If so, you may have violated the Foreign Corrupt Practices Act (“FCPA”) 15 U.S.C. §§ 78dd-1 et seq. And who are the target clients? Are they State-owned entities, as so many are in countries like China or the U.A.E.? If so, you may have, by allowing your agent to wine and dine the client’s employees and send them on trips to the United States, engaged in a violation of the FCPA. What if the client is a department within the U.K. government? Safe under the new U.K. Bribery Act?

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Manatt, Phelps & Phillips, LLP on:

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