Don't Mess Around with the Foriegn Corrupt Practices Act

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Enacted in 1977, the FCPA makes it a crime for U.S. companies to "bribe" (i.e., give or offer value for corrupt purposes) any foreign government official in order to secure business. For nearly three decades, that central FCPA proscription remained little more than aspirational, with the three federal enforcement agencies bringing only two FCPA enforcement actions.

But that has all changed. Prosecutions have jumped too the hundreds of active FCPA cases--raising serious "bet the company" risks: The consequences of conviction can be severe, with a record fine last year of $44 million, and prison terms for corporate executives—up to 20 years under the statute—becoming increasingly common.

Why have prosecutions skyrocketed? First, the world has become, to quote Thomas Friedman, increasingly flat. Electronic commerce has exponentially increased the volume of transactions and number of currencies changing hands. Monetary wires are transferred from Dubai to Beijing to San Francisco in a matter of minutes. This global interconnectedness has infinitely multiplied the opportunities for financial corruption. The confluence of a weakened domestic economy; prevalent, ingrained corruption in many attractive foreign markets; more temptation to "play along" with dubious foreign customs; and heightened FCPA enforcement creates the perfect storm for global companies. And it's up to inside or outside corporate counsel to navigate their companies through this storm.

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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.

© Seymour Mansfield, Mansfield Tanick & Cohen, P.A. | Attorney Advertising

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