Wednesday, June 26, 2013

Don’t Bribe the Officials; The Foreign Corrupt Practices Act (FCPA).

The FCPA is the U.S. law prohibiting the bribing of foreign officials. As a general prohibition the law is broad enough to ensure that any nefarious activity can be prohibited under its umbrella. Thus the law includes more than the proverbial ‘bags of cash’ and ‘brown envelopes.’ The law applies to all U.S. persons including corporations and other business organizations with operations in America. Natural persons, i.e. people, acting as agents, employees, officers, etc. for a company can incriminate not only themselves but also the company. However, Congress understood that rogue actors may exist and the law provides that some fines and penalties imposed directly upon individuals cannot be paid by the company for which the individual acted.

 So exactly what is illegal? The ‘payment,’ or gift, offer, promise, or authorization to pay, ‘anything of value’ to a ‘foreign official’ to secure that official’s assistance in obtaining and/or retaining business. ‘Foreign official’ includes political parties, members of the same, candidates for office, business executives of government owned companies, and close family to anyone in this group. ‘Anything of value’ is just that and could even be a meal, drink, or a ‘minor’ gift if such is lavish in the country where the “foreign official” serves.

Minimizing Your Risks

Failure to comply with the FCPA could result in millions of dollars in fines against the company and / or individual and subject the individual actor to criminal penalties including imprisonment. Due to the immense risks posed to companies and employees for violating the FCPA, it is important that companies doing business in the U.S. and engaging with foreign entities create, implement, and follow a robust anti-bribery/FCPA compliance policy. The Defense Management Group can assist U.S. and Foreign Companies in developing appropriate guidelines to ensure full compliance with the FCPA and so ensure continuance of lawful and ethical dealings with governments and foreign entities throughout the World. Please contact DMG for further information on general rules, other considerations and reporting requirements.

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