The U.S. Foreign Corrupt Practices Act

Thomas O’DeaVP International Sales

March 15, 2010

5 Elements• Five elements must be met to constitute a violation of the act:

1. Who (is acting)

2. Corrupt Intent

3. Payment

4. Recipient

5. Business Purpose

1. Actor• Individual, firm, officer, director,

employee, agent or any stockholder acting on behalf of a firm

– Individuals and firms may be penalized if they order, authorize or assist someone else to violate the anti-bribery provisions or if they conspire to violate those provisions

2. Corrupt Intent• Inducing a foreign official to do or omit to do any act in violation of

his or her lawful duty to obtain improper advantage

• To induce a foreign official to use his or her influence to affect or influence any act or decision

– Attempt does not have to be successful

3. Payment• Paying or offering to pay (or

authorizing to pay or offer) money or “anything of value”

4. Recipient

• Foreign official

• Foreign political party

• Candidate for foreign political office

• Public international organization

• Any person acting in an official capacity for a foreign government

• Obtaining or retaining business

• Directing business to any person

5. Business Purpose

Intermediaries

• Unlawful to make a payment to a third party while knowing that all or a portion is going to a foreign official

– Includes “conscious disregard and deliberate ignorance”

• Intermediaries include:

– Agents, partners

Due Diligence• To avoid being held liable, U.S.

companies are encouraged to exercise due diligence:

– Investigating potential partners and agents

– References and reputation

– Banking information

Red Flags• Unusual payment or financial arrangements

• History of corruption in the country

• Refusal to provide FCPA certification

• Unusually high commission

• Lack of transparency in accounting records

• Lack of qualifications or resources on the part of the partner to perform the services offered

• Partner has been recommended by an official of the potential foreign customer

Sanctions• Criminal:

– Fines of up $2M or more

– Employee fines of $100k or more & imprisonment of up to 5 years

• Firms are barred from paying employees’ fines

• Civil

– SEC may bring a civil action against firm and individuals & impose fine

• Private cause of action

– RICO

Sanctions• Other Governmental Action

– Barring from doing business with the govt

– Indictment alone can lead to suspension of the right to do business with the government

– Ineligibility to receive export licenses

Ethics Hotline• 954-xxx-xxxx

• Fraud

• Abuse

• Improper Behavior

• FCPA Red Flags

• Violations