An Overview of Bribery Allegations Investigated and Prosecuted
By John Teakell, Attorney at Law, Dallas, Texas, 2010
The Foreign Corrupt Practices Act (FCPA) was enacted in 1977 and revised in 1998 with two basic areas addressed, anti-bribery and accounting / record-keeping. The purpose of this article is to provide a summary of the anti-bribery provisions that can affect individuals and companies that contract with or do business with foreign companies.
The anti-bribery statute of the FCPA, found in Title 15 of the U.S. Code, makes it a federal criminal offense if a person of the United States or entity, or any foreigner who causes an act in the United States, to make a payment to any foreign government official to obtain business or retain the business.
Amendments to the original act include:
- expanding the jurisdiction to include U.S. nationals or U.S. companies that act outside the United States, regardless of whether they use interstate commerce;
- criminal penalties for foreigners who are agents of U.S. companies;
- prohibiting payment to foreign officials for securing an improper advantage; and
- broadening the definition of “foreign official” as that term is used in the FCPA
I. Bribery Prohibition
The bribery provisions, or more accurately, the bribery prohibitions, make it illegal for any citizen of the United States to bribe an official of a foreign government to obtain or retain business.
To prove a violation of the Foreign Corrupt Practices Act, the government must prove that:
- The act in question was by a prohibited person, such as U.S. residents, U.S. companies, issuers of U.S. securities;
- For the purpose of payment or promise to pay anything of value;
- Directly or indirectly;
- To a foreign official;
- For the purpose of corruptly influencing an official action or decision or securing any improper advantage;
- In order to obtain or retain business.
II. Jurisdiction and Trends
The U.S. Department of Justice has the jurisdiction authority to criminally prosecute violations of the FCPA, and the U.S. Securities and Exchange Commission also has jurisdiction to investigate these violations for civil enforcement actions. Historically, the Securities and Exchange Commission investigated and sued on accounting violations.
In recent years, the number of investigations by both agencies has significantly increased, as companies doing business in foreign countries has been sued and prosecuted for allegations of attempts to influence foreign officials in connection with company business. The results are often large criminal fines of companies and potential incarceration of certain individuals, as well as civil money penalties from civil enforcement suits.
III. Covered Persons/Entities
Persons and entities that can be held liable are basically:
- U.S. citizens;
- Entities that are incorporated in the United States;
- Entities that are incorporated in a foreign countries but have a principal place of business in the United States;
- Foreign residents in the United States and their agents.
- Issuers of securities.
- Foreign residents who cause payment in U.S. territory;
IV. Exceptions and Specific Defenses
There are some exceptions and defenses to the FCPA that are specifically enumerated. These basically include:
- Performance of routine government actions
- Being Lawful Pursuant to Local Law
- Promotion of products and services
- Reasonable expenses for a government contract