The Time Is Now To Invest In Anti-Corruption Compliance

Doing business internationally has always been fraught with risk, but businesses are justifiably troubled that much of the risk lately comes from our own government. The government has reinvigorated its enforcement of a 1978 U.S. law prohibiting bribery of foreign officials. Most U.S. businesses could support that effort, in theory, if the government's interpretation of the definition of "bribery" and "foreign official" weren't so hopelessly broad. The government recently attempted to provide some guidance to U.S. businesses on how to avoid prosecution under this law. The new guidance does not provide the clear roadmap most businesspeople might like — in large part because the law itself is vague — but it underscores the importance of implementing certain compliance strategies as soon as possible.

BACKGROUND

The Foreign Corrupt Practices Act prohibits any representative (including consultants or foreign sales representatives) of a company from paying or offering "anything of value" to a foreign official in a corrupt attempt to obtain or retain business. The statute permits both criminal and civil enforcement, which is carried out by the Department of Justice and the Securities and Exchange Commission (SEC). The statute is broad in almost every respect, including:

Applying to any U.S. citizen, national or resident operating anywhere in the world, as well as to all companies that are required to file reports under the Securities Exchange Act (including foreign companies whose stock is traded on U.S. exchanges), and any company organized under U.S. law or with a principal place of business in the United States. Moreover, wholly foreign companies or citizens may be liable for "aiding and abetting" a U.S. company's violation. "Anything of value": there is no de minimis exception under the FCPA; anything of value can mean anything, including discounts, free samples, pens, meals, t-shirts, etc. Foreign Official: Federal prosecutors have taken an incredibly broad view of the definition of foreign official to include, essentially, any representative of a company in which a foreign government has an ownership stake or other controlling role. "Obtain or Retain Business": this standard has been interpreted to mean, broadly, any effort to generate more revenue for a company. See, e.g., United States v. Kay, 513 F.3d 432 (5th Cir. 2007) (holding that bribes paid to reduce customs duties and taxes owed by a company in Haiti violated the FCPA because the...