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United States Department of Justice Increases Foreign Corrupt Practices Enforcement

Posted on May 27th, 2010 | Author: Ted Margolis

The United States government has moved to vigorously enforce the Foreign Corrupt Practices Act over the past several years and this has profound implications for companies working overseas.

The Foreign Corrupt Practices Act, 15 U.S.C. Section 788dd-1(a) (the “Act” or “FCPA”) prohibits “corrupt” offers of any kind of payment to a foreign official when the payment is for obtaining or retaining business.  The Act has exempted “grease” payments, that is, small payments to, for example, expedite paperwork at a port or to speed the clearance of goods shipped.

Now, the Department of Justice is moving to shrink the “grease” payment exception.  Under the DOJ’s new position, making any type of payment or gratuity to facilitate or promote or protect foreign business has become more dangerous.  The number of prosecutions of companies and executives has significantly increased over the past several years and more is on the way.  The rest of the world is finally agreeing with the U.S. government that bribery of officials is unhealthy and needs to be reigned in around the globe. 

The definition of “public official” has been held to mean anyone with access to or control, whether direct or indirect, of governmental action.   A travel agent with ties to the government was held to be a public official under the Act.

The two major danger points for companies under the Act arise in the context of the company hiring foreign agents to represent its interests and in the company failing to adequately monitor its own foreign sales force.  In the several FCPA cases we have handled over the past few years, the top echelons of the company under investigation were often ignorant of the violations. 

If you are doing business overseas, you need to keep aware of the FCPA and its implications on your business, executives and employees.