Anti-Bribery Laws and Investigation: Background

JORDAN SLOANE

I. Impact of Corruption

Corruption affects governments, economics, and institutions. Corruption corrodes government and pushes out honest officials. Corruption also distorts economies. The empirical studies suggest there is a negative correlation between perceived levels of corruption and foreign direct investment. The main concern is how corruption impacts growth. Finally, corruption undermines support for democratic institutions. The impact of corruption has led to the U.S. Foreign Corrupt Practices Act (FCPA) and many other anti-corruption acts around the world that interact to help fight corruption. See https://www.sec.gov/spotlight/fcpa/ fcpa-resource-guide.pdf and https://www. justice.gov/criminal-fraud/foreign-corruptpractices-act.

II. Multilateral Response

The U.S. led the push for a multilateral response to anti-corruption. Previously, the U.S. was the only country with a statute forbidding the payment of bribes to foreign public officials. Since 1977, when the FCPA was passed, multilateral efforts office; or to any other person knowing that something of value will be offered, given or promised directly or indirectly, to a foreign government official for the purposes of influencing official action, inaction of the foreign government official; or inducing the foreign government official to do or omit an action in violation of his lawful duty; or inducing the foreign government official to use his influence to affect an act or decision of the foreign government; or to secure an improper advantage.

There are two affirmative defenses. The FCPA does not apply to: (1) if the payment was lawful under the written laws of the country concerned; or (2) if the payment or gift was a reasonable and bona fide expenditure directly related to promotion/ demonstration of products or services or to the execution or performance of the contract. Such payments need to be recorded under the books/records requirements discussed below. See https://www.sec.gov/spotlight/fcpa/fcparesource-guide.pdf and https://www.sec.gov/ spotlight/fcpa/fcpa-anti-bribery.pdf.

have grown. There is the U.N. Convention Against Corruption (UNCAC) created in 2003. UNCAC provides for mutual legal assistance and cooperation on the recovery of assets. The Organisation for Economic CoOperation and Development (OECD) also developed the Anti-Bribery Convention in 1997 to establish “legally binding standards to criminalise bribery of foreign public officials in international business transactions” and to provide for a host of related measures that make this effective. The Anti-Bribery Convention is the first and only international anti-corruption instrument focused on the supply side of the bribery transaction. In response to OECD efforts, the U.K. created its Bribery Act in 2010, regarded as stricter than the U.S. legislation. See https://www. oecd.org/corruption/ and https://www.sec. gov/spotlight/fcpa/fcpa-resource-guide.pdf.

III. FCPA

The FCPA applies to any unlawful act by any issuer, domestic concern or person acting within the U.S. corruptly, which requires intent to make any offer, payment, promise to pay or to authorize payment of anything of value to a foreign official, international organization official, political party, party official, or candidate for public A. FCPA’s Two Main Sections and Two Main Enforcement Agencies

The FCPA continues to be the most important anti-bribery act in the U.S. The FCPA continues to be enforced by two agencies. The Securities and Exchange

Commission (SEC), handles civil matters in relation to FCPA. The Criminal Division of the Department of Justice (DOJ) implements the FCPA by providing guidance to companies that ask questions about the applicability of the FCPA to its dealings called the FCPA Opinion Procedure and coordinates prosecution with other countries. The DOJ announced that its top enforcement priority was the FCPA. See https://www.sec. gov/spotlight/fcpa/fcpa-resource-guide.pdf and https://www.justice.gov/criminal-fraud/ fcpa-guidance.

The FCPA has two main sections: one is the disclosure rules (“books and records”), which is dealt with by the SEC, and second is the anti-bribery provisions prohibiting the payment of bribes, which is dealt with by the Criminal Division of the DOJ. See https://www.sec.gov/spotlight/fcpa/fcparesource-guide.pdf and https://www.justice. gov/criminal-fraud/fcpa-guidance.

B. Violation of the FPCA

As to violators of the FPCA, they can receive criminal penalties, which can be imposed against companies, and officers, directors, stockholders, and employees as well as imprisonment for individuals. The SEC can also bring civil suits for damages. In addition, there are many other possible sanctions such as $250,000 and/ or 5 years imprisonment for individuals, $200,000,000 for corporations, and $10,000 civil penalty (corporations and individuals). In the alternative, there is an act called the Alternative Fine Act, which the fine could be up to twice the gross gain sought by the illicit payment. The SEC is increasingly using the option of seeking disgorgement of all the profits from the violations. The sentencing structures are being used to reward selfpolicing, self-reporting, remediation and cooperation. See https://www.sec.gov/ spotlight/fcpa/fcpa-resource-guide.pdf.

As the introduction is a brief background of anti-bribery laws and investigation: the FCPA will be discussed in further detail below, starting with Part IV which will discuss and breakdown the elements of the FCPA. Part V will discuss the enforcement agencies of the FCPA. Lastly, Part VI will discuss the sanctions and penalties against violators of the FCPA.

IV. Breakdown of the Anti- Bribery Elements of the FCPA

A. Any Issuer Acting Within the United States

The first element of the FCPA states that it is unlawful for any issuer, domestic concern or person acting within the U.S. to make use of the mails or any means or instrumentality of interstate commerce corruptly. See https://www.sec.gov/spotlight/ fcpa/fcpa-anti-bribery.pdf.

Who is covered by the anti-bribery provisions? The FCPA provisions apply to a broad spectrum of persons and entities, including: (1) issuers and their assignees, such as, their officers, directors, employees, agents, and shareholders; (2) domestic concerns and their officers, directors, employees, agents, and shareholders; and (3) certain persons and entities acting while in the territory of the U.S., other than issuers and domestic concerns. See https://www.sec.gov/spotlight/ fcpa/fcpa-anti-bribery.pdf.

How can you tell if your company is an issuer? “A company is an issuer under the FCPA if it has a class of securities registered under Section 12 of the Exchange Act or is required to file periodic and other reports with SEC under Section 15(d) of the Exchange Act.” The National Securities Exchange can help as they provide a list on the website below. Another way to tell if your company is an issuer is if the company’s stock trades in the over-the-counter market in the U.S. and the company is required to file SEC reports. To see if your company has filed SEC reports go to this website listed. See http:// www.sec.gov/edgar/searchedgar/webuser. htm, https://www.sec.gov/spotlight/fcpa/ fcpa-anti-bribery.pdf, and https://www. justice.gov/sites/default/files/criminal-fraud/ legacy/2012/11/14/fcpa-english.pdf.

What is a domestic concern? “A domestic concern is any individual who is a citizen, national, or resident of the U.S., or any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship that is organized under the laws of the U.S.” An individual’s assignees also are covered. See https://www.sec.gov/ spotlight/fcpa/fcpa-anti-bribery.pdf.

What are certain persons and entities acting while in the territory of the United States? The FCPA applies to certain foreign nationals or entities “that either directly or through an agent, engage in any act in furtherance of a corrupt payment while in the territory of the U.S.” The FCPA also applies to foreign nationals or entities’ assignees as well. See https://www.sec.gov/spotlight/fcpa/ fcpa-anti-bribery.pdf.

B. Corruptly

“[A]n offer, promise, or authorization

of payment, or a payment, to a government official must be made corruptly.” Congress added that corruptly means an intent or desire to wrongfully influence. Corruption first starts with “payments intended to induce or influence a foreign official to use his or her position in order to assist…in obtaining or retaining business for or with, or directing business to, any person.” This is known as the “business purpose test.” Examples of actions taken to obtain or retain business include, winning a contract, influencing the procurement process, circumventing the rules of importation of products, gaining access to non-public bid tender information, evading taxes or penalties, influencing the adjudication of lawsuits or enforcement actions, obtaining exceptions to regulations, and avoiding contract termination. See https://www.sec.gov/spotlight/fcpa/fcpaanti-bribery.pdf.

C. To make any offer, payment, promise to pay or to authorize payment of anything of value.

Anything of value includes large amount of cash, gifts, travel, entertainment, and other things of value. Giving anything of value is not prohibited unless anything of value is disguised as payments of bribes. See https://www.sec.gov/spotlight/fcpa/fcpaanti-bribery.pdf.

Cash with an improper purpose entails companies maintaining cash funds specifically for the use as bribes. An example includes, “one U.S. issuer headquartered in Germany disbursed corrupt payments from a corporate cash desk and used offshore bank accounts to bribe government officials to win contracts.” See https://www.sec.gov/ spotlight/fcpa/fcpa-anti-bribery.pdf.

Gifts with an improper purpose entails a larger or more extravagant gift. The “DOJ and SEC enforcement cases have involved single instances of large, extravagant giftgiving, such as a sports car, fur coats, and other luxury items, as well as, widespread gifts or smaller items as part of a pattern of bribes.” See https://www.sec.gov/spotlight/ fcpa/fcpa-anti-bribery.pdf.

Payment of travel and entertainment expenses with an improper purpose entails “the conjunction with other conduct reflecting systemic bribery or other clear indicia of corrupt intent.” A DOJ and SEC case involving a California based telecommunications company is an example of improper payment of travel and entertainment expenses because the company spent nearly $7 million on approximately 225 trips for its customers in order to obtain systems contracts in China. See https://www. sec.gov/spotlight/fcpa/fcpa-anti-bribery.pdf.

Other things of value include charitable contributions. The FCPA does not prohibit charitable contributions unless used to funnel bribes to government officials. Charitable contributions cannot be used to conceal payment made to corruptly influence foreign officials. See https://www.sec.gov/spotlight/ fcpa/fcpa-anti-bribery.pdf.

D. Foreign Official

“Foreign official” means any foreign political party, any candidate for foreign political office, or any person. Even though they are split into categories, the term “foreign official generally refers to an individual falling within any of these three categories.” Therefore, the FCPA defines foreign official as “any officer or employee of a foreign government or any department, agency or, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality, or for or on behalf of any such public international organization.” See https://www.sec.gov/ spotlight/fcpa/fcpa-anti-bribery.pdf.

Department, agency or instrumentality of a foreign government is also included in the definition of foreign official. The DOJ and SEC continues to bring FCPA cases involving bribes paid to employees of agencies and instrumentalities of foreign governments. See https://www.sec.gov/ spotlight/fcpa/fcpa-anti-bribery.pdf.

Public international organizations are also included as an expansion of foreign official to include employees and representation of public international organizations. A public international organization includes any organization designated by executive order under the International Organizations Immunities Act or any other organization that the President so designates. Examples of public international organizations are the World Bank, the International Monetary Fund, the World Intellectual Property Organization, the World Trade Organization, and the OECD. See https://www.sec.gov/ spotlight/fcpa/fcpa-anti-bribery.pdf.

E. Payments to Third Parties/Knowing

The FCPA “prohibits corrupt payments made through third parties or intermediaries,” which covers “any other person knowing that something of value will be offered, given or promised directly or indirectly, to a foreign government official.” According to the SEC, a bribe that is paid by a third party does not preclude potential liability for criminal

or civil under the FCPA. For example, a company used agents, a British lawyer, and a Japanese trading company to bribe Nigerian government officials in order to win a series of liquified natural gas construction projects. See https://www.sec.gov/spotlight/fcpa/fcpaanti-bribery.pdf.

Knowing entails awareness by the person that he or she is engaging in such conduct and such conduct is substantially certain to occur or has a firm belief that such circumstances will occur. Congress includes not only those individuals who have actual knowledge of wrongdoing but also who purposefully avoid actual knowledge; deliberately ignoring or consciously disregarding information that should have alerted the company to a high probability of illicit payments. See https://www.sec.gov/spotlight/fcpa/fcpaanti-bribery.pdf .

F. All for the Purpose

Conduct in violation of the FCPA must be “all for the purpose” of influencing official action or inaction, inducing foreign government officials to act or omit to act in violation of some lawful duty, inducing the foreign government official to use influence to affect an act or decision of the foreign government, or securing an improper advantage. Therefore, to help protect the economy and nation against foreign corruption, the U.S. decided to enforce the FCPA to combat corruption around the globe. To help with combating corruption and enforcing the FCPA, two enforcement agencies were created to make enforcing the FCPA their main priority. Discussed below in detail will be the extensive efforts by the members of the DOJ and SEC to enforce the FCPA and the approaches and priorities they take to fight corruption. See https://www. sec.gov/spotlight/fcpa/fcpa-anti-bribery.pdf.

V. Enforcement

A. Domestic

i. Criminal Division of the Department of Justice & Enforcment Division of the SEC

In November 2012, A Resource Guide to the United States Foreign Corrupt Practices Act was released. This guide reflects the DOJ and SEC's detailed compilation of information about the FCPA, its provisions, and enforcement. See https://www.justice. gov/criminal-fraud/fcpa-guidance .

The DOJ has “both criminal and civil enforcement responsibility for the FCPA’s anti-bribery provisions over domestic concerns.” The Fraud Section within the DOJ has primary responsibility for all FCPA matters, regularly working with U.S Attorney’s Offices around the country. The DOJ also works with the Federal Bureau of Investigation (FBI) to investigate FCPA violations. FBI Unit is dedicated to international corruption and fraud investigation. In 2017, the Attorney General said that “the Criminal Division’s Fraud Section within the DOJ, together with Assistant U.S. Attorneys and law enforcement partners, continue to secure convictions in important FCPA-related cases” and “working together with the international partners headway is being made in combatting corruption.” See https://www. sec.gov/spotlight/fcpa/fcpa-anti-bribery.pdf and https://www.justice.gov/opa/speech/ deputy-attorney-general-rosenstein-deliversremarks-34th-international-conferenceforeign.

In addition to the Attorney General’s remarks, the FCPA Corporate Enforcement Policy was revised. “The new policy enables the Department of Justice to efficiently identify and punish criminal conduct, and it provides guidance and greater certainty for companies struggling with the question of whether to make voluntary disclosures of wrongdoing.” Since 2016, the Fraud Section’s FCPA Unit has secured criminal resolutions in 17 FCPA-related corporate cases, resulting in penalties and forfeiture to the Department in excess of $1.6 billion. See https://www. justice.gov/opa/speech/deputy-attorneygeneral-rosenstein-delivers-remarks-34thinternational-conference-foreign and https:// www.justice.gov/criminal-fraud/file/838416/ download.

The DOJ also provides a Foreign Corrupt Practice Act Opinion, which enables issuers and domestic concerns to obtain an opinion of the Attorney General as to whether certain specified conduct conforms with the Department’s present enforcement policy regarding the antibribery provisions of the FCPA. See https:// www.justice.gov/sites/default/files/criminalfraud/legacy/2012/11/14/frgncrpt.pdf .

In 2018, the DOJ announced many changes to policies and procedures regarding enforcement of the anti-bribery and corruption laws. First, in May 2018, the Deputy Attorney General at that time announced the DOJ’s Policy on Coordination of Corporate Resolution Penalties. Its purpose is aimed at avoiding the imposition of duplicative and punitive penalties by multiple enforcement agencies

and regulators in corporate enforcement actions. “This policy has been incorporated into the Justice Manual to encourage prosecutors to coordinate with and consider the amount of fines, and penalties in order to avoid piling on penalties that could be cumulatively excessive. Second, in October 2018, the Assistant Attorney General for the DOJ’s Criminal Divisions at that time issued a memorandum providing new guidance to Criminal Division staff on the standards, policy, and procedures for the selection and imposition of monitors in negotiated corporate settlements, including nonprosecution agreements, deferred prosecution agreements, and plea agreements. Third, the DOJ’s new China Initiative announced by then-Attorney General Jeff Sessions, in November 2018, includes as one of its ten priorities the identification of FCPA cases that involve Chinese companies that compete with American business. See https://www.arnoldporter.com/en/ perspectives/publications/2019/01/globalanticorruption-insights.

ii. Securities and Exchange Commission (SEC)

a. Dealing with the Disclosure or “Books and Records”: SEC Enforcement Actions

“In 2010, the SEC’s Enforcement Division created a specialized unit to further enhance its enforcement of the FCPA, which prohibits companies issuing stock in the U.S. from bribing foreign officials for government contacts and other business.” See https:// www.sec.gov/spotlight/fcpa/fcpa-cases.shtml (includes SEC Enforcement Actions: FCPA Cases up to 2019).

b. Dealing with the Disclosure of “Books and Records: Accounting Provisions

In addition to the anti-bribery provisions, the FCPA contains accounting provisions applicable to public companies. The FCPA’s account provisions operate with the antibribery provisions and do not allow off-thebooks accounting. “Companies and investors rely on financial statements and internal accounting controls to ensure transparency in the financial health of the business, the risks undertaken, and the transactions between the company and its customers and business partners.” Therefore, the accounting provisions were created to “strengthen the accuracy of the corporate books and records and the reliability of the audit process which constitute the foundations of our system of corporate disclosure.”

c. Dealing with the Disclosure of “Books and Records”: Two Primary Components of the Accounting Provisions

First is the books and records provision, which entail that issuers must make and keep books, records and accounts that, in reasonable detail, accurately and fairly resembles an issuer’s transactions and dispositions of an issuer’s assets. Second is the “internal controls provisions, which entail that issuers must devise and maintain a system of internal accounting controls sufficient to assure management’s control, authority, [and] responsibility over the firm’s assets.” The accounting provisions led the way in preventing bribery; in the past, “corporate bribery has been concealed by the falsification of corporate books and records and the accounting provisions removed this avenue of coverup.” See https://www.sec.gov/spotlight/ fcpa/fcpa-resource-guide.pdf.

d. Dealing with the Disclosure of “Books and Records”: What is Covered by the Accounting Provisions

Books and records of a company are a place where bribery can spark. Books and records are often mischaracterized in companies. There is a list of bribery mischaracterization as commissions or royalties, consulting fees, sales and marketing expenses, scientific incentives or studies, travel and entertainment expenses, rebates or discounts, after sales services fees, miscellaneous expenses, petty cash withdrawals, free goods, intercompany accounts, supplier/vendor payments, writeoffs, and customs intervention payments. See https://www.sec.gov/spotlight/fcpa/fcparesource-guide.pdf .

e. Dealing with the Disclosure of “Books and Records”: Who is Covered by the Accounting Provisions

“The FCPA’s accounting provisions apply to every issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file annual or other periodic reports pursuant to Section 15(d) of the Exchange Act.” Therefore “the provisions apply to any issuer whose securities trade on a national securities exchange in the U.S., including foreign issuers with exchange-traded American Depository Receipts” as well as “companies whose stock trades in the over-the-counter market in the U.S.” See https://www.sec. gov/spotlight/fcpa/fcpa-resource-guide.pdf and https://www.justice.gov/sites/default/ files/criminal-fraud/legacy/2012/11/14/ fcpa-english.pdf.

f. Dealing with the disclosure of “books and records”: United States laws

The U.S. laws, including the SEC rules, require issuers to partake in an annual

external audit of their financial statements, which also must be available to the public by filing them with the SEC. There is also the Public Company Accounting Oversight Board (PCAOB) overseen by the SEC regarding the accounting provisions. https:// www.sec.gov/spotlight/fcpa/fcpa-resourceguide.pdf.

B. International

i. The OECD

The OECD was created in 1961. Accordingly, the OECD is an organization that brings together anti-corruption experts and practitioners from all over the world to share experiences, learn the ins and outs from each other, and build stronger networks. http://www.oecd.org/corruption/ international-co-operation-in-combatingforeign-bribery.htm.

In 1988 Congress “requested that the President negotiate an international treaty with members of the OECD to prohibit bribery in international business transactions by many of the U.S.’ major trading partners.” The OECD became a member of the AntiBribery Convention as of November 1, 2012, as well as the U.S., and the OECD also created the OECD Working Group on Bribery. This “Group is responsible for monitoring the implementation of the Anti-Bribery Convention.” It has been stated in recent years that there has been a growth in international corruption that must be combated. Therefore, the U.S. and other countries are members to different international anti-corruption conventions. These conventions have a main purpose to prevent and take measures on combatting corruption. Many of the conventions maintain a review process that allows the U.S. to monitor other countries to ensure they are abiding by their international obligations and vice versa. See https://www.sec.gov/ spotlight/fcpa/fcpa-anti-bribery.pdf, http:// www.oecd.org/corruption/anti-bribery/, and https://www.justice.gov/criminal-fraud/ international-agreements.

ii. International Response: UK Bribery Act 2010 vs. United States’ FCPA

The UK implemented its bribery act in 2010 dealing with bribery just like the FCPA; however, the UK’s act does not cover and is not concerned with fraud, theft, and specifically books and record offences. This is different from the FCPA as this act does cover and is concerned with books and record offences. On the other hand, the UK does provide a similar process as the U.S. of complying with the anti-bribery rules. The FCPA includes a Compliance Program which requires any U.S. firm that is a publicly traded firm must have adequate internal controls to meet the books and records requirement of the FCPA. The elements of the U.S.’ Compliance Program are: (1) commitment from the top; (2) policies and proportionate procedures; (3) recordkeeping; (4) risk assessment; (5) compliance function (responsibility for oversight); (6) implementing policies and procedure; (7) training; (8) seeking guidance and advice; (9) monitory; (10) how to deal with third parties; and (11) merger and acquisitions (see the FCPA Resource Guide for further explanation of each of the elements, which the link is provided below). The UK Bribery Act provides a similar process (see the link below for a comparison to the U.S.). The Compliance Programs implemented by the U.S. and the UK help companies and individuals decide what needs to be done differently to comply with the bribery acts. See https://www.justice.gov.uk/downloads/ legislation/bribery-act-2010-quick-startguide.pdf and https://www.sec.gov/spotlight/ fcpa/fcpa-resource-guide.pdf.

VI. Violations of the FCPA and Sanctions

The FCPA requires different criminal and civil sanctions and penalties for companies and individuals. See https://www.sec.gov/ spotlight/fcpa/fcpa-resource-guide.pdf.

A. Criminal Penalties

For a violation of the anti-bribery provisions, the FCPA requires that corporations and other entities are subject to a fine of up to $2 million. Also, individuals are subject to a fine up to $250,000 and imprisonment for up to five years. For a violation of the accounting provisions, the FCPA provides that corporations and other business entities are subject to a fine up to $25 million. Also, individuals are subject to a fine up to $5 million and imprisonment for up to twenty years. Under the Alternative Fine Act, courts have discretion to provide a higher fine than the FCPA provides. See https://www.sec.gov/spotlight/fcpa/fcparesource-guide.pdf.

B. United States Sentencing Guidelines

The United States Sentencing Guidelines are used by the DOJ to help with calculating penalties for violations of the FCPA. The Guidelines provide a detailed structure for calculating penalties for FCPA violators and federal crimes. The first step in calculating penalties is calculating the “offense level” by

examining the severity of the crime and the facts of the crime. Reductions are allowed if there is cooperation and acceptance of responsibility, and for business entities there are additional factors for reduction such as voluntary disclosure, cooperation, pre-existing compliance programs, and remediation. The Guidelines provide different penalties for the initial offense level for violations of the anti-bribery provisions and initial offense level for violations of the accounting provision. The violation procedures of the accounting provision are generally the same as the violation procedures of the anti-bribery provisions, expect that the specific offense characteristics differ. For example, for violations of the FCPA’s accounting provisions, the offense level may be increased if a substantial part of the scheme occurred outside the U.S. “The United States Guidelines are promulgated by the United States Sentencing Commission, which is an independent agency in the judicial branch. Its principal purpose is to establish sentencing policies and practices for the federal criminal justice system that will assure the ends of justice by promulgating detailed guidelines prescribing the appropriate sentences for offenders convicted of federal crimes.” See https://www.sec.gov/spotlight/fcpa/ fcpa-resource-guide.pdf and https://www. ussc.gov/guidelines. See also https://www. ussc.gov/sites/default/files/pdf/guidelinesmanual/2018/GLMFull.pdf.

C. Civil Penalties

Even though the DOJ has authority to obtain criminal actions and the SEC does not, both the DOJ and the SEC have authority to obtain civil enforcement authority under the FCPA. The DOJ has authority to obtain civil action for anti-bribery violations by domestic concerns, foreign nationals, and companies for violations while in the U.S. The SEC has authority to obtain civil actions against issuers and their officers, directors, employees, agents, or stockholders for violations of the anti-bribery and accounting provisions. Violations of the anti-bribery provisions by corporations and business entities as well as individuals are subject to a civil penalty of up to $16,000 per violation. For violations of the accounting provisions, the SEC has authority to obtain a “civil penalty not to exceed the greater of (a) the gross amount of the pecuniary gain to the defendant as a result of the violations or (b) a specified dollar limitation.” The specified dollar limitation is based on the “egregiousness of the violation, ranging from $7,500 to $150,000 for an individual and $75,000 to $725,000 for a company.” See https://www.sec.gov/spotlight/fcpa/fcparesource-guide.pdf.

D. Collateral Consequences

FCPA violators can also face collateral consequences, such as “suspension or debarment from contracting with the federal government, cross-debarment by multilateral development banks, and the suspension or revocation of certain export privileges.” See https://www.sec.gov/spotlight/fcpa/fcparesource-guide.pdf.

E. Compliance Monitor or Independent Consultant

A main goal of both the criminal prosecution and civil enforcement against companies that violate the FCPA is to make sure that the conduct does not happen again. Therefore, enhanced compliance and reporting requirements can be a part of criminal and civil resolutions of FCPA matters. For example, in criminal and civil cases a company may be required to appoint an independent corporate monitor who assesses and monitors a company’s compliance with the requirements. The factors the DOJ and SEC consider when determining if a compliance monitor is appropriate include, seriousness of the offense, duration of the misconduct, and pervasiveness of the misconduct, including whether the conduct cuts across geographic and/or product lines, nature and size of the company, quality of the company’s compliance program at the time of the misconduct, and subsequent remediation efforts. See https://www.sec.gov/spotlight/ fcpa/fcpa-resource-guide.pdf.

VII. Conclusion

According to many articles and experts the best course of action for a U.S. company is to include an FCPA provision in all of its agreements regarding distribution, licensing, and joint-ventures. The company needs to do this in order to enable the company to act as expected given the breadth of the statute. When a U.S. party comes across any type of suspicion, an investigation needs to be conducted to avoid imputation of knowledge or authorization. If the investigation supports the suspicions of the U.S.’ company, it may be necessary to terminate the relationship. See https://www.sec.gov/spotlight/fcpa/fcparesource-guide.pdf.

The FCPA disincentivizes corrupt practices, protects investors, and provides a fair playing field for companies seeking business based on quality and price rather

than bribes. “Following Congress’ leadership in enacting the FCPA [forty-three] years ago, and through determined international diplomatic and law enforcement efforts in the time since, laws like the FCPA prohibiting foreign bribery have been enacted by most of the U.S.’ major trading partners.” With its enactment of the FCPA, the U.S. has proceeded as a torch and the world follows.