For the past two years, many of us have been stuck at home and unable to travel for work. With the pandemic restrictions continuing to loosen, employees are returning to the office and international travel is resuming. There is no better time to revisit your company’s policy on the Foreign Corrupt Practices Act (FCPA).
The FCPA was designed to reduce incidents of questionable payments to foreign officials and to help restore confidence in American businesses. There are two key provisions. First, the anti-bribery provision applies to all U.S. persons and businesses as well as some foreign companies that issue securities in the U.S. This provision makes it unlawful to corruptly offer, promise or pay anything of value to a foreign government official to influence that official to act a certain way or secure an improper advantage to obtain or retain business. Second, the books and records provision requires any covered company to maintain accounting records that fairly and accurately record transactions and to maintain adequate internal accounting controls.
While COVID-19 may have led to a reduction in international travel, the Department of Justice (DOJ) has not slowed its enforcement efforts. So far, in 2022, there have been nine criminal enforcement actions filed for FCPA violations.
In May 2022, the DOJ announced that a Swiss-based company had agreed to plead guilty and pay over $1.1 billion to resolve allegations that it had paid bribes, through intermediaries, for over a decade to a variety of foreign officials in multiple foreign countries. The company also admitted to manipulating oil prices.
A month earlier, an Illinois-based company entered into a three-year deferred prosecution agreement to pay $84 million, which included a $52.5 million criminal fine, to resolve allegations that over five years the company had offered bribe payments to officials in Brazil, Mexico and Argentina.
The SEC is also continuing its administrative enforcement efforts to combat FCPA violations. On February 17, 2022, the SEC announced it had settled charges regarding a case with a South Korean telecom operator with American depository shares trading on the New York Stock Exchange. The telecom operator had violated the FCPA by making illegal payments in Korea and Vietnam through charitable donations and other third-party payments. Additionally, the SEC alleged that the company paid its executives inflated amounts of money to generate slush funds to pay for personal benefits and other illegal political contributions. The company settled the matter, without admitting or denying liability, and agreed to pay $6.3 million in civil penalties.
Companies can be held liable for violating the FCPA even if they had no actual knowledge of the bribes being paid. And, there is no sign that the DOJ will be slowing its enforcement efforts any time soon. For this reason, it is critical for companies to regularly review their anti-bribery/FCPA policies and train staff to recognize potential red flags.
For more information, please contact Madelaine Lane or a member of the White Collar Criminal Defense Practice Group.
2022 Summer Associate Valerie Uduji contributed to this eAlert.