Today, more and more U.S. individuals and companies are looking for business opportunities beyond our country's borders.  With greater opportunities for profits and increased competition, however, come increased risks.  Young lawyers will be wise to understand the legal risks that their clients may face when doing business abroad.  One of the primary risks is corruption.  The Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. § 78dd-1, et. seq. (“FCPA”), is a U.S. statute designed to deter individuals and corporations from offering or paying anything of value (i.e., bribes) to foreign officials in connection with business activities.  In recent years, the United States Department of Justice and the Securities and Exchange Commission have aggressively enforced the statute, levying large civil and criminal penalties (million dollar fines and prison sentences), as well as seeking disgorgement of profits for FCPA violations.  

The FCPA has two main provisions:  (1) anti-bribery, and (2) books and records. In general, the anti-bribery provision prohibits almost anyone from making a promise, offer, or payment of “anything of value” if the person knows that any portion will be offered, given, or promised to a foreign official for the purpose of influencing a governmental decision to assist the person in obtaining or retaining business.  This provision is not limited to U.S. citizens and corporations and may also apply to foreign individuals and corporations.  A foreign official, who may be a government employee, a political candidate, or an employee of state-owned enterprises, need not actually receive the bribe, and “anything of value” includes more than a suitcase full of cash.  The focus is not just on what was given.  Rather, an analysis of the offeror's intent, and whether there was any quid pro quo may be key to determining whether a violation has occurred. 

As with any statute, there is always at least one exception.  The FCPA anti-bribery provision is no different.  Under the FCPA, payments made to foreign officials “to expedite or secure the performance of routine government action” are permitted.  These payments are called “facilitating,” “expediting” or “grease” payments.  These payments are modest in amount and are often made to obtain permits, licenses, or to expedite goods through customs.  These facilitating payments can be a slippery slope, however, and more companies are implementing policies prohibiting these payments.

Unlike the anti-bribery provision, the books and records provision of the FCPA only applies to issuers (i.e., publicly held companies listed on U.S. securities exchanges) and their officers, directors, agents, and employees acting on their behalf.  In general, issuers are required to maintain: (1) accurate record s of their transactions and dispositions of assets and (2) internal controls that provide reasonable assurances that transactions are executed in accordance with management's authorization and generally accepted accounting principles.  Thus, if a bribe or facilitating payment is made, then the payment must be recorded and described accurately in the company's books and records, and there should be internal controls in place to detect any such deficiencies.  This provision is often used to buttress an anti-bribery violation.

Given the recent increase in business opportunities for clients abroad, understanding the FCPA will help you better serve and advise your clients.  Reviewing the criminal and civil penalties with your clients will assist you in steering them away from potential “pay to play” situations.