Foreign Corrupt Practices Act Violations

Enacted in 1977, the Foreign Corrupt Practices Act (FCPA) was designed to outlaw and create penalties for bribing public officials. More specifically, the FCPA outlaws the payment of money, gifts, or offering to give money or a gift in for the purpose of influencing a foreign official to use their office or power in order to obtain, retain, or direct business. In addition, the act makes it unlawful to bribe a foreign political party or a candidate running for office in another country. The reach of the FCPA is great, as it applies to nay country in the world and includes actions not only of companies, but of the officers of the company, directors, employers, stockholders, and even agents such as consultants, and distributors.

In addition to prohibiting bribery, the FCPA also requires businesses to maintain accurate records and create and maintain a sort of internal affairs. The internal affairs requirements ensure that businesses are doing some self policing in order to ensure that assets are accessed and accounted for in a way that management of the company authorizes.

While the language of the FCPA may seem to include countless acts, there are several exceptions or affirmative defenses built into the statute. For example, the statute does not apply to routine government action. In addition, there are two affirmative defenses carved into the statute. First, if the payment, gift, or offer was given in accordance with the laws of the country in question, the act does not fall within the purview of the FCPA. Second, if the payment, gift, or offer was a reasonable expenditure, then the action is not illegal. Reasonable expenditures include, but are not limited to, travel and lodging expenses, expenses incurred for the promotion or demonstration of products, or expenses incurred in the execution of a contract with a foreign government or agency.

The penalties for a violation of the FCPA can be severe. For those that violate the act and are a juridical person, the fine can be anywhere up to two million dollars. Any other person who violates the act faces a fine of up to $100,000 in addition to a prison sentence of up to five years. In addition to monetary penalties, in some cases injunctive relief is appropriate. According to the language of the statute, the Attorney General, if he or she suspects a violation of the act is about to occur, can bring the case in an appropriate court and be given a temporary restraining order. This temporary restraining order could easily turn into a permanent injunction, keeping the person or company from ever performing the act in question. Further, the Attorney General is given the power to subpoena records and testimony from members of a business, and a failure to comply with the subpoena mean the person will be in contempt of court.

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