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Originally enacted in 1977, the Foreign Corrupt Practices Act (FCPA) was designed as an anti-bribery act, preventing American businesses from making payments to government officials for the purpose of obtaining or retaining businesses in foreign countries. The FCPA was signed into law after investigations revealed that more than 400 U.S. companies admitted to making illegal payments totaling more than $300 million to foreign government officials.
However, in 1988, Congress became concerned that the Foreign Corrupt Practices Act placed American businesses at a disadvantage, since other countries not only allowed the bribery of foreign officials, but even allowed them to deduct bribery payments from their taxes as business expenses. After nearly ten years of negotiations with the Organization of Economic Cooperation and Development (OECD), the United States and thirty-three other countries signed the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Changes to the FCPA resulting from the cooperation of most U.S. trading partners, were ratified in 1998.
The Foreign Corrupt Practices Act makes it illegal to bribe foreign government officials in order to obtain or retain business in that country. The FCPA applies not only to American citizens and corporations, but also to foreign businesses listed on the U.S. Stock Exchange and those conducting business from within the United States.
The FCPA prohibits any issuer or domestic concern from making payment or promise of payment of anything of value to a foreign official, political party, party official, or candidate for foreign office with corrupt intent to induce the recipient to misuse his or her official authority to assist the firm in obtaining or retaining business or to direct business to any person.
The Foreign Corrupt Practices Act also prohibits third-party payments, including joint-venture partnerships, in which payment is made to a third party with the knowledge that some or all of that payment will be passed on to a foreign government official as a bribe. Therefore, the FCPA applies not only to bribery but also money laundering.
A violation of the Foreign Corrupt Practices Act can lead to civil and criminal penalties enforced by the Department of Justice (DOJ) in conjunction with the Securities and Exchange Commission (SEC). Civil penalties include a fine of up to $10,000 plus an additional fine not to exceed the greater of the gross amount of pecuniary gain or a specified dollar limitation ranging from $5,000 to $500,000, depending on the egregiousness of the violation. Furthermore, a person or business found to be in violation of the Foreign Corrupt Practices Act may be barred from conducting business with the federal government.
Criminal penalties for FCPA violations include fines of up to $2 million for businesses and corporations. For individuals, including officers, directors, stockholders, and employees, the criminal penalties include fines of up to $100,000 and up to five years in prison.
A federal criminal attorney experienced with the Foreign Corrupt Practices Act and anti-bribery legislation can carefully evaluate a defendant’s alleged FCPA violation. Moreover, such an attorney can determine whether the payment in question was allowable under the FCPA exception for “facilitating payments,” or whether an affirmative defense may be used for payments which are legal under the written laws of the foreign government, or which are a reasonable and bona fide business expense.
The FCPA is different than other laws that you might be charged with violating because you might not have any experience with it or knowledge about it until you have been charged. As it is a relatively recent piece of legislation, few people will ever come into contact with it or be affected by it. If you are one of these people, it is crucially important that you retain an attorney who understands these laws and what they might mean for your defense. Contact us today.
For more information about federal criminal defense against charges of FCPA violation, contact David Benowitz for a free consultation with an experienced federal criminal lawyer. Call (202) 600-9900 today.