March 19, 2012 Volume 4, No. 2
This edition of Currents is from Eric L. Dobberteen, Esq., a member of the litigation and white collar crime practice teams, and Jonathan L. Smoller, Esq., a member of the litigation practice team. Please contact Eric Dobberteen or Jonathan Smoller to inquire about the subject matter of this issue.
Bribe?!? What Bribe?!?
These can be the first words of someone who has just been accused of giving (or taking) a bribe. We all know what a bribe is—the corrupt public official, the dark alley, the cash in an envelope—all provided to influence some official act -- and it has long been a crime. That's something most of us have no direct experience with (thankfully) and most businesses in this Country wouldn't even consider engaging in such unsavory conduct.
But how about this? The world is shrinking and more and more businesses in the United States, large and small and maybe yours, are finding markets overseas to which they export their products. That trend will only continue as we market our wares to the "Global Village". As any good marketer can tell you, making the product is only part of a successful business. A market must be identified, accessed and convinced to buy what you make. When selling overseas into markets governed by different laws, traditions, cultures and certainly languages, local help is needed to obtain licenses, permits and contacts that can make your product a success. Local distributors or agents with good contacts can be vital.
Perfect, but what does selling overseas have to do with bribery? That's a question the United States answered back in 1977 with the passage of the Foreign Corrupt Practices Act (FCPA). If you already know about the FCPA and have implemented a compliance program at your company, feel free to turn to the sports page and enjoy the articles there. If, however, you aren't familiar with the FCPA, please take a few minutes to read part one below and them simply click as directed to review parts two and three.
PART ONE: What is the FCPA?
PART TWO: Why Worry About the FCPA Now?
PART THREE: Can Trouble With the FCPA Be Avoided?
The U.S. Department of Justice (DOJ) at its website on this statute summarizes the FCPA as follows:
As with most laws, the FCPA can be easily stated, but more complicated to understand when you begin to look behind the summary language. Here are a few more detailed explanations for some of the terms and phrases noted above:
The FCPA has been amended twice (1988 and 1998) and now can be violated by virtually any individual, firm, officer, director, employee or agent of a firm or any stockholder acting on behalf of a firm. Moreover, such "firms" need not be public companies, but can include "domestic concerns" that include any corporation, partnership, association, joint-stock company, business trust, unincorporated organization or sole proprietorship.
No. The law itself refers to "anything of value", and while the statute does not define that term, it has been broadly construed to include not only cash and cash equivalents, but also, discounts; gifts; use of facilities or equipment; entertainment; drinks; meals; transportation; lodging; insurance benefits; and promises of future employment. Moreover, there is no de minimis value associated with the term "anything of value".
It doesn't need to be the President, Prime Minister, Foreign Minister or Ambassador. The statute defines this term to mean:
This term has also been broadly interpreted by the DOJ to include not only traditional government officials, but also employees of state-owned or state-controlled entities since these entities can be "instrumentalities" of a foreign government. Assuming some foreign company is deemed an instrumentality because of the government's ownership (or partial ownership) or control, every employee of that entity will be considered a "foreign official" for purposes of the FCPA.
Direct payments to a foreign official aren't the only way to run afoul of the statute, since indirect payments to agents, distributors, consultants and joint venture partners can also result in liability. Such indirect payments through a third party must be made with knowledge "that all or a portion of such money or thing of value will be offered, given, or promised, directly or indirectly, to a foreign official." Once again, the FCPA defines "knowledge" broadly and such knowledge can be found when one knows that an event is certain or likely to occur. Being willfully blind to what is going on can also constitute knowledge for purposes of the statute.
Again, no. This element of the statute can be satisfied even if the payment to the foreign official does not result in a government contract. Payments made to secure special tax or customs treatment, obtain government permits or licenses, or otherwise secure an unfair/improper advantage over a competitor can satisfy this element.
Continue to Part Two: Why Worry About the FCPA Now?
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