LXGlobal has a long-standing commitment to comply with the FCPA and the laws of other countries that prohibit inappropriate payments to obtain business advantage. Although on the surface the FCPA's requirements and prohibitions seem straightforward, in practice FCPA issues are often subtle. The following information is designed to provide employees involved in LXGlobal's international business activities a general familiarity with the FCPA, so that they will avoid inadvertent violations and recognize potential issues in time for them to be appropriately addressed.
The FCPA is a U.S. criminal statute that prohibits improper payments to, or other improper transactions with, non-U.S. officials to influence the performance of their official duties. In general, the anti-bribery provisions of the FCPA prohibit giving, paying, promising, offering, or authorizing the payment of anything of value, directly or indirectly through a third party, to any "foreign official" – a term that is very broadly defined – to obtain or keep business or to secure some other improper advantage.
In addition to prohibiting bribery, the FCPA requires U.S. companies and their majority-owned affiliates to maintain adequate internal controls and to keep accurate and complete records of the transactions in which they engage. The FCPA also requires those companies to make good-faith efforts to cause the ventures in which they own minority interests to keep such records and proper internal controls.
The FCPA applies to U.S. persons or business entities anywhere in the world, to "issuers" of securities regulated by the U.S. Securities and Exchange Commission, and to any person who performs a prohibited act in the U.S. U.S. nationals and residents remain subject to the FCPA regardless of where they are employed or with whom they are working. Such employees associated with non-U.S. companies – either through temporary assignment, secondment, by serving on the boards of directors of such non-U.S. companies, or otherwise – remain individually subject to the FCPA even if the non-U.S. companies are not. In such circumstances, there is a risk that the individual employee, or the U.S. parent company, may be held accountable for actions taken by the non-U.S. company.
The FCPA has both criminal and civil aspects, and is aggressively enforced by the U.S. Department of Justice and the Securities and Exchange Commission. Representatives of those agencies advise that they investigate allegations that come to their attention through a variety of sources.
A company can suffer serious consequences even if it is not convicted and the statutory penalties are not brought into play – mere indictment under the FCPA may trigger significant sanctions. Also, FCPA prosecutions often include charges of other criminal violations, such as mail and wire fraud and conspiracy, and may lead to civil claims against the company. FCPA violations, moreover, can trigger investigations by non-U.S. governments, with the risk of both penalties under local laws and loss of good will.
The FCPA provides for harsh criminal and civil penalties. Statutory criminal penalties for individuals vary according to the offense, but may include fines up to $1,000,000 per violation or imprisonment up to 10 years, or both. Individual officers, directors, and employees of companies may be prosecuted even if the company for which they work is not. Fines assessed against individuals may not be reimbursed by the company.
Companies may be fined up to $2,500,000 per violation. Under alternative sentencing provisions, those penalties can be increased significantly.
The FCPA also allows a civil action by the U.S. government for a penalty of up to $10,000 against a company, or against any officer, provisions of the director, employee, or agent of a company who violates the anti-bribery FCPA.
The FCPA prohibits every U.S. company and its employees and representatives from giving, paying, promising, offering, or authorizing the payment of anything of value to any foreign official, or to any other person while knowing it would be offered, promised, or given to a foreign official, to persuade that official to help the company, or any other person, obtain or retain business, or obtain an improper advantage.
The FCPA bars such payments even if:
As mentioned, the term "foreign official" under the FCPA is broadly defined. It means any officer or employee of a non-U.S. government or of any department, agency, or instrumentality thereof, or of a designated public international organization, or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality, or for or on behalf of any such public international organization.
Public international organizations, for purposes of the FCPA, are designated from time to time by Executive Order of the President of the United States. The current list includes the United Nations, the World Bank, the International Monetary Fund, the International Red Cross, the World Trade Organization, and many other organizations.
Foreign or non-U.S. officials include employees and representatives of non-U.S. government departments or agencies, whether in the executive, legislative, or judicial branch of a government, and whether at the national, state, or local level. Non-U.S. officials also include officers and employees of companies under non-U.S. government ownership or control, such as national oil companies.
The basic FCPA prohibitions also apply to any non-U.S. political party or official thereof and any candidate for non-U.S. political office. While technically those persons and entities are not within the FCPA definition of foreign official, references to "non-U.S. official" in this Summary will include non-U.S. political parties, their officials, and candidates for non-U.S. political office, in the interest of brevity and convenience.
In some instances, non-U.S. officials are not treated as government officials by their own governments, and they expect to be treated like any other private business person. For purposes of the FCPA, however, it is legally irrelevant whether a person is considered a government official by the government at issue. The U.S. law definition controls.
Questions about the status of an individual should be raised with the LXGlobal's Compliance Department.
The FCPA prohibits improper payments to individual non-U.S. officials. Good-faith payments to a government entity, such as payments to the host country's federal treasury required by contract or law, are not prohibited, so long as they are made with due care to the government entity and not to any individual official.
The law prohibits offering, promising, or giving anything of value to a non-U.S. official to get or keep business or secure an improper advantage. Thus, the prohibition is not limited to cash payments. Anything of value may include:
In addition, less obvious items provided to non-U.S. officials can violate the FCPA. For example, in-kind contributions, investment opportunities, subcontracts, stock options, positions in joint ventures, favourable contracts for relatives, scholarships for children, and similar items provided to non-U.S. officials are all things of value that can violate the FCPA.