The FCPA and its role in preventing bribery

The word bribe in a Scrabble game

The Foreign Corrupt Practices Act is a piece of American legislation aimed at outlawing bribery of foreign officials. The Act applies to those with formal ties to the US, such as US nationals or businesses incorporated in the US, as well as foreign nationals and entities who are in the US at the time of the improper conduct. Individuals face between five to 20 years imprisonment for each violation. Corporations can be fined up to $2m per violation, and individuals up to $100,000.

The FCPA does not prohibit facilitation payments made to foreign officials for the purpose of causing them to perform routine governmental actions, such as issuing licenses or performing shipping inspections. The FCPA also does not prohibit reasonable, bona fide expenditures associated with a product or contract, or payments expressly permitted under the written laws of the foreign country.

Here is some guidance on the role the FCPA plays in helping businesses identify and mitigate the risk of bribery. The guidance has been taken from VinciWorks’ online anti-bribery training, which can be taken by staff working in any country.

Key differences between the FCPA and Bribery Act

Business to business bribery

The FCPA does not cover bribery on a private, business to business level, which the Bribery Act does criminalise. However, this sort of corruption is outlawed under other US legislation.

Offering and receiving

The FCPA only criminalises the act of giving or offering a bribe. The Bribery Act also criminalises taking a bribe.

Failure to prevent

The Bribery Act has a strict liability corporate offence of failing to prevent bribery, subject to the company having adequate procedures in place. Under the FCPA, a company can be held vicariously liable for the actions of its employees and agents, whereas UK legislation extends to all ‘associated persons’.

Corrupt intent

The FCPA requires a proof of corrupt intent to bribe a foreign official, whereas the Bribery Act has no requirement for corrupt or improper intent in bribing a foreign official, although there is for the general bribery offence.

Facilitation payments

Under the FCPA, there is an exception for facilitation payments to foreign officials. There is no such exception under the Bribery Act and this conduct is illegal.

Expenses

The FCPA allows for a defence of promotional expenses if they can be proved to be reasonable and bona fide. There is no defence under the Bribery Act.

Prohibited conduct under the FCPA

A person or entity is guilty of violating the FCPA if the government can prove the following five points:

  1. A payment, offer, authorisation, or promise to pay money or anything of value
  2. To a foreign government official or to any other person knowing that the payment will be passed to an official
  3. With a corrupt motive
  4. For the purpose of (a) influencing any act or decision of that person, (b) inducing the person to do or omit any action in violation of their lawful duty, (c) securing an improper advantage, or (d) inducing the person to use their influence to affect an official act or decision
  5. In order to assist in obtaining or retaining business for or with, or directing any business to, any person

A bribe need not be paid in order to violate the law. The promise of a corrupt payment is sufficient.

The biggest enforcement actions under the FCPA

The ten biggest FCPA cases have involved financial penalties totalling $5.36bn as of 2016. Enforcement of the FCPA is administered by the US Department of Justice, and has included prosecutions of politicians and some of the world’s largest companies. Here are just some of them.

2009 – Former Louisiana Congressman William J. Jefferson charged with violating the FCPA by bribing various African government officials.

2010 – The DOJ investigated News Corp for corrupt payments to UK police officers following a joint investigation with the UK’s Serious Fraud Office (SFO) in relation to the phone-hacking scandal.

2013 – French oil giant Total paid nearly $400m in penalties for bribing Iranian officials to gain access to oil and gas fields in the country after a joint US and French investigation.

2014 – Hewlett Packard pled guilty to bribing the Prosecutor General of Russia to win a contract to supply computer equipment in Russia.

2016 – Teva Pharmaceuticals, the world’s largest manufacturer of generic drugs, reached a settlement with the DOJ for bribing officials in Russia, Ukraine and Mexico.

How to stay on the right side of the FCPA

  • A clearly defined corporate policy, including conduct codes and internal procedures
  • Dissemination of policy to all employees
  • Periodic FCPA training and emphasis on the requirements of the policy and associated controls and procedures
  • Periodic certifications of compliance from personnel including management, finance and sales
  • Due diligence concerning intermediaries and business partners
  • Robust anti-corruption provisions in contract
  • Audit testing of all business locations with a particular emphasis on high-risk areas and new acquisitions

Anti-bribery resource page

VinciWorks’ anti-bribery resource page contains a host of compliance tools, including policy templates, guides, knowledge checks and more to help businesses comply with the latest anti-bribery legislation.