TerraLex Guide to Anticorruption Legislation

1997

The Foreign Corrupt Practices Act (FCPA) 1977.

Active and passive bribery.

Yes.

In the United States, commercial bribery typically is criminalized at the state or local, not federal, level. However, the US Travel Act, 18 USC § 1952, criminalizes travel or transportation within the US or abroad in furtherance of racketeering activity, which includes, among other things, acts of bribery (under federal law or the laws of the state where the act occurred) or distributing the proceeds of bribery (under federal law or the laws of the state where the act occurred). US federal prosecutors have used the Travel Act to prosecute acts of commercial bribery. See, e.g., United States v. Carson, 2011 WL 5101701, No. 09-cr-77 (C.D. Cal. May 18, 2011) (Travel Act prosecution predicated on underlying breaches of California state law prohibiting commercial bribery).

Yes.

Yes.

Yes.

Yes.

• FCPA (anti-bribery): individuals are subject to up to 20 years of imprisonment, $250,000 in fines (or twice the gross gain/loss); and corporations are subject to up to $2 million in fines. - FCPA (accounting violations): individuals are subject to up to 20 years of imprisonment, $5 million in fines (or twice the gross gain/loss); and corporations are subject to up to $25 million in fines.

• Commercial bribery: individuals are subject to up to 20 years of imprisonment, $250,000 in fines (or twice the gross gain/loss); corporations are subject to $500,000 in fines (or twice the gross gain/loss).

• Companies and individuals are also subject to disbarment from government contracts and civil (non-criminal) fines.

Yes, by statute, the FCPA applies to:

(a) any company whose securities trade on a U.S. stock exchange and who are required to file periodic reports with the SEC, which includes some foreign companies whose ADRs trade on U.S. exchanges (15 U.S. Code § 78dd–1);

(b) any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship which has its principal place of business in the U.S., or which is organized under the laws of a State of the U.S. or a territory, possession, or commonwealth of the U.S. (15 U.S. Code § 78dd–2); and

(c) any corporate entity that, while in the territory of the U.S., corruptly makes use of the mails or any means or instrumentality of interstate commerce or to do any other act in furtherance of an FCPA violation (15 U.S. Code § 78dd–3). Note that this jurisdictional provision is extraordinarily broad and captures conduct where the corruption scheme involved e-mails being sent to or from the U.S., data is stored on a U.S. based server, or U.S. dollars are used in the transaction.

There is no statutory requirement to put a compliance program in place; however, the U.S. authorities tasked with enforcing the FCPA (DOJ and SEC) have repeatedly stated in writing that the implementation of a well-designed and adequately resourced compliance program will be a mitigating factor in assessing fines and penalties for FCPA violations.

In their written FCPA compliance guidance, DOJ and SEC list what they believe to be the 11 "hallmarks" of a well-designed anti-corruption compliance program. https://www.justice.gov/criminal/criminal-fraud/fcpa-resource-guide

Yes. The implementation of a well-designed anticorruption compliance program will significantly increase the likelihood that a company will be able to negotiate for a better resolution, such as a non-prosecution agreement or a declination with disgorgement, and for reduced fines and penalties. Furthermore, where a company has a robust compliance program, the DOJ and SEC are less likely to require the appointment of an independent compliance monitor pursuant to a resolution of an FCPA investigation.

Yes.

Possible resolutions with the Department of Justice include a Deferred Prosecution Agreement ("DPA"), a Non-Prosecution Agreement ("NPA"), and a declination with disgorgement. Under a DPA, a criminal case is formally commenced but prosecution is deferred for a period of time (typically, three years) during which the company must comply with certain terms and conditions imposed by the DOJ, which often include remedial compliance measures or the appointment of an independent compliance monitor. Upon satisfactorily complying wih the terms of the DPA, the DOJ will dismiss the underlying crimnal case. Should the company fail to comply with the terms of the agreement, the DOJ can declare a breach of the DPA and pursue prosecution of the underlying misconduct. A NPA is similar to a DPA except that a criminal case is not officially commenced by the DOJ. Pursuant to a declination with disgorgement, the company agrees to disgorge profits or illgotten gains, and the DOJ agrees to not pursue criminal charges against the company.

The SEC, which has civil enforcement power over issuers of securities trading on U.S. exchanges, can enter into civil settlements with companies. These settlements typically involve monetary fines and injunctions from further violations of the U.S. securities laws, which includes the FCPA. In some instances, the SEC requires certain remedial compliance measures to be undertaken by the company or the appointment of a compliance monitor pursuant to a settlement agreement.