Foreign Corrupt Practice Act (FCPA)

Foreign Corrupt Practice Act (FCPA) Luis A. Perez 2011

FCPA • Number of investigations and prosecutions dramatically increased (over 50%) • Enforcement Authorities • Securities and Exchange Commission (SEC) • Department of Justice (DOJ) • 2010 • SEC 38 cases • DOJ 63 cases

Trends • Credit for Voluntary Reporting • Decline in Monitors • UK Bribery Act (July 1, 2011) • Sector Wide Targets • Individual Targets • More Foreign Cooperation • No legislative amendments

Affirmative Defenses • Lawful under foreign law • Reasonable bona fide expenditure

Provisions of Act • Anti-bribery • Illegal to offer or provide • Anything of value • To a foreign government official • Intent of retaining or obtaining business • Accounting reporting requirement

Penalties • Monetary fines • Cost of defense • Reputation • Compliance program • Risk of jail

Grease Payments • Corp. has burden of proof • Act is ministerial • Moving matter forward • Does not involve discretion

Acquisition of Another • Acquiring Corp. liable for prior acts • Usually if acts continue after acquisition • Institute compliance plan • Cooperate with investigation • Discipline • Internal audit

Foreign Representatives • Payments • Independent knowledge FCPA • Government official • Lawful • Assignment • Termination • Disclosure • Established • Country reputation

Foreign Official • Broad interpretation • Direct Gov. payroll • International organizations • Parliament members • Royal family • "decision making authority"

Voluntary Disclosure • Pros • Avoid jail • Mitigate penalty • Deferred prosecution • Cons • Some fine nonetheless • Public disclosure • Shareholder suits *Ethical dilemma

Whistelblowers • Dodd-Frank Act (2010) • Reward • Immunity • (90) day window • Plaintiff firms

Conclusion • Investigations and prosecutions increase • Task forces DOJ and SEC • Monetary incentive • International cooperation • Take it very seriously

Foreign Corrupt Practice Act (FCPA)