Starting a business here in America is difficult, but expanding overseas can be even more problematic. The possible language barrier aside, a U.S. company must comply with the regulations set by the country where it’s opening shop. It can be challenging to meet these requirements, but that’s the price of business.
It might be tempting for companies to bribe foreign government officials to get around these regulations or to maintain business in the region. However, this is a punishable crime under federal law.
The Foreign Corrupt Practices Act (FCPA) is a critical U.S. law designed to prevent corruption and promote fair business practices worldwide. The law prohibits U.S. individuals, businesses and their agents from bribing foreign officials to gain a business advantage.
The key provisions of the FCPA
The FCPA has two main provisions: the anti-bribery provision and the accounting provision. The anti-bribery provision makes it illegal to offer, pay, or promise to pay money or anything of value to foreign officials to secure business advantages.
Meanwhile, the accounting provision requires publicly traded companies to maintain accurate books and records and to have adequate internal controls.
Understanding bribes and business
Not all payments are considered bribes. The FCPA allows for “facilitating payments,” which are small sums paid to speed up routine governmental actions. However, distinguishing between a bribe and a facilitating payment can be complex, so businesses must tread carefully.
Enforcement and penalties
The Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) enforce the FCPA.
For each violation of the anti-bribery law, an offending business entity may have to pay up to $2 million in fines. Individual officers, directors, stockholders and agents of the offending company can end up paying up to $250,000 in fines and serve up to five years in prison.
On the other hand, businesses that violate the accounting provisions can pay up to $25 million in fines. Individuals involved in the offense may have to pay up to $5 million in fines and serve up to 20 years of imprisonment.
The FCPA’s role in the international business arena is both significant and complex. When a U.S. business encounters allegations of FCPA violations, the situation can become intricate and the stakes high. In such instances, the guidance of a seasoned lawyer with experience in federal law and FCPA regulations becomes invaluable.