California is home to some of the world’s largest multinational companies. From Silicon Valley tech giants to Los Angeles manufacturers, many of these firms operate in emerging markets across Asia, Latin America and Africa. This global reach comes with a serious legal risk: the Foreign Corrupt Practices Act (FCPA).
The FCPA makes it illegal for U.S. companies to bribe foreign government officials to win or keep business. Violations can lead to massive fines and criminal charges. In California, companies face more risk. That’s because the state’s Unfair Competition Law also covers foreign bribery. Here is where companies are most at risk.
Third-party relationships
One of the biggest danger zones is using local agents, consultants or distributors. California companies often hire local partners to navigate foreign markets. If that partner pays a bribe on the company’s behalf, the company can face liability. They cannot use ignorance as an excuse. That’s why due diligence is very important. Failing to run background checks or ignoring red flags can lead to federal and state prosecution.
Government contracts and licensing
In many markets, officials control contracts and permits. This creates pressure to make payments to speed things up. While the FCPA has a narrow exception for facilitating payments — small fees for routine, non-discretionary tasks like processing a visa—these are extremely risky. They are often illegal under local laws. They can also trigger a federal investigation to determine whether the payment was a bribe for a discretionary favor.
Weak internal controls
Internal controls are a company’s best defense. When firms expand quickly, they sometimes skip building strong compliance systems abroad. Poor recordkeeping and weak auditing create openings for corruption.
Companies must treat compliance as a core business function. Between federal oversight and California’s own strict laws, the cost of a mistake is far higher than the cost of doing things right.
Working with an experienced FCPA attorney can make a real difference. A lawyer can review third-party contracts and flag compliance gaps. They can also help build internal controls before problems arise. If a company is already under investigation, an attorney can guide its response and help limit exposure. Early legal advice is almost always cheaper than damage control later.