Answer ... The Foreign Corrupt Practices Act (FCPA) applies to bribes relayed by means of “anything of value” – including hospitality, travel and entertainment expenses, among other things – if provided corruptly to a foreign public official to influence or induce such official to take an official action (or omit to take an official action) and seek to obtain or retain business. The FCPA does not place dollar limits on such expenses; however, the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) issued guidelines on this topic in “A Resource Guide to the US Foreign Corrupt Practices Act” (2012, updated 2015), which state that hospitality, travel and entertainment expenses of nominal value – such as cab fares, reasonable meals and entertainment expenses – “are unlikely to improperly influence an official, and, as a result, are not, without more, items that have resulted in enforcement action by DOJ or SEC”. Large and extravagant expenses, however, may indicate a corrupt purpose, according to the Resource Guide.
Answer ... The FCPA has a narrow exception for “any facilitating or expediting payment to a foreign official, political party, or party official the purpose of which is to expedite or to secure the performance of a routine governmental action by a foreign official, political party, or party official” (18 USC § 78dd-1(b)). This exception applies only to non-discretionary government acts and includes “routine governmental action” such as “processing visas, providing police protection or mail service, and supplying utilities like phone service, power, and water” (DOJ and SEC, “A Resource Guide to the US Foreign Corrupt Practices Act” at 25 (2012, updated 2015)).
Answer ... Bribery through intermediaries and other third parties is penalised under the FCPA. Companies, through traditional principles of agency, may be held liable for the corrupt acts of third parties if the company participated in the third parties’ improper conduct or directed the third parties’ conduct (DOJ and SEC, “A Resource Guide to the US Foreign Corrupt Practices Act” at 21 (2012, updated 2015)). The third parties themselves may also be held liable under the FCPA if certain requirements are met.
Answer ... A company may be held liable “when its directors, officers, employees, or agents, acting within the scope of their employment, commit FCPA violations intended, at least in part, to benefit the company” (DOJ and SEC, “A Resource Guide to the US Foreign Corrupt Practices Act” at 27 (2012, updated 2015)).
Answer ... The DOJ and the SEC have jurisdiction to enforce the FCPA’s anti-bribery provisions against any of three sets of persons and entities:
- ‘issuers’, along with their officers, directors, employees, agents and shareholders;
- ‘domestic concerns’, along with their officers, directors, employees, agents and shareholders; and
- persons other than issuers or domestic concerns acting “while in the territory of the United States” (15 USC §§ 78dd-1, 78dd-2, 78dd-3).
‘Issuers’ are entities that either:
- have a class of securities registered under § 12 of the Securities Exchange Act; or
- are required to file reports with the SEC pursuant to § 15(d) of the Securities Exchange Act (15 USC § 78dd-1).
Foreign companies that list American depositary receipts (ADRs) on US exchanges are considered issuers; but foreign companies that trade ADRs over the counter without registration or § 15(d) filings are not issuers under the FCPA (DOJ and SEC, “A Resource Guide to the US Foreign Corrupt Practices Act” at 25 (2012, updated 2015)). Although the FCPA’s accounting requirements are directed at ‘issuers’, an issuer’s books and records include those of its consolidated subsidiaries and affiliates. An issuer’s responsibility thus extends to ensuring that subsidiaries comply with the accounting provisions (id at 43).
Answer ... A successor company may be held liable for bribery committed by legacy companies under the FCPA. Pursuant to a 2018 announcement by the Department of Justice, the FCPA Corporate Enforcement Policy will apply to companies that uncover corrupt conduct through due diligence in advance of an acquisition, as well as to companies that learn of such conduct subsequent to an acquisition (Harvard Law School, FCPA Successor Liability, August 2018).