1018

Prohibited Foreign Corrupt Practices

The antibribery provisions of the FCPA make it unlawful to offer, promise, or make a corrupt payment to a foreign official, a foreign political party, a party official, a candidate for public office, or to an intermediary to influence an act or decision made in his or its official capacity, to induce him or it to do or omit to do any act in order, or to obtain an improper advantage to obtain or retain business. Individuals and firms may also be prosecuted if they order, authorize, or assist someone else to violate the antibribery provisions or if they conspire to violate those provisions. The FCPA potentially applies to any individual, firm, officer, director, employee, or agent of a firm and any stockholder acting on behalf of a firm. Under the FCPA, U.S. jurisdiction over corrupt payments to foreign officials depends upon whether the violator is an "issuer," a "domestic concern," or a foreign national or business. An "issuer" is a corporation that has issued securities that have been registered in the United States or who is required to file periodic reports with the SEC. See 15 U.S.C. §§ 78c(a)(8), 78dd-1(a). A "domestic concern" is any individual who is a citizen, national, or resident of the United States, or any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship which has its principal place of business in the United States, or which is organized under the laws of a State of the United States, or a territory, possession, or commonwealth of the United States. See § 78dd-2(h)(1). Issuers and domestic concerns may be held liable under the FCPA under either territorial or nationality jurisdiction principles. For acts taken within the territory of the United States, issuers and domestic concerns are liable if they take an act in furtherance of a corrupt payment to a foreign official using the U.S. mails or other means or instrumentalities of interstate commerce. See §§  78dd-1(a), 78dd-2(a). For acts taken outside the United States, U.S. issuers and domestic concerns are liable if they take any act in furtherance of a corrupt payment, even if the offer, promise, or payment is accomplished without any conduct within U.S. territory. See §§  78dd-1(g), 78dd-2(i). In addition, U.S. parent corporations may be held liable for the acts of their foreign subsidiaries where they authorized, directed, or controlled the activity in question, as can U.S. citizens or residents, themselves "domestic concerns," who were employed by or acting on behalf of such foreign-incorporated subsidiaries. Prior to 1998, foreign companies, with the exception of those who qualified as "issuers," and most foreign nationals were not covered by the FCPA. The 1998 amendments expanded the FCPA to assert territorial jurisdiction over foreign companies and nationals. A foreign company or person is now subject to the FCPA if it takes any act in furtherance of the corrupt payment while within the territory of the United States. There is, however, no requirement that such act make use of the U.S. mails or other means or instrumentalities of interstate commerce. See §  78dd-3(a), (f)(1). Although this section has not yet been interpreted by any court, the Department interprets it as conferring jurisdiction whenever a foreign company or national causes an act to be done within the territory of the United States by any person acting as that company's or national's agent. Under the FCPA, the person making or authorizing the payment must have a corrupt intent. The payment must be intended to induce the recipient to misuse his official position to direct business wrongfully to the payer or to any other person. The FCPA prohibits any corrupt payment intended to influence any act or decision of a foreign official in his or her official capacity, to induce the official to do or omit to do any act in violation of his or her lawful duty, to obtain any improper advantage, or to induce a foreign official improperly to use his or her influence with other government officials or agencies to affect or influence any act or decision. Where such intent is present, the FCPA prohibits paying, offering, promising to pay (or authorizing to pay or offer) money or anything of value. The FCPA does not require that a corrupt act succeed in its purpose. The offer or promise of a corrupt payment can constitute a violation of the statute. The prohibition extends only to corrupt payments made, directly or indirectly, to a foreign official, a foreign political party or party official, or any candidate for foreign public office. A "foreign official" means any officer or employee of a foreign government, a public international organization, or any department or agency thereof, or any person acting in an official capacity. The FCPA applies to payments to any public official, regardless of rank or position. The FCPA also prohibits corrupt payments made through intermediaries, including joint venture partners or agents. It is unlawful to make a payment to any person, while knowing that all or a portion of the payment will be offered, given, or promised, directly or indirectly to a foreign official. The term "knowing" includes conscious disregard and deliberate ignorance. See §§78dd-1(f)(2), 78dd-2(h)(3), 78dd-3(f)(3). The FCPA focuses on the purpose of the payment instead of the particular duties of the official receiving the payment, offer, or promise of payment. The Department of Justice interprets "obtaining or retaining business" broadly, such that the term encompasses more than the mere award or renewal of a contract. The business to be obtained or retained does not need to be with a foreign government or instrumentality thereof. The FCPA contains an explicit exception to the bribery prohibition for facilitating payments made in furtherance of routine governmental action. See §§ 78dd-1(b), 78dd-2(b), 78dd-3(b). The statute lists several examples of payments that may be made to facilitate or to expedite performance of a routine governmental action, including payments made to: obtain permits, licenses, or other official documents; process governmental papers, such as visas and work orders; provide police protection, mail pick-up and delivery; provide phone service, power and water supply, cargo handling, or protection of perishable products; and schedule inspections associated with contract performance or transit of goods across country. See §§ 78dd-1(f)(3), 78dd-2(h)(4), 78dd-3(f)(4). Other similar actions may also be covered by this exception. "Routine governmental action" does not include any decision by a foreign official to award new business or to continue business with a particular party. Id. In addition, the FCPA allows for certain affirmative defenses which can be used to defend against alleged violations of the FCPA. A person charged with a violation of the FCPA's antibribery provisions may assert as a defense that the payment was lawful under the written laws of the foreign country or that the money was spent as part of demonstrating a product or performing a contractual obligation. See §§ 78dd-1(c), 78dd-2(c), 78dd-3(c). To invoke an affirmative defense, the defendant is required to show in the first instance that the payment met these requirements. [updated November 2000] [cited in USAM 9-47.100]