Over the last several years there has been an unprecedented rise in the number, severity and scope of FCPA enforcement actions by the U.S. government. Foreign and international anticorruption laws and standards are also aggressively increasing. Key developments include:
- Introduction of sting operations as a new enforcement tool in the FCPA arena.
- Increased emphasis on effective compliance programs as a primary aggravating or mitigating factor in determining FCPA penalties (including imprisonment).
- Increased FCPA prosecutions and imprisonment of senior executives, holding them accountable for plans and actions of employees even without direct knowledge of the improper activities.
- Increased liability for improper payments by third parties acting on behalf of companies, even without direct knowledge.
- The UK’s passage of comprehensive legislation — Bribery Act 2010 — modeled after, but reaching beyond, the FCPA.
We not only defend clients facing allegations of violating the FCPA, we also work proactively to help clients ensure compliance with it. FCPA anti-bribery and accounting provisions impose a number of obligations on domestic companies, regardless of whether they have foreign operations.
The FCPA may also trigger severe criminal and civil penalties for companies and their officers, employees and agents who fail to adhere to its obligations. For example, individuals who violate the anti-bribery provisions may be fined up to $100,000 and/or serve five years of imprisonment. Individuals who violate the accounting provisions may be fined up to $5 million and imprisoned for up to 20 years. Companies and individuals are also subject to potential enforcement actions brought by the SEC.
FCPA compliance training at all levels of an organization can help companies avoid violating FCPA mandates. We have found that a company can substantially improve its chances of avoiding FCPA violations by investing in policy development, training and periodic compliance audits. The cost of this type of investment is comparatively small when assessed side by side with the investment required to defend a company against a government inquiry.
However, the core value of an FCPA compliance program may be that it serves to deter employees from engaging in conduct that may come within the FCPA’s purview — conduct that may be normal and customary in certain foreign countries. The FCPA’s anti-bribery provisions are broad and proscribe authorizing — even offering or promising — payment to a foreign official to assist a company or obtain an improper advantage.
A compliance program could alleviate the widespread misconception among employees that facilitating business in foreign countries justifies payments to foreign officials. It is also likely to empower employees to resist the urge to surrender to undue pressures from foreign officials.
The FCPA also imposes record-keeping and internal control obligations that apply only to public companies. Our attorneys help clients effectively navigate the U.S. Sentencing Guidelines and the SEC, both of which reward effective compliance and ethics programs.