The FCPA Made Simple
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Support Materials
© TrainingABC 2016
Program Transcript with Links to the FCPA Website
The Foreign Corrupt Practices Act Made Simple
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In the face of widespread corruption by U.S. businesses, Congress passed the Foreign
Corrupt Practices Act (FCPA) in 1977.
The Act protects against unethical behavior and provides a level playing field for all
businesses interested in foreign trade.
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In many countries, bribes and kickbacks given to government officials are
commonplace.
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These behaviors threaten market growth and limit the opportunity for honest business
owners to go into or expand their businesses.
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Bribery and other unfair practices also inflate the cost of doing business thus affecting
the economy overall.
The Act requires all U.S. businesses, regardless of size, to be forthright and honest in
their dealings in international trade.
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The law has two main components: anti-bribery and accounting.
Anti-bribery
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The FCPA makes it illegal for businesses or individuals to order, offer or assist another
party in giving bribes or kickbacks to foreign government officials to gain a business
advantage within a particular country.
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Bribes in the form of monetary payments, travel or entertainment benefits, charitable
contributions and any other gift of value are strictly prohibited.
The Act makes it illegal to promise bribes or kickbacks even if they are never actually
given.
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In addition, bribes that do not result in an unfair advantage are still illegal. Intent is the
most important test of the law.
In addition to officials directly employed by foreign governments, the law covers
individuals working in an official capacity for the government such as consultants,
advisors or university employees.
In many countries, businesses that are traditionally private organizations in the United
States are actually run by the government. Often, officers of these organizations are
also government officials. Doing business with these organizations is high risk and
should be monitored carefully.
Complying with the FCPA is required whether conducting business on U.S. soil or
abroad and it applies to any company representative including its owners, directors,
board members and agents.
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Foreign companies or individuals who engage in bribery schemes within the United
States may also be prosecuted under the law. This includes the use of interstate or
intrastate communication to facilitate the crimes.
The Facilitating Payments Exemption
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The Facilitating Payments Exemption was written into the law for payments made to
lower level officials whose duties are clerical in nature. The payments, often referred to
as grease payments, are intended to speed up or facilitate routine governmental action.
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In recent years, however, the Department of Justice and the SEC have advised
organizations to prohibit or discourage these grease payments. Therefore most
companies now avoid them entirely.
Third Party Agents
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Third parties represent the greatest risk for violations of the law and represent 90% of
the FCPA cases brought by the US government.
A third party is any company or individual who assists businesses in a foreign country.
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Third party agents should be thoroughly vetted and every contract should include an
FCPA policy.
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High risk third parties include sales agents, lobbyists, joint ventures, distributors and
resellers.
In addition, foreign attorneys are some of the most dangerous third party agents. In
many countries, the legal system is dangerously corrupt and bribes are normal practice.
Legal proceedings in at-risk countries should be closely watched.
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Clear, concise communication is critical. Often, words like commission will substituted
for the word bribe. In most cases, corrupt practices will not be spoken about directly.
It is vital that all third party agents are closely monitored and that FCPA policy is
followed to the letter.
Accurate and Honest Recordkeeping
To protect business investors, the FCPA requires publicly traded companies to keep
truthful and accurate records, so that corruption may be more easily detected.
This includes the disclosure of all assets and liabilities as well as filing annual financial
statements with the Securities and Exchange Commission.
To ensure compliance with this rule, each company must follow internationally
recognized and accepted accounting procedures otherwise known as GAAP.
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Consequences
The Department of Justice and the SEC use a variety of investigative tools to find FCPA
violators including sting operations and collaborative efforts with other agencies such as
the FBI.
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Investigative journalists also play a pivotal role in regulation by uncovering stories of
bribery and corruption.
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However, the majority of violations are uncovered by professional consultants such as
accountants or lawyers during corporate reviews.
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Organizations who report violations voluntarily to the Department of Justice or the SEC
generally receive more lenient treatment by authorities.
Violations of the FCPA can result in a number of severe civil and criminal penalties
including fines and imprisonment.
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Violators of the FCPA may also be found guilty of breaking other laws such as antimoney laundering or wire and mail fraud statutes, all of which could result in additional
penalties.
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Furthermore, violators might be prohibited from participating in future international
business ventures either temporarily or permanently.
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The bill allows for the prosecution of companies, however an individual employee or
agent can also be prosecuted…regardless of a company verdict. Around 50% of FCPA
cases open today are against individual business persons or agents.
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The U.S. Government rarely loses FCPA cases. In fact, several major U.S.
corporations have lost hundreds of millions of dollars in penalties and fines in recent
years.
In Conclusion
Corruption and unfair trade practices harm the economy and stifle innovation and
creativity. They give an unfair market advantage to dishonest individuals and
companies and represent a barrier to entry into the marketplace for ethically run
businesses.
Following FCPA law is not only a business imperative from a legal perspective, it is also
the right thing to do for the prosperity of our country and world.
Helpful Links for More Information on the FCPA
130 page Department of Justice guide on the FCPA
FCPA website at The Department of Justice
http://www.justice.gov/criminal-fraud/foreign-corrupt-practices-act
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http://www.sec.gov/spotlight/fcpa/fcpa-recordkeeping.pdf
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FCPA Anti-Bribery Provisions
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FCPA website at the SEC
http://www.sec.gov/spotlight/fcpa.shtml
http://www.sec.gov/spotlight/fcpa/fcpa-anti-bribery.pdf
SEC enforcement actions against FCPA violators
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http://www.sec.gov/spotlight/fcpa/fcpa-cases.shtml
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Recordkeeping and internal controls provisions under the FCPA
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http://www.justice.gov/sites/default/files/criminal-fraud/legacy/2015/01/16/guide.pdf
The FCPA Made Simple Employee Quiz
1. The FCPA makes it illegal for businesses or individuals to order, offer or assist another
party in giving bribes or kickbacks to foreign government officials to gain a business
advantage within a particular country.
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A) True
B) False
2. Which of the following types of bribery are illegal under the FCPA.
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A) Monetary payments
B) Travel or entertainment benefits
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C) Charitable contributions
D) All of the above and any other gift of value
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3. It is not illegal to promise bribes or kickbacks if they are never actually given, however
promises still suggest impropriety and could leave your business open to possible
governmental investigations.
B) False
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A) True
4. Bribes that do not result in an unfair advantage are still illegal. Intent is the most
important aspect of the law.
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A) True
B) False
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5. Complying with the FCPA is required whether conducting business on U.S. soil or
abroad and it applies to any company representative including its owners, directors,
board members and agents.
A) True
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B) False
6. Foreign companies or individuals who engage in bribery schemes within the United
States are exempt under the law, if they can prove that bribery and kickbacks are legal
in their home country.
A) True
B) False
7. Third parties represent the greatest risk for violations of the law and represent the vast
majority of the FCPA cases brought by the U.S. Government.
A) True
B) False
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8. Which of the following statements is true about the consequences of violating FCPA
law?
A) The FCPA is not a criminal law, however the fines and penalties levied by the SEC
and Department of Justice can be quite severe.
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B) The FCPA can result in a number of severe civil and criminal penalties including
fines and imprisonment.
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C) Individual employees are not liable under the FCPA however violations could result
in the termination of an individual’s employment and severe harm to his or her
reputation.
D) Third party agents who are not U.S. citizens are exempt from FCPA law.
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9. To ensure compliance with the accounting portion of the Act, each company must follow
internationally recognized and accepted accounting procedures otherwise known as
GAAP.
B) False
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A) True
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10. Although the law has a specific exemption for Facilitating Payments, the Department of
Justice and the SEC have advised organizations to prohibit or discourage these so
called grease payments.
A) True
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B) False
The FCPA Made Simple Employee Quiz Answer Key
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1. The FCPA makes it illegal for businesses or individuals to order, offer or assist another
party in giving bribes or kickbacks to foreign government officials to gain a business
advantage within a particular country.
A) True
B) False
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2. Which of the following types of bribery are illegal under the FCPA.
A) Monetary payments
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B) Travel or entertainment benefits
C) Charitable contributions
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D) All of the above and any other gift of value
A) True
B) False
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3. It is not illegal to promise bribes or kickbacks if they are never actually given; however
promises still suggest impropriety and could leave your business open to possible
governmental investigations.
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4. Bribes that do not result in an unfair advantage are still illegal. Intent is the most
important aspect of the law.
A) True
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B) False
5. Complying with the FCPA is required whether conducting business on U.S. soil or
abroad and it applies to any company representative including its owners, directors,
board members and agents.
Fo
A) True
B) False
6. Foreign companies or individuals who engage in bribery schemes within the United
States are exempt under the law, if they can prove that bribery and kickbacks are legal
in their home country.
A) True
B) False
7. Third parties represent the greatest risk for violations of the law and represent the vast
majority of the FCPA cases brought by the U.S. Government.
A) True
B) False
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8. Which of the following statements is true about the consequences of violating FCPA
law?
A) The FCPA is not a criminal law, however the fines and penalties levied by the SEC
and Department of Justice can be quite severe.
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B) The FCPA can result in a number of severe civil and criminal penalties
including fines and imprisonment.
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C) Individual employees are not liable under the FCPA however violations could result
in the termination of an individual’s employment and severe harm to his or her
reputation.
D) Third party agents who are not U.S. citizens are exempt from FCPA law.
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9. To ensure compliance with the accounting portion of the Act, each company must follow
internationally recognized and accepted accounting procedures otherwise known as
GAAP.
B) False
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A) True
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10. Although the law has a specific exemption for Facilitating Payments, the Department of
Justice and the SEC have advised organizations to prohibit or discourage these so
called grease payments.
A) True
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B) False