The Perils of Conducting Business Abroad: The Anti-Bribery Provisions of the Foreign Corrupt Practices Act
Back in law school, I wrote a paper for my Business Ethics class about combating international bribery in business transactions, with a focus on the U.S. Foreign Corrupt Practices Act (“FCPA”). As our economy has become a global one, U.S. businesses have found themselves doing deals in countries with different values and ethics than we have in this country. It was an interesting topic to research and write about, but to be honest, when I finished the paper, I had my doubts about whether I would ever be able to use the information I had learned in my practice upon graduation and passing the bar exam.
Flash forward to a few years ago. I had a client approach me about my assisting on an international business transaction. My client was to raise funds that would allow its business partner to close an overseas transaction. When I asked what our funds were going to be used for, my client’s response was that the funds would be used to “pay fees.”
When I heard that, my radar went up; suddenly I had found a use for all that FCPA research.
Here in the United States, we are fortunate to have a strong culture of business ethics and state and Federal regulatory schemes that serve as a strong deterrent to the use of bribes in order to induce government officials to take an action or actions that would benefit a business (the issuance of a permit, for example, or the award of a government contract). That is not to say that it never happens in this country, but when it does, it is usually brought to light and the guilty parties are brought to justice.
In other countries and cultures, that is not the case, and a U.S. business may be asked to pay a “fee” which is really a bribe to an official of a foreign government. That is what the FCPA prohibits, namely: (1) the giving or offering of anything of value, (2) for corrupt purposes, (3) to a foreign official. To be “for corrupt purposes,” the offering is made to induce the governmental official, regardless of rank, to assist the company in obtaining or retaining governmental or nongovernmental business or gaining some advantage in so doing, whether or not that corrupt purpose succeeds.
If you are a business engaging in transactions abroad, you need to be aware of the Foreign Corrupt Practices Act and the restrictions it places on your dealings with foreign officials. The U.S. Department of Justice has an excellent website devoted to FCPA compliance. For other resources, you can find my old paper here, or for a more concise explanation (including some tips for compliance), I would suggest an article written a few years ago by my partner, Seymour J. Mansfield.
It has been said that ignorance of the law is no defense to the violation of the law, so, as the title of Seymour’s article went, “Don’t Mess Around With the Foreign Corrupt Practices Act.”