United States

What does it consist of?

The FCPA was issued in 1977, in the United States, with the objective of setting rules for companies to act ethically in foreign contracts, prohibiting bribery in both U.S. companies and any of their subsidiaries, regardless of where their operations and employees are located.
Since the Sarbanes-Oxley Act (SOX) was passed in 2001, FCPA compliance has become increasingly important because of the relationship between the two laws. SOX requires companies to comply fully with accounting records, which could not be achieved if corrupt acts had been committed.

Risk areas for companies to address:

  • Gifts
  • Food
  • Entertainment
  • Customer travel
  • Employee expense reimbursements
  • Use of cash, such as out-of-country payments
  • Political, charitable and sponsorship donations
  • Solicitation and extortion payments
  • Government sales and bids outside the U.S.
  • Interaction with non-U.S. government regulators (customs, visa issuing agencies, labor authorities, tax authorities, etc.).
  • Non-U.S. sponsors who are required to conduct business in certain countries.
  • Partnerships with local companies or using local companies as suppliers or service providers.
  • Doing business in countries with a high degree of state involvement in the economy/state-owned or controlled enterprises.

What a compliance program must address to meet requirements:

FCPA
  • Corruption risk assessments.
  • Third-party due diligence
  • Monitoring and updating of the compliance program.
  • Training and certification.
  • Whistleblower channel, ensuring anonymity and protection from possible retaliation.
  • Internal ethics and compliance investigations.
  • Disciplinary measures to employees for non-compliance or violations of the rules.
  • Due diligence in mergers and acquisitions

Consequences of Non-Compliance with the FCPA

  • Heavy financial penalties
  • Reputational damage
  • Judicial supervision of the company, owners, or directors of the company.
  • A court order for liquidation.
  • Costly investigations by U.S. authorities such as the
  • Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).
  • Cancellation or delay of important purchase and sale transactions and their associated costs.
  • Collateral litigation
  • Loss of business with the U.S. Government.