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The Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act

De Minimis Payments. Though the FCPA has no exception for providing de minimis gifts or hospitality to a foreign official, in practice the government does not bring enforcement actions in such cases. If such payments are discovered during a larger investigation, however, they will increase the company’s penalty exposure and provide the government additional leverage in the negotiation of a settlement. Accordingly, company compliance officers need to ensure that employees understand that they violate the FCPA if they have a “corrupt intent” – no matter the value of a gift or hospitality expense. Companies should have internal controls to track and review gift, travel and hospitality expenses – even those of de minimis value – of employees who potentially deal with foreign officials. The FCPA requires that the books and records of the company be accurate. That said, the 2012 Resource Guide notes that “it is difficult to envision any scenario in which the provision of cups of coffee, taxi fare, or company promotional items of nominal value would ever evidence corrupt intent.“
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The Foreign Corrupt Practices Act Review Procedure: A Quest for Clarity

The Foreign Corrupt Practices Act Review Procedure: A Quest for Clarity

Propisions of the Foreign Corrupt Practices Act, II THE NEW REVIEW PROCEDURE UNDER THE FOREIGN CORRUPT PRACTICEs ACT 3, 4-5 (R. Foreign Corrupt Practices Act Review Pr[r]

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USING FOREIGN RELATIONS LAW TO LIMIT EXTRATERRITORIAL APPLICATION OF THE FOREIGN CORRUPT PRACTICES ACT

USING FOREIGN RELATIONS LAW TO LIMIT EXTRATERRITORIAL APPLICATION OF THE FOREIGN CORRUPT PRACTICES ACT

95. See, e.g., Cortney C. Thomas, Note, The Foreign Corrupt Practices Act: A Decade of Rapid Expansion Explained, Defended, and Justified, 29 R EV . L ITIG . 439, 441–42 & n.9 (2010) (explaining the cost of lawsuits to companies and the possibility of lost revenues from damaged reputations). In addition to these costs, companies found liable under the FCPA may also be liable under other criminal statutes, such as the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961–1968 (2006 & Supp. IV 2011)) that use an FCPA violation as a predicate offense, Paul D. Carrington, Enforcing International Corrupt Practices Law, 32 M ICH . J. I NT ’ L L. 129, 134 (2010); see also, e.g., Dooley v. United Techs. Corp., 803 F. Supp. 428, 438 (D.D.C. 1992) (“The Travel Act[, 18 U.S.C. § 1952 (1988 & Supp. III 1992), is] . . . one of the enumerated predicate acts of racketeering under RICO . . . . Dooley charges that the British and Saudi defendants committed Travel Act violations because their actions violate the Foreign Corrupt Practices Act. . . . Thus, the success of plaintiff Dooley’s RICO- related claim that the . . . defendants committed Travel Act violations, hinges on whether these defendants violated the FCPA.”). Some have argued that this application conflates the meaning of both statutes. See, e.g., Raymond J. Dowd, Note, Civil RICO Misread: The Judicial Repeal of the 1988 Amendments to the Foreign Corrupt Practices Act, 14 F ORDHAM I NT ’ L L.J. 946, 947 (1990) (“This Note argues that civil RICO should not provide a remedy for a party claiming injury due to the commercial bribery of a foreign official.”).
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The Bribery Act 2010: raising the bar above the US Foreign Corrupt Practices Act

The Bribery Act 2010: raising the bar above the US Foreign Corrupt Practices Act

The UK Bribery Act 2010 (the Bribery Act) has been described as the toughest anti-corruption legislation in the world. It was enacted in April 2010 and it will come into force in April 2011. Until now, the US Foreign Corrupt Practices Act (FCPA) has been, in practice, the predominant force in setting compliance standards for international businesses, but the Bribery Act has raised the bar in this respect. Businesses with a presence in the United Kingdom must now get to grips with the offences prohibited by the Bribery Act and consider what changes to their policies, procedures and training programmes may be required. Companies and their officers will be anxious to avoid the reputational risk, criminal liability and commercial cost that may flow from bribery and corruption enforcement action in the United Kingdom. Of particular concern is the risk of being barred from tendering for government contracts and the potential for alienating future investors. In addition, executives and employees risk significant prison terms for breach of the Bribery Act’s provisions.
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Accounting for Corporate Misconduct Abroad: The Foreign Corrupt Practices Act of 1977

Accounting for Corporate Misconduct Abroad: The Foreign Corrupt Practices Act of 1977

Use of the securities laws to regulate foreign bribery entered a new phase with the passage of the Foreign Corrupt Practices Act of 1977 (FCPA).I Prior to the enact[r]

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Following on the Foreign Corrupt Practices Act: The Dynamic Shareholder Derivative Suit

Following on the Foreign Corrupt Practices Act: The Dynamic Shareholder Derivative Suit

Corporations that have allegedly violated the Foreign Corrupt Practices Act (FCPA) increasingly face a new threat of liability: cases brought by private plaintiffs in follow-on derivative suits. These derivative suits for breaches of fiduciary duty focus on whether directors provided the necessary oversight through compliance systems designed to detect and prevent FCPA violations. The demand requirement, a procedural hurdle of derivative suits, has stymied plaintiffs that are unable to show that directors cannot disinterestedly assess whether to pursue a claim for violations. This Note proposes a framework that systematizes the factual scenarios under which the demand requirement could be excused. Using other instances of regulatory violations as a lens, courts can infer that directors knew of FCPA violations based on patterns of bribes and the importance of bribery to the overall business of the corporation. Only plaintiffs that have utilized procedural devices to inspect corporate books and records, however, can expect courts to reach this inference of director knowledge. Despite being much maligned, the follow-on derivative suit may actually clarify the duties of directors in FCPA compliance and advance the corporate governance reforms of corporations, separately from the deterrent effect of government enforcement.
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ACFE Foreign Corrupt Practices Act: Lessons Learned June 15, 2011

ACFE Foreign Corrupt Practices Act: Lessons Learned June 15, 2011

The Foreign Corrupt Practices Act (FCPA), was created in 1977 as a result of over 400 U.S. companies admitting to making questionable or illegal payments to foreign government officials, politicians, and political parties. Congress enacted the FCPA in an attempt to stop bribery of foreign officials and restore the integrity of American businesses.

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China's Anti-Corruption Crackdown and the Foreign Corrupt Practices Act

China's Anti-Corruption Crackdown and the Foreign Corrupt Practices Act

China’s highly publicized crackdown on corruption may affect the type and number of cases in China that arise under the Foreign Corrupt Practices Act (“FCPA”), but it should not be assumed that the crackdown will necessarily lead to fewer FCPA prosecutions. Although there is some overlap of the goals of China’s corruption crackdown and the goals of the FCPA, China’s crack- down also serves important goals of the ruling Communist Party. The main goal of the current crackdown is to reinforce the Party’s power by targeting enemies and rivals of the current leadership. The crackdown is not aimed at prohibiting bribes given to foreign officials for the purpose of obtaining busi- ness; however, the FCPA is aimed at proscribing these types of bribes. As a result, while the crackdown may deter some types of FCPA cases from arising in China, other types of cases will be unaffected or may even increase.
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Honest or Excluded? A Gender Analysis of Foreign Corrupt Practices Act and Chicago City Council Defendants

Honest or Excluded? A Gender Analysis of Foreign Corrupt Practices Act and Chicago City Council Defendants

In the context of the Chicago City Council and the cohort of individuals with potential exposure under the Foreign Corrupt Practices Act, contexts in which homophily and patronage networks have long favored men, it seems unrealistic to rely on women’s mere presence in these cohorts alone to act as a sanitizing force. Rather, a more effective anti-corruption policy is one that encourages professional advancement on the basis of merit, not gender, patronage or homophily, and one that encourages accountability, both internally and through legal action.
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How Much is an Ambassadorship? And the Tale of How Watergate Led to a Strong Foreign Corrupt Practices Act and a Weak Federal Election Campaign Act

How Much is an Ambassadorship? And the Tale of How Watergate Led to a Strong Foreign Corrupt Practices Act and a Weak Federal Election Campaign Act

170 Laura E. Longobardi, Reviewing the Situation: What is to Be Done with the Foreign Corrupt Practices Act?, 20 V AND . J. T RANSNAT ’ L L. 431, 433 (1987) (internal citations omitted); see also Bixby, supra note 168,  at  93  (“These  revelations  caused  the  resignation  of  many  important  officials  in   Japan, the Netherlands, Italy, and other countries, as well as considerable public outcry in the United States.”);; Mark Levin, Lighting Up the Foreign Corrupt Practices Act: A Case Study of U.S. Tobacco Industry Political Influence Buying in Japan, 34 N.C. J. I NT ’ L L. & C OM . R EG . 471, 473 (2009) (stating that Congress enacted the far-reaching Foreign Corrupt Practices Act in the midst of political reforms that emerged from the Watergate scandal).
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Incentivizing Corporate America to Eradicate Transnational Bribery Worldwide: Federal Transparency and Voluntary Disclosure under the Foreign Corrupt Practices Act

Incentivizing Corporate America to Eradicate Transnational Bribery Worldwide: Federal Transparency and Voluntary Disclosure under the Foreign Corrupt Practices Act

http://www.imagesensing.com/company/news-and-events/140908.html. This same weakness occurs with the information on declinations set forth by the DOJ and the SEC in their 2012 FCPA Resource Guide, which provides six anonymized examples of FCPA matters in which the government declined to take enforcement action. All six examples share the following five elements: (1) the company self-reported the potential violation to the government; (2) the company undertook an internal investigation; (3) the company took immediate action to halt the wrongdoing; (4) the company cooperated fully with the government; and (5) the company in some way strengthened compliance, either through remedial compliance training or through specific upgrades to its current compliance program. While this information is helpful, it is, again, impossible for one to discern how the government weighted each individual element mentioned in its decision-making process. See FCPA R ESOURCE G UIDE , supra note 27, at 77–79. 244. See, e.g., Judge Stanley Sporkin, Speech at the ABA National Institute on the Foreign Corrupt Practices Act: Origins of the FCPA (Oct. 16, 2006), available at http://www.nacdl.org/WorkArea/ DownloadAsset.aspx?id=21764&libID (proposing an FCPA “immunization-inoculation program” that would “serve the dual purpose of: (1) creating suitable incentives to compliance-minded companies to adopt and maintain high ethical standards in the conduct of their business; and (2) reducing the case load and investigative burden of governmental agencies that enforce the FCPA while reassuring regulators that companies are taking active steps to limit corruption in their foreign contracting and other activities”); James R. Doty, Toward a Reg. FCPA: A Modest Proposal for Change in Administering the Foreign Corrupt Practices Act, 62 B US . L. 1233, 1233–34 (2007) (former SEC General Counsel advocating for a “Reg. FCPA” and a “new approach to administration of the FCPA, one that would provide a measure of regulatory certainty to public companies regarding the elements of good faith compliance. The policy issue before us in the FCPA area is not whether the cases that are being charged and prosecuted can be brought consistent with the standards of the statute; rather, the issue is whether our law enforcement agencies should be left to devise their own, case-by-case interpretation of the FCPA, without the rigor of greater regulatory clarity and the benefits of more consistent administrative interpretation” (emphasis added)); Stephen A. Fraser, Introduction to Placing the Foreign Corrupt Practices Act on the Tracks in the Race for Amnesty, 90 T EX . L. R EV . 1009 (2012) (suggesting that the government implement an FCPA
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The Bribery Act 2010 Raising the Bar above the US Foreign Corrupt Practices Act

The Bribery Act 2010 Raising the Bar above the US Foreign Corrupt Practices Act

The UK Bribery Act 2010 (“Bribery Act”) has been described as the toughest anti-corruption legislation in the world. It was enacted in April 2010 and will come into force in April 2011. Until now, the US Foreign Corrupt Practices Act (FCPA) has been, in practice, the predominant force in setting compliance standards for international businesses, but the Bribery Act has raised the bar in this respect. Businesses with a presence in the United Kingdom must now get to grips with the offences prohibited by the Bribery Act and consider what changes to their policies, procedures and training programmes may be required. Companies and their officers will be anxious to avoid the reputational risk, criminal liability and commercial cost that may flow from bribery and corruption enforcement action in the United Kingdom. Of particular concern is the risk of being barred from tendering for government contracts and the potential for alienating future investors. In addition, executives and employees risk significant prison terms for breach of the Bribery Act’s provisions.
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DEFERRED PROSECUTION UNDER THE FOREIGN CORRUPT PRACTICES ACT. By: Sue Snyder, Partner, and Kimberly Connors, Associate. Jackson Walker, L.L.P.

DEFERRED PROSECUTION UNDER THE FOREIGN CORRUPT PRACTICES ACT. By: Sue Snyder, Partner, and Kimberly Connors, Associate. Jackson Walker, L.L.P.

In 1977, in response to findings by the Securities and Exchange Commission (“SEC”) that U.S. companies were paying out hundreds of millions in foreign bribes, 1 Congress passed the Foreign Corrupt Practices Act (the “FCPA”). 2 The FCPA bars companies within the United States from bribing foreign officials. Companies found to have violated the FCPA may be fined up to $2 million and be subject to a civil penalty of up to $10,000 per incident. 3 Officers, directors, employees, and agents of these companies who “willfully violate” the FCPA are also subject to fines up to $100,000, a civil penalty of up to $10,000, and up to five years in prison per incident. 4 Because these amounts are assessed per incident, a single case may include fines well in excess of $2 million. Recently, for example, Willbros Group, Inc. agreed to pay a $22 million fine for violations of the FCPA. 5 Further, jail terms, including those exceeding five years, have been imposed for individual employees found to have violated the FCPA. 6
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NEW GUIDANCE ON THE FOREIGN CORRUPT PRACTICES ACT

NEW GUIDANCE ON THE FOREIGN CORRUPT PRACTICES ACT

The Jackson Lewis Corporate Governance and Internal Investigations Practice Group, led by partners Rich Cino (Morristown, NJ) and David Jimenez (Hartford, CT), provides advice and counsel on the development, design, and implementation of organizational and corporate compliance programs including codes of conduct, internal reporting mechanisms, internal controls, and corporate investigations that correspond to Foreign Corrupt Practices Act and U.K. Bribery Act requirements. Should litigation ensue, we also defend employers on all types of related civil litigation including whistleblower claims arising from the Sarbanes-Oxley Act, the False Claims Act, and more recently, the Dodd-Frank Act of 2010. Additionally, we advise and defend organizations faced with high-stakes regulatory investigations and enforcement actions. In cross-border investigations and other matters, the Group works closely with our International Employment Law Group, which includes attorneys with substantial in-house experience for major global employers managing workplace and compliance issues in more than 60 countries. To the extent local labor/employment law matters arise outside the U.S., we work in tandem with our international alliance L&E Global, the only global alliance comprised of labor and employment law boutiques, as well as other top law practices throughout the world.
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The Foreign Corrupt Practices Act:  A New Approach to the Reasonable and Bona Fide Expenditure Defense

The Foreign Corrupt Practices Act: A New Approach to the Reasonable and Bona Fide Expenditure Defense

The FCPA’s reasonable and bona fide affirmative defense promulgates a standard by which companies seeking to pay promotional expenses may determine whether their conduct violates the anti-bribery provisions. Standard-based approaches, however, offer no concrete parameters, making it difficult for companies to be assured they are correctly applying the law. Further, the DOJ Opinion Procedure Releases are of limited utility because the opinion applies only to the specific conduct described therein and may not be used for precedent. Finally, without clear guidelines, penalties for violations lack consistency as demonstrated in the UTSI and Lucent cases. In fact, the Resource Guide does not provide novel insight into the Act. Instead, it appears to be a compilation of various enforcement actions and a summary of advice the legal community already deduced. These problems all illustrate the need for a rule-based FCPA, particularly regarding the reasonable and bona fide affirmative defense.
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The Foreign Corrupt Practices Act Turns 40: "Reflections on Walmart's Enhanced Ethics & Compliance Program"

The Foreign Corrupt Practices Act Turns 40: "Reflections on Walmart's Enhanced Ethics & Compliance Program"

But in an increasingly complex business environment, even people who want to do the right thing don’t always know what actions to take or avoid. As an example, Walmart operates stores in twenty-eight countries and ecommerce websites in eleven. Through these outlets we provide a variety of goods and services to millions of customers each week. To manage these businesses well, we must educate our employees on the best way to fulfill their responsibilities. We also need to provide them with a way to ask questions. Even with excellent training, not every employee will handle each situation the right way. Accordingly, we must have processes to monitor our performance and to provide correction where needed. Finally, we must provide mecha- nisms for allegations of wrongdoing to be appropriately reported, in- vestigated and resolved. Only through these types of processes can the cultural desire to act appropriately be realized across a wide group.
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The Potent and Broad Ranging Implications of the Accounting and Record Keeping Provisions of the Foreign Corrupt Practices Act

The Potent and Broad Ranging Implications of the Accounting and Record Keeping Provisions of the Foreign Corrupt Practices Act

8 The second mechanism is comprised of a set of provisions known as the "accounting and record-keeping provisions."' 9 Through the accounting and record-keeping provisions, the FCPA plac[r]

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SEC and the Foreign Corrupt Practices Act: Fighting Global Corruption Is Not Part of the SEC's Mission

SEC and the Foreign Corrupt Practices Act: Fighting Global Corruption Is Not Part of the SEC's Mission

74 The Enforcement Division routinely brought actions for violations of the accounting provisions, but only a very few of them involved alleged violations of the anti[r]

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Foreign Corrupt Practices Act Alert

Foreign Corrupt Practices Act Alert

The Guide provides examples of “larger or more extravagant” gifts, travel and entertainment that are more likely to demonstrate corrupt intent. For example, the Guide cites impermissible scenarios in which government officials were paid $500 to $1000 per diems in addition to meal, lodging, and transportation expenses on primarily sightseeing trips. 9 In contrast, the Guide describes as permissible a bar tab for a dozen current and prospective customers (including government customers), a crystal vase for a wedding gift, and moderately priced entertainment expenses (such as baseball and theater tickets) on a legitimate training trip. These are distinguished from an all-expenses-paid trip to Las Vegas for executives and spouses without any business purpose. 10
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The Foreign Corrupt Practices Act: Imposing an American Definition of Corruption on Global Markets

The Foreign Corrupt Practices Act: Imposing an American Definition of Corruption on Global Markets

more nuanced approach, suggesting that U.S. courts should defer to another jurisdiction with a conflicting antibribery regime. Nevertheless, because this is only one of many factors that courts should consider when deciding whether to allow an extraterritorial FCPA prosecution, courts may lessen the weight that they give to this factor where a foreign jurisdiction enacts a conflicting antibribery law but underenforces it. Given the com- plex problems that regulating foreign bribery creates, the best approach to interest balancing in this context would consider both (a) the degree of conflict that a foreign law presents on its face, and (b) the level of enforce- ment as a proxy for the degree of actual conflict with the FCPA.
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