FCPA

How does FCPA define "anything of value"

= any benefit

Potential Benefits of Bribary

Assume a country allows its firms to bribe foreign officials Assume a company allows it employees to bribe foreign officials

When Are FCPA Foreign Subsidiaries Considered Issuer?

Any issuer or any domestic concern - or for any officer, director, employee, or agent

What are the three elements of the foreign corrupt practices act?

1. Attain it was something of value is offered 2. To a foreign official 3. Corrupt Purpose

Whom Does The FCPA Apply?

1. Issuer 2. Domestic Concern: 3. Person

Examples of indirect payments under FCPA

Agents or consultants - Distributors - Joint venture partners - Lawyers/accountants

FCPA Facilitating Payments

Exception under FCPA Purpose of payment must be to expedite or secure performance of "routine governmental action" by a foreign official Action must be "ordinarily and commonly performed" by the foreign official (for example, stamping passports) Does not include decision by foreign official whether, or on what terms, to award new business to or to continue business with a particular party • BUT some companies no longer allow these types of payments • AND facilitating payments are not always permitted under local foreign law

How does FCPA define foreign official?

Foreign government employees or officials - Political officials or members of their staffs - Employees of public international organizations - Candidates for political office

What Is an "Unfair Business Advantage" under FCPA?

In order to assist such issuer in obtaining or retaining business for or with, or directing business to, any person Focus is on gaining a competitive advantage rather than directly securing a particular contract

Does a payment need to be made under FCPA? Why?

No • Offers, promises, or authorizations to make prohibited payments are just as illegal as actually making a prohibited payment • The simple offer of a payment is enough to create liability

Elements of an Acceptable FCPA Compliance Program

Policy and written compliance code • Commitment from the top • Compliance standards and procedures covering gifts, travel and entertainment, political and charitable contributions, etc. . . • Annual risk assessment • Review and update of standards and procedures on an at least annual basis Senior person responsible for oversight • Internal controls for accurate books and records • Communication to employees of policies, standards and procedures • Effective system to provide advice on an urgent basis • Appropriate disciplinary procedures for violations • Appropriate due diligence for retention of agents and business partners

FCPA Books and Records Provisions

Requires SEC-registered or reporting issuers to make and maintain accurate books and records and to implement adequate internal accounting controls Civil Rights Mainly

OECD Anti-Bribery Convention

Requires signatories to adopt anti-bribery legislation - Does not specify penalties - Does not require all countries to join - No full-time administrative body with enforcement powers. - Uses a mutual monitoring method for implementation under a peer-review model.

Possible Collateral Consequences of FCPA Violations

Termination of government licenses • Debarment from government contracting programs • Disgorgement of a company's profits on contracts secured with improper payments • Shareholder litigation • Foreign enforcement actions • Appointment of independent compliance monitors

Costs of Bribery

To a country Potential Loss of FDI, loss of confidence of citizenry, increased political instability, inefficient allocation of resources to fuel growth. For a company operating in a corrupt country Higher costs, fewer market opportunities

What is the DOJ Advisory Opinion?

Where a company is unsure whether an act would constitute an FCPA violation, the Act allows a company to submit an inquiry to DOJ concerning the propriety of the conduct Must respond within 30 days

How is knowledge established under FCPA?

a person is aware of a high probability of the existence of such circumstance, unless the person actually believes that such circumstance does not exist

What is corrupt intent und FCPA?

any person, while knowing that all or a portion of such money or thing of value will be offered to foreign official directly or indirectly "Knowing" includes having a firm belief that something will happen