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International Business and FCPA Compliance – Part 2

Surendran K. Pattel Attorney & Counselor at Law, PKS Law Firm, PLLC

Surendran K. Pattel
Attorney & Counselor at Law, PKS Law Firm, PLLC

Question: What are the anti-bribery provisions of the FCPA?
Answer: It is unlawful under the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) to offer, pay, promise to pay, or authorize payment of money, or to offer, give, or promise to give anything of value to a foreign official in an effort to obtain a business or secure a questionable business advantage.
Anti-bribery provisions can apply both within the United States and abroad. While the original FCPA anti-bribery rules applied only to U.S. nationals and to U.S. firms and issuers, a 1998 amendment expanded the scope and application of FCPA’s anti-bribery provisions. As a result, anti-bribery provisions now apply not only to an act that promotes a foreign bribery scheme that occurs in the United States, but also to any act that utilizes any sort of interstate communication. It is irrelevant weather such communication occurred intrastate; the acts of U.S. companies and individuals are subject to the FCPA even if they have acted outside the United states.
In order to violate FCPA anti-bribery rules, a payment must be made “corruptly.” This means that there must be wrongful intent in efforts to influence the recipient. A violation may be cited even if no bribe is paid, and the identity of the recipient remains unknown. It is not important, either, whether the company receives the benefit of a corrupt payment. It is the intent that is important.
Improper payments may be anything of value, not just cash. These can be in the form of travel or entertainment expenses, or expensive gifts of a non-monetary nature. Foreign charitable contributions are allowed as long as they are not meant to influence a foreign official. Whatever the nature of the payment, be it direct or indirect, it is illegal if it is made for the purpose of influencing a foreign official. Payments to foreign officials through third parties or intermediaries, or payments to friends or family members, can be illegal if they are made with corrupt intent.
There are possible defenses under FCPA anti-bribery provisions. One deals with whether transactions or payments comply with the local laws of the foreign country at issue. The other is rooted in determining whether an exchange of money is a legitimate and bona fide business expense. Payments made for routine nondiscretionary governmental actions or payments made to protect against imminent danger of physical harm do not violate the FCPA.
Since there is no specific statute of limitations in the anti-bribery provisions, a general five-year limitation period applies to what are viewed as serious violations. However, there are circumstances in which the limitations period can be extended; for instance, when it is determined that a conspiracy exists or simply to obtain evidence from foreign companies.
In the next column we will look at FCPA accounting provisions.
Disclaimer: Information in this column is meant to be general and informational; it is not intended as legal advice. Consult an attorney regarding your personal situation before you take any action that has legal consequences.
BIO: Surendran K. Pattel is an Indian-born attorney in private practice in the Houston area. He is the founder of PKS Law Firm, PLLC. He is licensed to practice in Texas, United States District Court Southern District of Texas, and in India. To contact please email: adv.surendran@gmail.com

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