In many parts of the world, cash payments to government officials are not only routine, but required to do business. While some foreign governments may turn a blind eye to such practices, the United States does not. Under the Foreign Corrupt Practices Act (FCPA), both U.S. and non-U.S. persons and entities may incur civil and criminal liability, even for actions that take place outside U.S. territory. To ensure compliance with the law, anyone doing business overseas should be familiar with the provisions of FCPA.
FCPA prohibits giving, attempting to give, or offering to give anything of value to foreign officials, directly or through intermediaries, for the purpose of influencing official acts and decisions or securing "any improper advantage." FCPA applies to U.S. persons and entities whether acting inside or outside the U.S., and to non-U.S. persons and entities acting while on U.S. soil. In short, FCPA applies to virtually everyone, everywhere, except for non-U.S. persons and entities acting entirely outside U.S. territory.
FCPA's definition of "foreign official" is equally broad, and includes officers and employees of foreign governments and their departments and agencies, foreign political parties, public international organizations (such as the United Nations) and any foreign government "instrumentality," such as state-owned private companies. Thus, FCPA may apply to business deals between two private companies, even though no foreign government or government agency is involved.
FCPA provides an exception for payments made to facilitate or expedite "routine governmental action," which include a wide range of common activities such as the issuance of permits, licenses, visas, and work orders, police protection, mail pick-up and delivery, and so forth. FCPA also exempts payments that are lawful under the laws of the foreign government, and, in certain circumstances, payment of "bona fide expenditures" such as travel and lodging expenses.
The criminal penalty for an FCPA violation is a fine of up to $2 million for entities, and a fine of up to $100,000 and/or up to five years in prison for persons. Companies are prohibited from paying the fines imposed on their officers, directors, employees, agents, or stockholders. In addition to these criminal penalties, FCPA allows for a civil penalty of up to $10,000 upon companies and persons, to be imposed in a civil action brought by the U.S. Attorney General. The Attorney General also has the right to seek injunctive relief to prevent ongoing FCPA violations.
Determining the exact boundaries of who is a "foreign official," what is "routine governmental action," and which companies are "instrumentalities," can be difficult. Fortunately, the U.S. Attorney General has established an opinion procedure, by which U.S. persons and companies can request an opinion from the Attorney General as to whether a proposed course of action would violate FCPA. If there is any concern that a particular prospective payment or action may violate FCPA, experienced counsel should be engaged to advise and request an Attorney General opinion if necessary.