Are you Compliant with the Foreign Corrupt Practices Act (FCPA)?

The government’s broad interpretation of the terms of the Foreign Corrupt Practices Act (FCPA) makes compliance with the law difficult, as outlined in this Risk Management article. The FCPA prohibits U.S.-based individuals and entities from directly or indirectly making payments or offering anything of value to a foreign official to obtain a business advantage.

The terms include:

• “Anything of value”- This could mean anything from a gift to a job offer.
• A “foreign official” – This could be an employee, agent or official of any foreign government entity or government-run company.
• A “business advantage” – This could mean obtaining or retaining any business, including directing business to a third party. Payments or offers made through third-party representatives are also violations.

The U.S. government has been strictly enforcing the FCPA over these past couple of years. Today’s General Counsel wrote about 97 companies with open disclosed Foreign Corrupt Practices Act-related investigations at the end of 2022. Risk Management mentions other FCPA actions of 2023 involving companies such as Philips, Frank’s, Ericsson and Flutter.

The recent increased enforcement of the FCPA calls for a closer look at the practices your company might have with foreign officials.  Here are three things to keep in mind:

1. Ensure that you are doing the proper due diligence of your third-party representatives.
2. Implement all of the remedial measures agreed to in a settlement or as part of a compliance audit or other review.
3. Beware that the FCPA can be enforced by the Securities and Exchange Commission (SEC) or the Department of Justice DOJ depending on who has jurisdiction.