A Resource Guide to the U.S. Foreign Corrupt Practices Act

chapter 1 Introduction

FCPA

A Resource Guide to the U.S. Foreign Corrupt Practices Act

By the Criminal Division of the U.S. Department of Justice and the Enforcement Division of the U.S. Securities and Exchange Commission

This guide is intended to provide information for businesses and individuals regarding the U.S. Foreign Corrupt Practices Act (FCPA). The guide has been prepared by the staff of the Criminal Division of the U.S. Department of Justice and the Enforcement Division of the U.S. Securities and Exchange Commission. It is non-binding, informal, and summary in nature, and the information contained herein does not constitute rules or regulations. As such, it is not intended to, does not, and may not be relied upon to create any rights, substantive or procedural, that are enforceable at law by any party, in any criminal, civil, or administrative matter. It is not intended to substitute for the advice of legal counsel on specific issues related to the FCPA. It does not in any way limit the enforcement intentions or litigating positions of the U.S. Department of Justice, the U.S. Securities and Exchange Commission, or any other U.S. government agency.

Companies or individuals seeking an opinion concerning specific prospective conduct are encouraged to use the U.S. Department of Justice's opinion procedure discussed in Chapter 9 of this guide.

This guide is United States Government property. It is available to the public free of charge online at criminal/fraud/fcpa and spotlight/fcpa.shtml.

A RESOURCE GUIDE TO THE

U.S. FOREIGN CORRUPT PRACTICES ACT

By the Criminal Division of the U.S. Department of Justice and the Enforcement Division of the U.S. Securities and Exchange Commission

FOREWORD

We are pleased to announce the publication of A Resource Guide to the U.S. Foreign Corrupt Practices Act. The Foreign Corrupt Practices Act (FCPA) is a critically important statute for combating corruption around the globe. Corruption has corrosive effects on democratic institutions, undermining public accountability and diverting public resources from important priorities such as health, education, and infrastructure. When business is won or lost based on how much a company is willing to pay in bribes rather than on the quality of its products and services, law-abiding companies are placed at a competitive disadvantage--and consumers lose. For these and other reasons, enforcing the FCPA is a continuing priority at the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).

The Guide is the product of extensive efforts by experts at DOJ and SEC, and has benefited from valuable input from the Departments of Commerce and State. It endeavors to provide helpful information to enterprises of all shapes and sizes-- from small businesses doing their first transactions abroad to multi-national corporations with subsidiaries around the world. The Guide addresses a wide variety of topics, including who and what is covered by the FCPA's anti-bribery and accounting provisions; the definition of a "foreign official"; what constitute proper and improper gifts, travel and entertainment expenses; the nature of facilitating payments; how successor liability applies in the mergers and acquisitions context; the hallmarks of an effective corporate compliance program; and the different types of civil and criminal resolutions available in the FCPA context. On these and other topics, the Guide takes a multi-faceted approach, setting forth in detail the statutory requirements while also providing insight into DOJ and SEC enforcement practices through hypotheticals, examples of enforcement actions and anonymized declinations, and summaries of applicable case law and DOJ opinion releases.

The Guide is an unprecedented undertaking by DOJ and SEC to provide the public with detailed information about our FCPA enforcement approach and priorities. We are proud of the many lawyers and staff who worked on this project, and hope that it will be a useful reference for companies, individuals, and others interested in our enforcement of the Act.

Lanny A. Breuer Assistant Attorney General Criminal Division Department of Justice

Robert S. Khuzami Director of Enforcement Securities and Exchange Commission

November 14, 2012

CONTENTS

Chapter 1: INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

The Costs of Corruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Historical Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 National Landscape: Interagency Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Department of Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Securities and Exchange Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Law Enforcement Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Departments of Commerce and State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 International Landscape: Global Anti-Corruption Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 OECD Working Group on Bribery and the Anti-Bribery Convention . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 U.N. Convention Against Corruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Other Anti-Corruption Conventions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Chapter 2: THE FCPA: ANTI-BRIBERY PROVISIONS . . . . . . . . . . . . . . . . . . . . . 10

Who Is Covered by the Anti-Bribery Provisions? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Issuers--15 U.S.C. ? 78dd-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Domestic Concerns--15 U.S.C. ? 78dd-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Territorial Jurisdiction--15 U.S.C. ? 78dd-3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

What Jurisdictional Conduct Triggers the Anti-Bribery Provisions? . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 What Is Covered?--The Business Purpose Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 What Does "Corruptly" Mean? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 What Does "Willfully" Mean and When Does It Apply? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 What Does "Anything of Value" Mean? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Gifts, Travel, Entertainment, and Other Things of Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Charitable Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Who Is a Foreign Official? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Department, Agency, or Instrumentality of a Foreign Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Public International Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 How Are Payments to Third Parties Treated? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 What Affirmative Defenses Are Available? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 The Local Law Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Reasonable and Bona Fide Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 What Are Facilitating or Expediting Payments? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Does the FCPA Apply to Cases of Extortion or Duress? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Principles of Corporate Liability for Anti-Bribery Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Parent-Subsidiary Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Successor Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Additional Principles of Criminal Liability for Anti-Bribery Violations: Aiding and Abetting and Conspiracy . . . . 34

Additional Principles of Civil Liability for Anti-Bribery Violations: Aiding and Abetting and Causing . . . . . . . . 34 What Is the Applicable Statute of Limitations? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Statute of Limitations in Criminal Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Statute of Limitations in Civil Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Chapter 3: THE FCPA: ACCOUNTING PROVISIONS . . . . . . . . . . . . . . . . . . . . 38

What Is Covered by the Accounting Provisions? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Books and Records Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Internal Controls Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Potential Reporting and Anti-Fraud Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 What Are Management's Other Obligations? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Who Is Covered by the Accounting Provisions? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Civil Liability for Issuers, Subsidiaries, and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Civil Liability for Individuals and Other Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Criminal Liability for Accounting Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Conspiracy and Aiding and Abetting Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Auditor Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Chapter 4: OTHER RELATED U.S. LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Travel Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Money Laundering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Mail and Wire Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Certification and Reporting Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Tax Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Chapter 5: GUIDING PRINCIPLES OF ENFORCEMENT . . . . . . . . . . . . . . . . . . . 52

What Does DOJ Consider When Deciding Whether to Open an Investigation or Bring Charges? . . . . . . . . . 52 DOJ Principles of Federal Prosecution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 DOJ Principles of Federal Prosecution of Business Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

What Does SEC Consider When Deciding Whether to Open an Investigation or Bring Charges? . . . . . . . . . 53 Self-Reporting, Cooperation, and Remedial Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Criminal Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Civil Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Corporate Compliance Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Hallmarks of Effective Compliance Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Commitment from Senior Management and a Clearly Articulated Policy Against Corruption . . . . . . . . . . . . . . 57 Code of Conduct and Compliance Policies and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Oversight, Autonomy, and Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Training and Continuing Advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Incentives and Disciplinary Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Third-Party Due Diligence and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Confidential Reporting and Internal Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Continuous Improvement: Periodic Testing and Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Mergers and Acquisitions: Pre-Acquisition Due Diligence and Post-Acquisition Integration . . . . . . . . . . . . . . . 62 Other Guidance on Compliance and International Best Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Chapter 6: FCPA PENALTIES, SANCTIONS, AND REMEDIES . . . . . . . . . . . . . . . . 68

What Are the Potential Consequences for Violations of the FCPA? . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Criminal Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

U.S. Sentencing Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Civil Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Collateral Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Debarment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Cross-Debarment by Multilateral Development Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Loss of Export Privileges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 When Is a Compliance Monitor or Independent Consultant Appropriate? . . . . . . . . . . . . . . . . . . . . . . . 71

Chapter 7: RESOLUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

What Are the Different Types of Resolutions with DOJ? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Criminal Complaints, Informations, and Indictments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Plea Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Deferred Prosecution Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Non-Prosecution Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Declinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

What Are the Different Types of Resolutions with SEC? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Civil Injunctive Actions and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Civil Administrative Actions and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Deferred Prosecution Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Non-Prosecution Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Termination Letters and Declinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

What Are Some Examples of Past Declinations by DOJ and SEC? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Chapter 8: WHISTLEBLOWER PROVISIONS AND PROTECTIONS . . . . . . . . . . . . . 82

Chapter 9: DOJ OPINION PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

Chapter 10: CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

APPENDIX: THE FOREIGN CORRUPT PRACTICES ACT . . . . . . . . . . . . . . . . . . . 92

APPENDIX: ENDNOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download