An Introduction to federal criminal charges relating to the Foreign Corrupt Practices Act (FCPA).
Understanding Federal Criminal Charges Under the Foreign Corrupt Practices Act (FCPA)
The Foreign Corrupt Practices Act (FCPA) is a cornerstone of U.S. anti-corruption enforcement, aimed at preventing American companies and individuals from engaging in bribery and unethical conduct overseas. Enacted in 1977 and enforced by both the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), the FCPA is a critical tool in promoting transparency and accountability in international business.
Overview of the FCPA
The FCPA contains two primary provisions:
- The Anti-Bribery Provisions
These prohibit U.S. persons and businesses, foreign companies listed on U.S. stock exchanges, and certain foreign persons acting while in the U.S. from:- Offering, paying, or promising to pay money or anything of value
- To foreign officials
- For the purpose of influencing official action or securing an improper advantage.
- The Accounting Provisions
These require publicly traded companies to:- Keep accurate books and records that fairly reflect transactions
- Maintain a system of internal accounting controls to prevent and detect bribery.
Who Can Be Charged?
Federal criminal charges under the FCPA can be brought against:
- U.S. citizens and residents
- U.S. corporations and their employees
- Foreign firms and individuals if they take any act in furtherance of a corrupt payment while in the U.S.
- Officers, directors, employees, agents, or stockholders acting on behalf of a covered company
Notably, individuals and corporations can be held liable for the acts of intermediaries, such as consultants or joint venture partners.
Penalties for Violations
Violations of the FCPA can lead to severe criminal and civil penalties, including:
- For Corporations:
- Fines up to $2 million per violation under the anti-bribery provisions
- Additional penalties under the Alternative Fines Act, which can increase fines to twice the gain obtained or loss suffered
- For Individuals:
- Fines up to $250,000 per violation
- Up to five years in prison for anti-bribery violations
- Up to 20 years in prison for accounting violations
- Civil Penalties:
- Imposed by the SEC, including disgorgement of profits and civil fines
Recent Enforcement Trends
Federal prosecutors have increasingly targeted high-profile FCPA cases, often working with international counterparts. Recent years have seen major settlements involving Fortune 500 companies across industries such as oil and gas, pharmaceuticals, and technology.
In addition to enforcement actions, the DOJ has emphasized corporate compliance programs. Companies that self-disclose, cooperate with investigations, and remediate misconduct may be eligible for reduced penalties under the DOJ’s Corporate Enforcement Policy.
Conclusion
The FCPA remains a powerful tool in the fight against global corruption. Its broad reach and strict penalties reflect the U.S. government’s commitment to ethical business conduct worldwide. As enforcement continues to evolve, companies operating internationally must remain vigilant in maintaining robust compliance systems, training personnel, and conducting due diligence to avoid costly legal repercussions.
Matthew Galluzzo is a former Manhattan prosecutor and experienced federal criminal defense attorney. He has significant experience representing foreign citizens before American courts; indeed, he was knighted by the French government for his success in representing and defending French citizens. If you or a loved one have been accused of violating the FCPA, you should strongly consider contacting him to discuss his legal services.