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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 www.justice.gov/
criminal/fraud/fcpa and www.sec.gov/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
Corporate bribery is bad business. In our free market system it is basic that the
sale of products should take place on the basis of price, quality, and service.
Corporate bribery is fundamentally destructive of this basic tenet. Corporate
bribery of foreign officials takes place primarily to assist corporations in gaining
business. Thus foreign corporate bribery affects the very stability of overseas
business. Foreign corporate bribes also affect our domestic competitive climate
when domestic firms engage in such practices as a substitute for healthy competition
for foreign business. 1 —United States Senate, 1977

chapter 1
Introduction
INTRODUCTION
Congress enacted the U.S. Foreign Corrupt Practices Act (FCPA or the Act) in
1977 in response to revelations of widespread bribery of foreign officials by U.S.
companies. The Act was intended to halt those corrupt practices, create a level
playing field for honest businesses, and restore public confidence in the integrity
of the marketplace. 2
The FCPA contains both anti-bribery and accounting
provisions. The anti-bribery provisions prohibit U.S. persons
and businesses (domestic concerns), U.S. and foreign
public companies listed on stock exchanges in the United
States or which are required to file periodic reports with
the Securities and Exchange Commission (issuers), and
certain foreign persons and businesses acting while in the
territory of the United States (territorial jurisdiction) from
making corrupt payments to foreign officials to obtain or
retain business. The accounting provisions require issuers
to make and keep accurate books and records and to devise
and maintain an adequate system of internal accounting
controls. The accounting provisions also prohibit individuals
and businesses from knowingly falsifying books and
records or knowingly circumventing or failing to implement
a system of internal controls.
The Department of Justice (DOJ) and the
Securities and Exchange Commission (SEC) share FCPA
enforcement authority and are committed to fighting foreign
bribery through robust enforcement. An important
component of this effort is education, and this resource
guide, prepared by DOJ and SEC staff, aims to provide
businesses and individuals with information to help them
abide by the law, detect and prevent FCPA violations, and
implement effective compliance programs.
The Costs of Corruption
Corruption is a global problem. In the three decades
since Congress enacted the FCPA, the extent of corporate
bribery has become clearer and its ramifications in a transnational
economy starker. Corruption impedes economic
growth by diverting public resources from important priorities
such as health, education, and infrastructure. It
undermines democratic values and public accountability
and weakens the rule of law. 3 And it threatens stability and
security by facilitating criminal activity within and across
2
borders, such as the illegal trafficking of people, weapons,
and drugs. 4 International corruption also undercuts good
governance and impedes U.S. efforts to promote freedom
and democracy, end poverty, and combat crime and terrorism
across the globe. 5
Corruption is also bad for business. Corruption is
anti-competitive, leading to distorted prices and disadvantaging
honest businesses that do not pay bribes. It increases
the cost of doing business globally and inflates the cost of
government contracts in developing countries. 6 Corruption
also introduces significant uncertainty into business transactions:
Contracts secured through bribery may be legally
unenforceable, and paying bribes on one contract often
results in corrupt officials making ever-increasing demands. 7
Bribery has destructive effects within a business as well,
undermining employee confidence in a company’s management
and fostering a permissive atmosphere for other kinds
of corporate misconduct, such as employee self-dealing,
embezzlement, 8 financial fraud, 9 and anti-competitive
behavior. 10 Bribery thus raises the risks of doing business,
putting a company’s bottom line and reputation in jeopardy.
Companies that pay bribes to win business ultimately
undermine their own long-term interests and the best interests
of their investors.
Historical Background
Congress enacted the FCPA in 1977 after revelations
of widespread global corruption in the wake of the
Watergate political scandal. SEC discovered that more than
400 U.S. companies had paid hundreds of millions of dollars
in bribes to foreign government officials to secure business
overseas. 11 SEC reported that companies were using
secret “slush funds” to make illegal campaign contributions
in the United States and corrupt payments to foreign officials
abroad and were falsifying their corporate financial
records to conceal the payments. 12
Congress viewed passage of the FCPA as critical
to stopping corporate bribery, which had tarnished the
image of U.S. businesses, impaired public confidence in
the financial integrity of U.S. companies, and hampered
the efficient functioning of the markets. 13 As Congress
No problem does more to alienate citizens
from their political leaders and institutions,
and to undermine political stability and
economic development, than endemic
corruption among the government, political
party leaders, judges, and bureaucrats.
— USAID Anti-Corruption Strategy
recognized when it passed the FCPA, corruption imposes
enormous costs both at home and abroad, leading to market
inefficiencies and instability, sub-standard products,
and an unfair playing field for honest businesses. 14 By
enacting a strong foreign bribery statute, Congress sought
to minimize these destructive effects and help companies
resist corrupt demands, while addressing the destructive
foreign policy ramifications of transnational bribery.
15 The Act also prohibited off-the-books accounting
through provisions designed to “strengthen the accuracy
of the corporate books and records and the reliability of
the audit process which constitute the foundations of our
system of corporate disclosure.” 16
In 1988, Congress amended the FCPA to add two
affirmative defenses: (1) the local law defense; and (2) the
reasonable and bona fide promotional expense defense. 17
Congress also requested that the President negotiate an
international treaty with members of the Organisation
for Economic Co-operation and Development (OECD)
to prohibit bribery in international business transactions
by many of the United States’ major trading partners. 18
Subsequent negotiations at the OECD culminated in the
Convention on Combating Bribery of Foreign Officials
in International Business Transactions (Anti-Bribery
Convention), which, among other things, required parties
to make it a crime to bribe foreign officials. 19
3
DOJ Contact Information
Deputy Chief (FCPA Unit)
Fraud Section, Criminal Division
Bond Building
1400 New York Ave, N.W.
Washington, DC 20005
Telephone: (202) 514-7023
Facsimile: (202) 514-7021
Email: FCPA.Fraud@usdoj.gov
In 1998, the FCPA was amended to conform to
the requirements of the Anti-Bribery Convention. These
amendments expanded the FCPA’s scope to: (1) include
payments made to secure “any improper advantage”; (2)
reach certain foreign persons who commit an act in furtherance
of a foreign bribe while in the United States; (3)
cover public international organizations in the definition
of “foreign official”; (4) add an alternative basis for jurisdiction
based on nationality; and (5) apply criminal penalties
to foreign nationals employed by or acting as agents
of U.S. companies. 20 The Anti-Bribery Convention came
into force on February 15, 1999, with the United States
as a founding party.
National Landscape: Interagency
Efforts
DOJ and SEC share enforcement authority for the
FCPA’s anti-bribery and accounting provisions. 21 They also
work with many other federal agencies and law enforcement
partners to investigate and prosecute FCPA violations,
reduce bribery demands through good governance
programs and other measures, and promote a fair playing
field for U.S. companies doing business abroad.
chapter 1
Introduction
directors, employees, agents, or stockholders acting on the
issuer’s behalf. DOJ also has both criminal and civil enforcement
responsibility for the FCPA’s anti-bribery provisions
over “domestic concerns”—which include (a) U.S. citizens,
nationals, and residents and (b) U.S. businesses and their
officers, directors, employees, agents, or stockholders acting
on the domestic concern’s behalf—and certain foreign
persons and businesses that act in furtherance of an FCPA
violation while in the territory of the United States. Within
DOJ, the Fraud Section of the Criminal Division has primary
responsibility for all FCPA matters. 22 FCPA matters
are handled primarily by the FCPA Unit within the Fraud
Section, regularly working jointly with U.S. Attorneys’
Offices around the country.
DOJ maintains a website dedicated to the FCPA and
its enforcement at http://www.justice.gov/criminal/fraud/
fcpa/. The website provides translations of the FCPA in
numerous languages, relevant legislative history, and selected
documents from FCPA-related prosecutions and resolutions
since 1977, including charging documents, plea agreements,
deferred prosecution agreements, non-prosecution agreements,
press releases, and other relevant pleadings and court
decisions. The website also provides copies of opinions issued
in response to requests by companies and individuals under
DOJ’s FCPA opinion procedure. The procedures for submitting
a request for an opinion can be found at http://www.
justice.gov/criminal/fraud/fcpa/docs/frgncrpt.pdf and are
discussed further in Chapter 9. Individuals and companies
wishing to disclose information about potential FCPA violations
are encouraged to contact the FCPA Unit at the telephone
number or email address above.
Department of Justice
DOJ has criminal FCPA enforcement authority
over “issuers” (i.e., public companies) and their officers,
Securities and Exchange Commission
SEC is responsible for civil enforcement of the FCPA
over issuers and their officers, directors, employees, agents,
4
SEC Contact Information
FCPA Unit Chief
Division of Enforcement
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Online: Tips, Complaints, and
Referrals website
http://www.sec.gov/complaint/tipscomplaint.shtml
Office of Investor Education and Advocacy:
(800) SEC-0330
or stockholders acting on the issuer’s behalf. SEC’s Division
of Enforcement has responsibility for investigating and
prosecuting FCPA violations. In 2010, SEC’s Enforcement
Division created a specialized FCPA Unit, with attorneys
in Washington, D.C. and in regional offices around the
country, to focus specifically on FCPA enforcement. The
Unit investigates potential FCPA violations; facilitates
coordination with DOJ’s FCPA program and with other
federal and international law enforcement partners; uses its
expert knowledge of the law to promote consistent enforcement
of the FCPA; analyzes tips, complaints, and referrals
regarding allegations of foreign bribery; and conducts public
outreach to raise awareness of anti-corruption efforts
and good corporate governance programs.
The FCPA Unit maintains a “Spotlight on FCPA”
section on SEC’s website at http://www.sec.gov/spotlight/
fcpa.shtml. The website, which is updated regularly, provides
general information about the Act, links to all SEC
enforcement actions involving the FCPA, including both
federal court actions and administrative proceedings, and
contains other useful information.
Individuals and companies with information about
possible FCPA violations by issuers may report them to the
Enforcement Division via SEC’s online Tips, Complaints
and Referral system, http://www.sec.gov/complaint/tipscomplaint.shtml.
They may also submit information to
SEC’s Office of the Whistleblower through the same online
system or by contacting the Office of the Whistleblower
at (202) 551-4790. Additionally, investors with questions
about the FCPA can call the Office of Investor Education
and Advocacy at (800) SEC-0330.
For more information about SEC’s Whistleblower
Program, under which certain eligible whistleblowers may
be entitled to a monetary award if their information leads to
certain SEC actions, see Chapter 8.
Law Enforcement Partners
DOJ’s FCPA Unit regularly works with the Federal
Bureau of Investigation (FBI) to investigate potential FCPA
violations. The FBI’s International Corruption Unit has primary
responsibility for international corruption and fraud
investigations and coordinates the FBI’s national FCPA
enforcement program. The FBI also has a dedicated FCPA
squad of FBI special agents (located in the Washington
Field Office) that is responsible for investigating many, and
providing support for all, of the FBI’s FCPA investigations.
In addition, the Department of Homeland Security and the
Internal Revenue Service-Criminal Investigation regularly
investigate potential FCPA violations. A number of other
agencies are also involved in the fight against international
corruption, including the Department of Treasury’s Office
of Foreign Assets Control, which has helped lead a number
of FCPA investigations.
Departments of Commerce and State
Besides enforcement efforts by DOJ and SEC,
the U.S. government is also working to address corruption
abroad and level the playing field for U.S. businesses
through the efforts of the Departments of Commerce and
State. Both Commerce and State advance anti-corruption
and good governance initiatives globally and regularly
assist U.S. companies doing business overseas in several
5
important ways. Both agencies encourage U.S. businesses
to seek the assistance of U.S embassies when they are confronted
with bribe solicitations or other corruption-related
issues overseas. 23
The Department of Commerce offers a number
of important resources for businesses, including the
International Trade Administration’s United States and
Foreign Commercial Service (Commercial Service). The
Commercial Service has export and industry specialists
located in over 100 U.S. cities and 70 countries who are
available to provide counseling and other assistance to U.S.
businesses, particularly small and medium-sized companies,
regarding exporting their products and services. Among
other things, these specialists can help a U.S. company conduct
due diligence when choosing business partners or agents
overseas. The International Company Profile Program, for
instance, can be part of a U.S. business’ evaluation of potential
overseas business partners. 24 Businesses may contact the
Commercial Service through its website, http://export.gov/
eac/, or directly at its domestic and foreign offices. 25
Additionally, the Department of Commerce’s Office
of the General Counsel maintains a website, http://www.
commerce.gov/os/ogc/transparency-and-anti-briberyinitiatives,
that contains recent articles and speeches, links
to translations of the FCPA, a catalogue of anti-corruption
resources, and a list of international conventions and initiatives.
The Trade Compliance Center in the Department
of Commerce’s International Trade Administration hosts
a website with anti-bribery resources, http://tcc.export.
gov/Bribery. This website contains an online form through
which U.S. companies can report allegations of foreign
bribery by foreign competitors in international business
transactions. 26 The Department of Commerce also provides
information to companies through a number of U.S.
and international publications designed to assist firms in
complying with anti-corruption laws. For example, the
Department of Commerce has included a new anti-corruption
section in its Country Commercial Guides, prepared
by market experts at U.S. embassies worldwide, that contains
information on market conditions for more than 100 countries,
including information on the FCPA for exporters. 27
chapter 1
Introduction
The Department of Commerce has also published a guide,
Business Ethics: A Manual for Managing a Responsible
Business Enterprise in Emerging Market Economies, which
contains information about corporate compliance programs
for businesses involved in international trade. 28
The Departments of Commerce and State also provide
advocacy support, when determined to be in the
national interest, for U.S. companies bidding for foreign
government contracts. The Department of Commerce’s
Advocacy Center, for example, supports U.S. businesses
competing against foreign companies for international contracts,
such as by arranging for the delivery of an advocacy
message by U.S. government officials or assisting with unanticipated
problems such as suspected bribery by a competitor.
29 The Department of State’s Bureau of Economic and
Business Affairs (specifically, its Office of Commercial and
Business Affairs) similarly assists U.S. firms doing business
overseas by providing advocacy on behalf of U.S. businesses
and identifying risk areas for U.S. businesses; more information
is available on its website, http://www.state.gov/e/
eb/cba/. Also, the Department of State’s economic officers
serving overseas provide commercial advocacy and support
for U.S. companies at the many overseas diplomatic posts
where the Commercial Service is not represented.
The Department of State promotes U.S. government
interests in addressing corruption internationally through
country-to-country diplomatic engagement; development
of and follow-through on international commitments relating
to corruption; promotion of high-level political engagement
(e.g., the G20 Anticorruption Action Plan); public
outreach in foreign countries; and support for building
the capacity of foreign partners to combat corruption. In
fiscal year 2009, the U.S. government provided more than
$1 billion for anti-corruption and related good governance
assistance abroad.
6
The Department of State’s Bureau of International
Narcotics and Law Enforcement Affairs (INL) manages
U.S. participation in many multilateral anti-corruption
political and legal initiatives at the global and regional level.
INL also funds and coordinates significant efforts to assist
countries with combating corruption through legal reform,
training, and other capacity-building efforts. Inquiries about
the U.S. government’s general anti-corruption efforts and
implementation of global and regional anti-corruption initiatives
may be directed to INL on its website, http://www.
state.gov/j/inl/c/crime/corr/index.htm, or by email to:
anticorruption@state.gov. In addition, the U.S. Agency for
International Development (USAID) has developed several
anti-corruption programs and publications, information
about which can be found at http://www.usaid.gov/whatwe-do/democracy-human-rights-and-governance/promoting-accountability-transparency.
Finally, the Department of
State’s brochure “Fighting Global Corruption: Business Risk
Management,” available at http://www.ogc.doc.gov/pdfs/
Fighting_Global_Corruption.pdf, provides guidance about
corporate compliance programs as well as international anticorruption
initiatives.
International Landscape: Global Anti-
Corruption Efforts
In recent years, there has been a growing international
consensus that corruption must be combated, and the
United States and other countries are parties to a number
of international anti-corruption conventions. Under these
conventions, countries that are parties undertake commitments
to adopt a range of preventive and criminal law measures
to combat corruption. The conventions incorporate
review processes that allow the United States to monitor
other countries to ensure that they are meeting their international
obligations. Likewise, these processes in turn permit
other parties to monitor the United States’ anti-corruption
laws and enforcement to ensure that such enforcement and
legal frameworks are consistent with the United States’ treaty
obligations. 30 U.S. officials regularly address the subject of
corruption with our foreign counterparts to raise awareness
of the importance of fighting corruption and urge stronger
enforcement of anti-corruption laws and policies.
OECD Working Group on Bribery and the Anti-
Bribery Convention
The OECD was founded in 1961 to stimulate economic
progress and world trade. As noted, the Anti-Bribery
Convention requires its parties to criminalize the bribery
of foreign public officials in international business transactions.
31 As of November 1, 2012, there were 39 parties to
the Anti-Bribery Convention: 34 OECD member countries
(including the United States) and five non-OECD
member countries (Argentina, Brazil, Bulgaria, the Russian
Federation, and South Africa). All of these parties are
also members of the OECD Working Group on Bribery
(Working Group). 32
The Working Group is responsible for monitoring the
implementation of the Anti-Bribery Convention, the 2009
Recommendation of the Council for Further Combating
Bribery of Foreign Public Officials in International
Business Transactions, and related instruments. Its members
meet quarterly to review and monitor implementation
of the Anti-Bribery Convention by member states around
the world. Each party undergoes periodic peer review. 33
This peer-review monitoring system is conducted in three
phases. The Phase 1 review includes an in-depth assessment
of each country’s domestic laws implementing the
Convention. The Phase 2 review examines the effectiveness
of each country’s laws and anti-bribery efforts. The final
phase is a permanent cycle of peer review (the first cycle of
which is referred to as the Phase 3 review) that evaluates
a country’s enforcement actions and results, as well as the
country’s efforts to address weaknesses identified during the
Phase 2 review. 34 All of the monitoring reports for the parties
to the Convention can be found on the OECD website
and can be a useful resource about the foreign bribery laws
of the OECD Working Group member countries. 35
The United States was one of the first countries to
undergo all three phases of review. The reports and appendices
can be found on DOJ’s and SEC’s websites. 36 In its
7
Phase 3 review of the United States, which was completed
in October 2010, the Working Group commended U.S.
efforts to fight transnational bribery and highlighted a
number of best practices developed by the United States.
The report also noted areas where the United States’ antibribery
efforts could be improved, including consolidating
publicly available information on the application of
the FCPA and enhancing awareness among small- and
medium-sized companies about the prevention and detection
of foreign bribery. This guide is, in part, a response to
these Phase 3 recommendations and is intended to help
businesses and individuals better understand the FCPA. 37
U.N. Convention Against Corruption
The United States is a state party to the United
Nations Convention Against Corruption (UNCAC),
which was adopted by the U.N. General Assembly on
October 31, 2003, and entered into force on December
14, 2005. 38 The United States ratified the UNCAC on
October 30, 2006. The UNCAC requires parties to criminalize
a wide range of corrupt acts, including domestic and
foreign bribery and related offenses such as money laundering
and obstruction of justice. The UNCAC also establishes
guidelines for the creation of anti-corruption bodies,
codes of conduct for public officials, transparent and objective
systems of procurement, and enhanced accounting and
auditing standards for the private sector. A peer review
mechanism assesses the implementation of the UNCAC
by parties to the Convention, with a focus in the first round
on criminalization and law enforcement as well as international
legal cooperation. 39 The United States has been
reviewed under the Pilot Review Programme, the report
of which is available on DOJ’s website. As of November 1,
2012, 163 countries were parties to the UNCAC. 40
chapter 1
Introduction
The IACAC requires parties (of which the United States
is one) to criminalize both foreign and domestic bribery.
A body known as the Mechanism for Follow-Up on
the Implementation of the Inter-American Convention
Against Corruption (MESICIC) monitors parties’ compliance
with the IACAC. As of November 1, 2012, 31 countries
were parties to MESICIC.
The Council of Europe established the Group of
States Against Corruption (GRECO) in 1999 to monitor
countries’ compliance with the Council of Europe’s anticorruption
standards, including the Council of Europe’s
Criminal Law Convention on Corruption. 42 These standards
include prohibitions on the solicitation and receipt of
bribes, as well as foreign bribery. As of November 1, 2012,
GRECO member states, which need not be members of
the Council of Europe, include more than 45 European
countries and the United States. 43
The United States has been reviewed under both
MESICIC and GRECO, and the reports generated by
those reviews are available on DOJ’s website.
Other Anti-Corruption Conventions
The Inter-American Convention Against Corruption
(IACAC) was the first international anti-corruption convention,
adopted in March 1996 in Caracas, Venezuela,
by members of the Organization of American States. 41
8

chapter 2
The FCPA:
Anti-Bribery Provisions
THE FCPA: ANTI-BRIBERY
PROVISIONS
The FCPA addresses the problem of international corruption in two ways: (1)
the anti-bribery provisions, which are discussed below, prohibit individuals
and businesses from bribing foreign government officials in order to obtain
or retain business and (2) the accounting provisions, which are discussed in
Chapter 3, impose certain record keeping and internal control requirements
on issuers, and prohibit individuals and companies from knowingly falsifying
an issuer’s books and records or circumventing or failing to implement an issuer’s
system of internal controls. Violations of the FCPA can lead to civil and
criminal penalties, sanctions, and remedies, including fines, disgorgement,
and/or imprisonment.
In general, the FCPA prohibits offering to pay, paying,
promising to pay, or authorizing the payment of money
or anything of value to a foreign official in order to influence
any act or decision of the foreign official in his or her
official capacity or to secure any other improper advantage
in order to obtain or retain business. 44
Who Is Covered by the Anti-Bribery Provisions?
The FCPA’s anti-bribery provisions apply broadly to
three categories of persons and entities: (1) “issuers” and
their officers, directors, employees, agents, and shareholders;
(2) “domestic concerns” and their officers, directors,
employees, agents, and shareholders; and (3) certain persons
and entities, other than issuers and domestic concerns,
acting while in the territory of the United States.
Issuers—15 U.S.C. § 78dd-1
Section 30A of the Securities Exchange Act of 1934
(the Exchange Act), which can be found at 15 U.S.C.
§ 78dd-1, contains the anti-bribery provision governing
10
How Can I Tell If My Company Is an “Issuer”?
• It is listed on a national securities exchange in the
United States (either stock or American Depository
Receipts); or
• The company’s stock trades in the over-thecounter
market in the United States and the
company is required to file SEC reports.
• To see if your company files SEC reports, go to
SEC’s website at http://www.sec.gov/edgar/
searchedgar/webusers.htm.
issuers. 45 A company is an “issuer” under the FCPA if it
has a class of securities registered under Section 12 of the
Exchange Act 46 or is required to file periodic and other
reports with SEC under Section 15(d) of the Exchange
Act. 47 In practice, this means that any company with a
class of securities listed on a national securities exchange in
the United States, or any company with a class of securities
quoted in the over-the-counter market in the United
States and required to file periodic reports with SEC, is an
issuer. A company thus need not be a U.S. company to be
an issuer. Foreign companies with American Depository
Receipts that are listed on a U.S. exchange are also issuers. 48
As of December 31, 2011, 965 foreign companies were registered
with SEC. 49 Officers, directors, employees, agents,
or stockholders acting on behalf of an issuer (whether U.S.
or foreign nationals), and any co-conspirators, also can be
prosecuted under the FCPA. 50
Domestic Concerns—15 U.S.C. § 78dd-2
The FCPA also applies to “domestic concerns.” 51 A
domestic concern is any individual who is a citizen, national,
or resident of the United States, or any corporation, partnership,
association, joint-stock company, business trust,
unincorporated organization, or sole proprietorship that is
organized under the laws of the United States or its states,
territories, possessions, or commonwealths or that has its
principal place of business in the United States. 52 Officers,
directors, employees, agents, or stockholders acting on
behalf of a domestic concern, including foreign nationals or
companies, are also covered. 53
Territorial Jurisdiction—15 U.S.C. § 78dd-3
The FCPA also applies to certain foreign nationals or
entities that are not issuers or domestic concerns. 54 Since
1998, the FCPA’s anti-bribery provisions have applied to
foreign persons and foreign non-issuer entities that, either
directly or through an agent, engage in any act in furtherance
of a corrupt payment (or an offer, promise, or authorization
to pay) while in the territory of the United States. 55
Also, officers, directors, employees, agents, or stockholders
acting on behalf of such persons or entities may be subject
to the FCPA’s anti-bribery prohibitions. 56
What Jurisdictional Conduct Triggers the Anti-
Bribery Provisions?
The FCPA’s anti-bribery provisions can apply to
conduct both inside and outside the United States. Issuers
and domestic concerns—as well as their officers, directors,
employees, agents, or stockholders—may be prosecuted
for using the U.S. mails or any means or instrumentality of
interstate commerce in furtherance of a corrupt payment
to a foreign official. The Act defines “interstate commerce”
as “trade, commerce, transportation, or communication
among the several States, or between any foreign country
and any State or between any State and any place or ship
outside thereof ….” 57 The term also includes the intrastate
use of any interstate means of communication, or any other
interstate instrumentality. 58 Thus, placing a telephone call or
sending an e-mail, text message, or fax from, to, or through
the United States involves interstate commerce—as does
sending a wire transfer from or to a U.S. bank or otherwise
using the U.S. banking system, or traveling across state borders
or internationally to or from the United States.
Those who are not issuers or domestic concerns may
be prosecuted under the FCPA if they directly, or through
an agent, engage in any act in furtherance of a corrupt payment
while in the territory of the United States, regardless of
11
whether they utilize the U.S. mails or a means or instrumentality
of interstate commerce. 59 Thus, for example, a foreign
national who attends a meeting in the United States that furthers
a foreign bribery scheme may be subject to prosecution,
as may any co-conspirators, even if they did not themselves
attend the meeting. A foreign national or company may also
be liable under the FCPA if it aids and abets, conspires with,
or acts as an agent of an issuer or domestic concern, regardless
of whether the foreign national or company itself takes any
action in the United States. 60
In addition, under the “alternative jurisdiction” provision
of the FCPA enacted in 1998, U.S. companies or
persons may be subject to the anti-bribery provisions even
if they act outside the United States. 61 The 1998 amendments
to the FCPA expanded the jurisdictional coverage of
the Act by establishing an alternative basis for jurisdiction,
that is, jurisdiction based on the nationality principle. 62 In
particular, the 1998 amendments removed the requirement
that there be a use of interstate commerce (e.g., wire, email,
telephone call) for acts in furtherance of a corrupt payment
chapter 2
The FCPA:
Anti-Bribery Provisions
to a foreign official by U.S. companies and persons occurring
wholly outside of the United States. 63
What Is Covered?—The Business
Purpose Test
The FCPA applies only to payments intended to
induce or influence a foreign official to use his or her position
“in order to assist … in obtaining or retaining business
for or with, or directing business to, any person.” 64 This
requirement is known as the “business purpose test” and is
broadly interpreted. 65
Not surprisingly, many enforcement actions involve
bribes to obtain or retain government contracts. 66 The
FCPA also prohibits bribes in the conduct of business or
Hypothetical: FCPA Jurisdiction
Company A, a Delaware company with its principal place of business in New York, is a large energy company that
operates globally, including in a number of countries that have a high risk of corruption, such as Foreign Country. Company
A’s shares are listed on a national U.S. stock exchange. Company A enters into an agreement with a European company
(EuroCo) to submit a joint bid to the Oil Ministry to build a refinery in Foreign Country. EuroCo is not an issuer.
Executives of Company A and EuroCo meet in New York to discuss how to win the bid and decide to hire a purported
third-party consultant (Intermediary) and have him use part of his “commission” to bribe high-ranking officials within the
Oil Ministry. Intermediary meets with executives at Company A and EuroCo in New York to finalize the scheme. Eventually,
millions of dollars in bribes are funneled from the United States and Europe through Intermediary to high-ranking officials
at the Oil Ministry, and Company A and EuroCo win the contract. A few years later, a front page article alleging that the
contract was procured through bribery appears in Foreign Country, and DOJ and SEC begin investigating whether the
FCPA was violated.
Based on these facts, which entities fall within the FCPA’s jurisdiction?
All of the entities easily fall within the FCPA’s jurisdiction. Company A is both an “issuer” and a “domestic concern”
under the FCPA, and Intermediary is an “agent” of Company A. EuroCo and Intermediary are also subject to the FCPA’s
territorial jurisdiction provision based on their conduct while in the United States. Moreover, even if EuroCo and Intermediary
had never taken any actions in the territory of the United States, they can still be subject to jurisdiction under a traditional
application of conspiracy law and may be subject to substantive FCPA charges under Pinkerton liability, namely, being liable
for the reasonably foreseeable substantive FCPA crimes committed by a co-conspirator in furtherance of the conspiracy.
12
Examples of Actions Taken
to Obtain or Retain Business
• Winning a contract
• Influencing the procurement process
• Circumventing the rules for importation of
products
• Gaining access to non-public bid tender
information
• Evading taxes or penalties
• Influencing the adjudication of lawsuits or
enforcement actions
• Obtaining exceptions to regulations
• Avoiding contract termination
held that payments to obtain favorable tax treatment can,
under appropriate circumstances, violate the FCPA:
Avoiding or lowering taxes reduces operating costs
and thus increases profit margins, thereby freeing up
funds that the business is otherwise legally obligated
to expend. And this, in turn, enables it to take any
number of actions to the disadvantage of competitors.
Bribing foreign officials to lower taxes and customs
duties certainly can provide an unfair advantage
over competitors and thereby be of assistance to the
payor in obtaining or retaining business.
* * *
[W]e hold that Congress intended for the FCPA
to apply broadly to payments intended to assist the
payor, either directly or indirectly, in obtaining or
retaining business for some person, and that bribes
paid to foreign tax officials to secure illegally reduced
customs and tax liability constitute a type of payment
that can fall within this broad coverage. 72
to gain a business advantage. 67 For example, bribe payments
made to secure favorable tax treatment, to reduce or eliminate
customs duties, to obtain government action to prevent
competitors from entering a market, or to circumvent
a licensing or permit requirement, all satisfy the business
purpose test. 68
In 2004, the U.S. Court of Appeals for the Fifth Circuit
addressed the business purpose test in United States v. Kay
and held that bribes paid to obtain favorable tax treatment—
which reduced a company’s customs duties and sales taxes
on imports—could constitute payments made to “obtain
or retain” business within the meaning of the FCPA. 69 The
court explained that in enacting the FCPA, “Congress meant
to prohibit a range of payments wider than only those that
directly influence the acquisition or retention of government
contracts or similar commercial or industrial arrangements.”
70 The Kay court found that “[t]he congressional
target was bribery paid to engender assistance in improving
the business opportunities of the payor or his beneficiary,
irrespective of whether that assistance be direct or indirect,
and irrespective of whether it be related to administering
the law, awarding, extending, or renewing a contract, or
executing or preserving an agreement.” 71 Accordingly, Kay
Paying Bribes to Customs Officials
In 2010, a global freight forwarding company and
six of its corporate customers in the oil and gas industry
resolved charges that they paid bribes to customs
officials. The companies bribed customs officials in more
than ten countries in exchange for such benefits as:
• evading customs duties on imported goods
• improperly expediting the importation of goods
and equipment
• extending drilling contracts and lowering tax
assessments
• obtaining false documentation related to
temporary import permits for drilling rigs
• enabling the release of drilling rigs and other
equipment from customs officials
In many instances, the improper payments at issue
allowed the company to carry out its existing business,
which fell within the FCPA’s prohibition on corrupt
payments made for the purpose of “retaining” business.
The seven companies paid a total of more than $235
million in civil and criminal sanctions and disgorgement.
13
In short, while the FCPA does not cover every type
of bribe paid around the world for every purpose, it does
apply broadly to bribes paid to help obtain or retain business,
which can include payments made to secure a wide
variety of unfair business advantages. 73
chapter 2
The FCPA:
Anti-Bribery Provisions
What Does “Corruptly” Mean?
To violate the FCPA, an offer, promise, or authorization
of a payment, or a payment, to a government official
must be made “corruptly.” 74 As Congress noted when
adopting the FCPA, the word “corruptly” means an intent
or desire to wrongfully influence the recipient:
The word “corruptly” is used in order to make clear
that the offer, payment, promise, or gift, must be intended
to induce the recipient to misuse his official
position; for example, wrongfully to direct business
to the payor or his client, to obtain preferential legislation
or regulations, or to induce a foreign official to
fail to perform an official function. 75
Where corrupt intent is present, the FCPA prohibits
paying, offering, or promising to pay money or anything
of value (or authorizing the payment or offer). 76 By focusing
on intent, the FCPA does not require that a corrupt
act succeed in its purpose. 77 Nor must the foreign official
actually solicit, accept, or receive the corrupt payment for
the bribe payor to be liable. 78 For example, in one case, a
specialty chemical company promised Iraqi government
officials approximately $850,000 in bribes for an upcoming
contract. Although the company did not, in the end, make
the payment (the scheme was thwarted by the U.S. government’s
investigation), the company still violated the FCPA
and was held accountable. 79
Also, as long as the offer, promise, authorization, or
payment is made corruptly, the actor need not know the
identity of the recipient; the attempt is sufficient. 80 Thus, an
executive who authorizes others to pay “whoever you need
to” in a foreign government to obtain a contract has violated
the FCPA—even if no bribe is ultimately offered or paid.
What Does “Willfully” Mean and When
Does It Apply?
In order for an individual defendant to be criminally
liable under the FCPA, he or she must act “willfully.” 81 Proof
of willfulness is not required to establish corporate criminal
or civil liability, 82 though proof of corrupt intent is.
The term “willfully” is not defined in the FCPA, but
it has generally been construed by courts to connote an
act committed voluntarily and purposefully, and with a
bad purpose, i.e., with “knowledge that [a defendant] was
doing a ‘bad’ act under the general rules of law.” 83 As the
Supreme Court explained in Bryan v. United States, “[a]s a
general matter, when used in the criminal context, a ‘willful’
act is one undertaken with a ‘bad purpose.’ In other
words, in order to establish a ‘willful’ violation of a statute,
‘the Government must prove that the defendant acted with
knowledge that his conduct was unlawful.’” 84
Notably, as both the Second Circuit and Fifth Circuit
Courts of Appeals have found, the FCPA does not require
the government to prove that a defendant was specifically
aware of the FCPA or knew that his conduct violated the
FCPA. 85 To be guilty, a defendant must act with a bad purpose,
i.e., know generally that his conduct is unlawful.
What Does “Anything of Value” Mean?
In enacting the FCPA, Congress recognized that bribes
can come in many shapes and sizes—a broad range of unfair
benefits 86 —and so the statute prohibits the corrupt “offer,
payment, promise to pay, or authorization of the payment of
any money, or offer, gift, promise to give, or authorization of
the giving of anything of value to” a foreign official. 87
An improper benefit can take many forms. While
cases often involve payments of cash (sometimes in the
guise of “consulting fees” or “commissions” given through
intermediaries), others have involved travel expenses and
14
expensive gifts. Like the domestic bribery statute, the FCPA
does not contain a minimum threshold amount for corrupt
gifts or payments. 88 Indeed, what might be considered a
modest payment in the United States could be a larger and
much more significant amount in a foreign country.
Regardless of size, for a gift or other payment to violate
the statute, the payor must have corrupt intent—that is,
the intent to improperly influence the government official.
The corrupt intent requirement protects companies that
engage in the ordinary and legitimate promotion of their
businesses while targeting conduct that seeks to improperly
induce officials into misusing their positions. Thus, it
is difficult to envision any scenario in which the provision
of cups of coffee, taxi fare, or company promotional items
of nominal value would ever evidence corrupt intent, and
neither DOJ nor SEC has ever pursued an investigation
on the basis of such conduct. Moreover, as in all areas of
federal law enforcement, DOJ and SEC exercise discretion
in deciding which cases promote law enforcement priorities
and justify investigation. Certain patterns, however,
have emerged: DOJ’s and SEC’s anti-bribery enforcement
actions have focused on small payments and gifts only when
they comprise part of a systemic or long-standing course of
conduct that evidences a scheme to corruptly pay foreign
officials to obtain or retain business. These assessments are
necessarily fact specific.
Cash
The most obvious form of corrupt payment is large
amounts of cash. In some instances, companies have maintained
cash funds specifically earmarked for use as bribes.
One U.S. issuer headquartered in Germany disbursed corrupt
payments from a corporate “cash desk” and used offshore
bank accounts to bribe government officials to win
contracts. 89 In another instance, a four-company joint venture
used its agent to pay $5 million in bribes to a Nigerian
political party. 90 The payments were made to the agent in
suitcases of cash (typically in $1 million installments), and,
in one instance, the trunk of a car when the cash did not fit
into a suitcase. 91
Gifts, Travel, Entertainment, and Other Things
of Value
A small gift or token of esteem or gratitude is often
an appropriate way for business people to display respect
for each other. Some hallmarks of appropriate gift-giving
are when the gift is given openly and transparently, properly
recorded in the giver’s books and records, provided only to
reflect esteem or gratitude, and permitted under local law.
Items of nominal value, such as cab fare, reasonable
meals and entertainment expenses, or company promotional
items, are unlikely to improperly influence an official,
and, as a result, are not, without more, items that have
resulted in enforcement action by DOJ or SEC. The larger
or more extravagant the gift, however, the more likely it was
given with an improper purpose. DOJ and SEC enforcement
cases thus have involved single instances of large,
extravagant gift-giving (such as sports cars, fur coats, and
other luxury items) as well as widespread gifts of smaller
items as part of a pattern of bribes. 92 For example, in one
case brought by DOJ and SEC, a defendant gave a government
official a country club membership fee and a generator,
as well as household maintenance expenses, payment
of cell phone bills, an automobile worth $20,000, and limousine
services. The same official also received $250,000
through a third-party agent. 93
In addition, a number of FCPA enforcement actions
have involved the corrupt payment of travel and entertainment
expenses. Both DOJ and SEC have brought cases
where these types of expenditures occurred in conjunction
with other conduct reflecting systemic bribery or other
clear indicia of corrupt intent.
A case involving a California-based telecommunications
company illustrates the types of improper travel
and entertainment expenses that may violate the FCPA. 94
Between 2002 and 2007, the company spent nearly $7 million
on approximately 225 trips for its customers in order to
obtain systems contracts in China, including for employees
of Chinese state-owned companies to travel to popular tourist
destinations in the United States. 95 Although the trips
were purportedly for the individuals to conduct training at
15
Examples of Improper
Travel and Entertainment
• a $12,000 birthday trip for a government decisionmaker
from Mexico that included visits to wineries
and dinners
• $10,000 spent on dinners, drinks, and
entertainment for a government official
• a trip to Italy for eight Iraqi government officials
that consisted primarily of sightseeing and
included $1,000 in “pocket money” for each
official
• a trip to Paris for a government official and his wife
that consisted primarily of touring activities via a
chauffeur-driven vehicle
the company’s facilities, in reality, no training occurred on
many of these trips and the company had no facilities at those
locations. Approximately $670,000 of the $7 million was
falsely recorded as “training” expenses. 96
Likewise, a New Jersey-based telecommunications
company spent millions of dollars on approximately 315
trips for Chinese government officials, ostensibly to inspect
factories and train the officials in using the company’s
equipment. 97 In reality, during many of these trips, the officials
spent little or no time visiting the company’s facilities,
but instead visited tourist destinations such as Hawaii, Las
Vegas, the Grand Canyon, Niagara Falls, Disney World,
Universal Studios, and New York City. 98 Some of the trips
were characterized as “factory inspections” or “training”
with government customers but consisted primarily or
entirely of sightseeing to locations chosen by the officials,
typically lasting two weeks and costing between $25,000
and $55,000 per trip. In some instances, the company gave
the government officials $500 to $1,000 per day in spending
money and paid all lodging, transportation, food,
and entertainment expenses. The company either failed
to record these expenses or improperly recorded them as
“consulting fees” in its corporate books and records. The
chapter 2
The FCPA:
Anti-Bribery Provisions
company also failed to implement appropriate internal controls
to monitor the provision of travel and other things of
value to Chinese government officials. 99
Companies also may violate the FCPA if they give
payments or gifts to third parties, like an official’s family
members, as an indirect way of corruptly influencing a foreign
official. For example, one defendant paid personal bills
and provided airline tickets to a cousin and close friend of
the foreign official whose influence the defendant sought in
obtaining contracts. 100 The defendant was convicted at trial
and received a prison sentence. 101
As part of an effective compliance program, a company
should have clear and easily accessible guidelines
and processes in place for gift-giving by the company’s
directors, officers, employees, and agents. Though not
necessarily appropriate for every business, many larger
companies have automated gift-giving clearance processes
and have set clear monetary thresholds for gifts
along with annual limitations, with limited exceptions
for gifts approved by appropriate management. Clear
guidelines and processes can be an effective and efficient
means for controlling gift-giving, deterring improper
gifts, and protecting corporate assets.
The FCPA does not prohibit gift-giving. Rather, just
like its domestic bribery counterparts, the FCPA prohibits
the payments of bribes, including those disguised as gifts.
Charitable Contributions
Companies often engage in charitable giving as part
of legitimate local outreach. The FCPA does not prohibit
charitable contributions or prevent corporations from acting
as good corporate citizens. Companies, however, cannot
use the pretense of charitable contributions as a way to
funnel bribes to government officials.
16
For example, a pharmaceutical company used charitable
donations to a small local castle restoration charity
headed by a foreign government official to induce the official
to direct business to the company. Although the charity
was a bona fide charitable organization, internal documents
at the pharmaceutical company’s subsidiary established that
the payments were not viewed as charitable contributions
but rather as “dues” the subsidiary was required to pay for
assistance from the government official. The payments constituted
a significant portion of the subsidiary’s total promotional
donations budget and were structured to allow
the subsidiary to exceed its authorized limits. The payments
Hypothetical: Gifts, Travel, and Entertainment
Company A is a large U.S. engineering company with global operations in more than 50 countries, including a
number that have a high risk of corruption, such as Foreign Country. Company A’s stock is listed on a national U.S. stock
exchange. In conducting its business internationally, Company A’s officers and employees come into regular contact with
foreign officials, including officials in various ministries and state-owned entities. At a trade show, Company A has a booth
at which it offers free pens, hats, t-shirts, and other similar promotional items with Company A’s logo. Company A also
serves free coffee, other beverages, and snacks at the booth. Some of the visitors to the booth are foreign officials.
Is Company A in violation of the FCPA?
No. These are legitimate, bona fide expenditures made in connection with the promotion, demonstration, or
explanation of Company A’s products or services There is nothing to suggest corrupt intent here The FCPA does not
prevent companies from promoting their businesses in this way or providing legitimate hospitality, including to foreign
officials Providing promotional items with company logos or free snacks as set forth above is an appropriate means of
providing hospitality and promoting business Such conduct has never formed the basis for an FCPA enforcement action
At the trade show, Company A invites a dozen current and prospective customers out for drinks, and pays
the moderate bar tab. Some of the current and prospective customers are foreign officials under the FCPA. Is
Company A in violation of the FCPA?
No. Again, the FCPA was not designed to prohibit all forms of hospitality to foreign officials. While the cost here may
be more substantial than the beverages, snacks, and promotional items provided at the booth, and the invitees specifically
selected, there is still nothing to suggest corrupt intent.
Two years ago, Company A won a long-term contract to supply goods and services to the state-owned Electricity
Commission in Foreign Country. The Electricity Commission is 100% owned, controlled, and operated by the
government of Foreign Country, and employees of the Electricity Commission are subject to Foreign Country’s
domestic bribery laws. Some Company A executives are in Foreign Country for meetings with officials of the
Electricity Commission. The General Manager of the Electricity Commission was recently married, and during the
trip Company A executives present a moderately priced crystal vase to the General Manager as a wedding gift
and token of esteem. Is Company A in violation of the FCPA?
No. It is appropriate to provide reasonable gifts to foreign officials as tokens of esteem or gratitude. It is important that
such gifts be made openly and transparently, properly recorded in a company’s books and records, and given only where
appropriate under local law, customary where given, and reasonable for the occasion.
During the course of the contract described above, Company A periodically provides training to Electricity
Commission employees at its facilities in Michigan. The training is paid for by the Electricity Commission as part of
the contract. Senior officials of the Electricity Commission inform Company A that they want to inspect the facilities
and ensure that the training is working well. Company A pays for the airfare, hotel, and transportation for the
(cont’d)
17
chapter 2
The FCPA:
Anti-Bribery Provisions
Electricity Commission senior officials to travel to Michigan to inspect Company A’s facilities. Because it is a lengthy
international flight, Company A agrees to pay for business class airfare, to which its own employees are entitled
for lengthy flights. The foreign officials visit Michigan for several days, during which the senior officials perform an
appropriate inspection. Company A executives take the officials to a moderately priced dinner, a baseball game,
and a play. Do any of these actions violate the FCPA?
No Neither the costs associated with training the employees nor the trip for the senior officials to the Company’s
facilities in order to inspect them violates the FCPA Reasonable and bona fide promotional expenditures do not violate
the FCPA Here, Company A is providing training to the Electricity Commission’s employees and is hosting the Electricity
Commission senior officials Their review of the execution and performance of the contract is a legitimate business purpose
Even the provision of business class airfare is reasonable under the circumstances, as are the meals and entertainment,
which are only a small component of the business trip
Would this analysis be different if Company A instead paid for the senior officials to travel first-class with their
spouses for an all-expenses-paid, week-long trip to Las Vegas, where Company A has no facilities?
Yes. This conduct almost certainly violates the FCPA because it evinces a corrupt intent. Here, the trip does not appear
to be designed for any legitimate business purpose, is extravagant, includes expenses for the officials’ spouses, and therefore
appears to be designed to corruptly curry favor with the foreign government officials. Moreover, if the trip were booked as a
legitimate business expense—such as the provision of training at its facilities—Company A would also be in violation of the
FCPA’s accounting provisions. Furthermore, this conduct suggests deficiencies in Company A’s internal controls.
Company A’s contract with the Electricity Commission is going to expire, and the Electricity Commission is
offering the next contract through its tender process. An employee of the Electricity Commission contacts
Company A and offers to provide Company A with confidential, non-public bid information from Company A’s
competitors if Company A will pay for a vacation to Paris for him and his girlfriend. Employees of Company A
accede to the official’s request, pay for the vacation, receive the confidential bid information, and yet still do not
win the contract. Has Company A violated the FCPA?
Yes Company A has provided things of value to a foreign official for the purpose of inducing the official to misuse
his office and to gain an improper advantage It does not matter that it was the foreign official who first suggested the
illegal conduct or that Company A ultimately was not successful in winning the contract This conduct would also violate
the FCPA’s accounting provisions if the trip were booked as a legitimate business expense and suggests deficiencies in
Company A’s internal controls
18
also were not in compliance with the company’s internal
policies, which provided that charitable donations generally
should be made to healthcare institutions and relate to
the practice of medicine. 102
Proper due diligence and controls are critical for
charitable giving. In general, the adequacy of measures
taken to prevent misuse of charitable donations will depend
on a risk-based analysis and the specific facts at hand. In
Opinion Procedure Release No. 10-02, DOJ described the
due diligence and controls that can minimize the likelihood
of an FCPA violation. In that matter, a Eurasian-based subsidiary
of a U.S. non-governmental organization was asked
by an agency of a foreign government to make a grant to
a local microfinance institution (MFI) as a prerequisite to
the subsidiary’s transformation to bank status. The subsidiary
proposed contributing $1.42 million to a local MFI to
satisfy the request. The subsidiary undertook an extensive,
three-stage due diligence process to select the proposed
grantee and imposed significant controls on the proposed
grant, including ongoing monitoring and auditing, earmarking
funds for capacity building, prohibiting compensation
of board members, and implementing anti-corruption
compliance provisions. DOJ explained that it would
not take any enforcement action because the company’s due
diligence and the controls it planned to put in place sufficed
to prevent an FCPA violation.
Other opinion releases also address charitable-type
grants or donations. Under the facts presented in those
releases, DOJ approved the proposed grant or donation, 103
based on due diligence measures and controls such as:
• certifications by the recipient regarding compliance
with the FCPA; 104
• due diligence to confirm that none of the recipient’s
officers were affiliated with the foreign government
at issue; 105
• a requirement that the recipient provide audited
financial statements; 106
• a written agreement with the recipient restricting
the use of funds; 107
• steps to ensure that the funds were transferred to a
valid bank account; 108
• confirmation that the charity’s commitments were
met before funds were disbursed; 109 and
• on-going monitoring of the efficacy of the
program. 110
Legitimate charitable giving does not violate the
FCPA. Compliance with the FCPA merely requires that
charitable giving not be used as a vehicle to conceal payments
made to corruptly influence foreign officials.
Five Questions to Consider When Making
Charitable Payments in a Foreign Country:
1 What is the purpose of the payment?
2 Is the payment consistent with the company’s
internal guidelines on charitable giving?
3 Is the payment at the request of a foreign official?
4 Is a foreign official associated with the charity
and, if so, can the foreign official make decisions
regarding your business in that country?
5 Is the payment conditioned upon receiving
business or other benefits?
Who Is a Foreign Official?
The FCPA’s anti-bribery provisions apply to corrupt
payments made to (1) “any foreign official”; (2) “any foreign
political party or official thereof ”; (3) “any candidate for
foreign political office”; or (4) any person, while knowing
that all or a portion of the payment will be offered, given, or
promised to an individual falling within one of these three
categories. 111 Although the statute distinguishes between a
“foreign official,” “foreign political party or official thereof,”
and “candidate for foreign political office,” the term “foreign
official” in this guide generally refers to an individual
falling within any of these three categories.
The FCPA defines “foreign official” to include:
any officer or employee of a foreign government or
any department, agency, or instrumentality thereof,
19
or of a public international organization, or any person
acting in an official capacity for or on behalf of
any such government or department, agency, or instrumentality,
or for or on behalf of any such public
international organization. 112
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As this language makes clear, the FCPA broadly
applies to corrupt payments to “any” officer or employee
of a foreign government and to those acting on the foreign
government’s behalf. 113 The FCPA thus covers corrupt
payments to low-ranking employees and high-level
officials alike. 114
The FCPA prohibits payments to foreign officials, not
to foreign governments. 115 That said, companies contemplating
contributions or donations to foreign governments
should take steps to ensure that no monies are used for corrupt
purposes, such as the personal benefit of individual
foreign officials.
Department, Agency, or Instrumentality of a
Foreign Government
Foreign officials under the FCPA include officers
or employees of a department, agency, or instrumentality
of a foreign government. When a foreign government
is organized in a fashion similar to the U.S. system, what
constitutes a government department or agency is typically
clear (e.g., a ministry of energy, national security agency, or
transportation authority). 116 However, governments can be
organized in very different ways. 117 Many operate through
state-owned and state-controlled entities, particularly in
such areas as aerospace and defense manufacturing, banking
and finance, healthcare and life sciences, energy and
extractive industries, telecommunications, and transportation.
118 By including officers or employees of agencies and
instrumentalities within the definition of “foreign official,”
the FCPA accounts for this variability.
The term “instrumentality” is broad and can include
state-owned or state-controlled entities. Whether a particular
entity constitutes an “instrumentality” under the FCPA
requires a fact-specific analysis of an entity’s ownership,
control, status, and function. 119 A number of courts have
approved final jury instructions providing a non-exclusive
list of factors to be considered:
• the foreign state’s extent of ownership of the entity;
• the foreign state’s degree of control over the entity
(including whether key officers and directors of
the entity are, or are appointed by, government
officials);
• the foreign state’s characterization of the entity and
its employees;
• the circumstances surrounding the entity’s creation;
• the purpose of the entity’s activities;
• the entity’s obligations and privileges under the
foreign state’s law;
• the exclusive or controlling power vested in the
entity to administer its designated functions;
• the level of financial support by the foreign
state (including subsidies, special tax treatment,
government-mandated fees, and loans);
• the entity’s provision of services to the jurisdiction’s
residents;
• whether the governmental end or purpose sought
to be achieved is expressed in the policies of the
foreign government; and
• the general perception that the entity is performing
official or governmental functions. 120
Companies should consider these factors when evaluating
the risk of FCPA violations and designing compliance
programs.
DOJ and SEC have pursued cases involving instrumentalities
since the time of the FCPA’s enactment and
have long used an analysis of ownership, control, status,
and function to determine whether a particular entity is
an agency or instrumentality of a foreign government.
For example, the second-ever FCPA case charged by DOJ
involved a California company that paid bribes through a
Mexican corporation to two executives of a state-owned
20
Mexican national oil company. 121 And in the early 1980s,
DOJ and SEC brought cases involving a $1 million bribe to
the chairman of Trinidad and Tobago’s racing authority. 122
DOJ and SEC continue to regularly bring FCPA
cases involving bribes paid to employees of agencies and
instrumentalities of foreign governments. In one such
case, the subsidiary of a Swiss engineering company paid
bribes to officials of a state-owned and controlled electricity
commission. The commission was created by, owned
by, and controlled by the Mexican government, and it had
a monopoly on the transmission and distribution of electricity
in Mexico. Many of the commission’s board members
were cabinet-level government officials, and the director
was appointed by Mexico’s president. 123 Similarly, in
another recent case, Miami telecommunications executives
were charged with paying bribes to employees of Haiti’s
state-owned and controlled telecommunications company.
The telecommunications company was 97% owned and
100% controlled by the Haitian government, and its director
was appointed by Haiti’s president. 124
While no one factor is dispositive or necessarily more
important than another, as a practical matter, an entity is
unlikely to qualify as an instrumentality if a government
does not own or control a majority of its shares. However,
there are circumstances in which an entity would qualify
as an instrumentality absent 50% or greater foreign government
ownership, which is reflected in the limited number
of DOJ or SEC enforcement actions brought in such
situations. For example, in addition to being convicted of
funneling millions of dollars in bribes to two sitting presidents
in two different countries, a French issuer’s three
subsidiaries were convicted of paying bribes to employees
of a Malaysian telecommunications company that was 43%
owned by Malaysia’s Ministry of Finance. There, notwithstanding
its minority ownership stake in the company, the
Ministry held the status of a “special shareholder,” had veto
power over all major expenditures, and controlled important
operational decisions. 125 In addition, most senior
company officers were political appointees, including the
Chairman and Director, the Chairman of the Board of the
Tender Committee, and the Executive Director. 126 Thus,
despite the Malaysian government having a minority shareholder
position, the company was an instrumentality of the
Malaysian government as the government nevertheless had
substantial control over the company.
Companies and individuals should also remember
that, whether an entity is an instrumentality of a foreign
government or a private entity, commercial (i.e., privateto-private)
bribery may still violate the FCPA’s accounting
provisions, the Travel Act, anti-money laundering laws, and
other federal or foreign laws. Any type of corrupt payment
thus carries a risk of prosecution.
Public International Organizations
In 1998, the FCPA was amended to expand the definition
of “foreign official” to include employees and representatives
of public international organizations. 127 A “public international
organization” is any organization designated as such
by Executive Order under the International Organizations
Immunities Act, 22 U.S.C. § 288, or any other organization
that the President so designates. 128 Currently, public international
organizations include entities such as the World Bank,
the International Monetary Fund, the World Intellectual
Property Organization, the World Trade Organization, the
OECD, the Organization of American States, and numerous
others. A comprehensive list of organizations designated
as “public international organizations” is contained in 22
U.S.C. § 288 and can also be found on the U.S. Government
Printing Office website at http://www.gpo.gov/fdsys/.
How Are Payments to Third Parties
Treated?
The FCPA expressly prohibits corrupt payments
made through third parties or intermediaries. 129 Specifically,
it covers payments made to “any person, while knowing
that all or a portion of such money or thing of value will
be offered, given, or promised, directly or indirectly,” 130 to a
foreign official. Many companies doing business in a foreign
country retain a local individual or company to help them
conduct business. Although these foreign agents may provide
entirely legitimate advice regarding local customs and
procedures and may help facilitate business transactions,
21
companies should be aware of the risks involved in engaging
third-party agents or intermediaries. The fact that a
bribe is paid by a third party does not eliminate the potential
for criminal or civil FCPA liability. 131
For instance, a four-company joint venture used
two agents—a British lawyer and a Japanese trading
company—to bribe Nigerian government officials in
order to win a series of liquefied natural gas construction
projects. 132 Together, the four multi-national corporations
and the Japanese trading company paid a
combined $1.7 billion in civil and criminal sanctions
for their decade-long bribery scheme. In addition, the
subsidiary of one of the companies pleaded guilty and a
number of individuals, including the British lawyer and
the former CEO of one of the companies’ subsidiaries,
received significant prison terms.
Similarly, a medical device manufacturer entered into
a deferred prosecution agreement as the result of corrupt
payments it authorized its local Chinese distributor to pay
to Chinese officials. 133 Another company, a manufacturer
of specialty chemicals, committed multiple FCPA violations
through its agents in Iraq: a Canadian national and
the Canadian’s companies. Among other acts, the Canadian
national paid and promised to pay more than $1.5 million
in bribes to officials of the Iraqi Ministry of Oil to secure
sales of a fuel additive. Both the company and the Canadian
national pleaded guilty to criminal charges and resolved
civil enforcement actions by SEC. 134
In another case, the U.S. subsidiary of a Swiss freight
forwarding company was charged with paying bribes on
behalf of its customers in several countries. 135 Although the
U.S. subsidiary was not an issuer under the FCPA, it was an
“agent” of several U.S. issuers and was thus charged directly
with violating the FCPA. Charges against the freight forwarding
company and seven of its customers resulted in
over $236.5 million in sanctions. 136
Because Congress anticipated the use of third-party
agents in bribery schemes—for example, to avoid actual
knowledge of a bribe—it defined the term “knowing” in a
way that prevents individuals and businesses from avoiding
liability by putting “any person” between themselves and
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the foreign officials. 137 Under the FCPA, a person’s state of
mind is “knowing” with respect to conduct, a circumstance,
or a result if the person:
• is aware that [he] is engaging in such conduct,
that such circumstance exists, or that such result is
substantially certain to occur; or
• has a firm belief that such circumstance exists or
that such result is substantially certain to occur. 138
Thus, a person has the requisite knowledge when he is
aware of a high probability of the existence of such circumstance,
unless the person actually believes that such circumstance
does not exist. 139 As Congress made clear, it meant to
impose liability not only on those with actual knowledge
of wrongdoing, but also on those who purposefully avoid
actual knowledge:
[T]he so-called “head-in-the-sand” problem—variously
described in the pertinent authorities as “conscious
disregard,” “willful blindness” or “deliberate
ignorance”—should be covered so that management
officials could not take refuge from the Act’s prohibitions
by their unwarranted obliviousness to any
action (or inaction), language or other “signaling device”
that should reasonably alert them of the “high
probability” of an FCPA violation. 140
Common red flags associated with third parties include:
• excessive commissions to third-party agents or
consultants;
• unreasonably large discounts to third-party
distributors;
• third-party “consulting agreements” that include
only vaguely described services;
• the third-party consultant is in a different line of
business than that for which it has been engaged;
• the third party is related to or closely associated
with the foreign official;
22
• the third party became part of the transaction at
the express request or insistence of the foreign
official;
• the third party is merely a shell company incorporated
in an offshore jurisdiction; and
• the third party requests payment to offshore
bank accounts.
Businesses may reduce the FCPA risks associated
with third-party agents by implementing an effective compliance
program, which includes due diligence of any prospective
foreign agents.
United States v. Kozeny, et al.
In December 2011, the U.S. Court of Appeals
for the Second Circuit upheld a conscious avoidance
instruction given during the 2009 trial of a businessman
who was convicted of conspiring to violate the FCPA’s
anti-bribery provisions by agreeing to make payments to
Azeri officials in a scheme to encourage the privatization
of the Azerbaijan Republic’s state oil company. The
court of appeals found that the instruction did not lack
a factual predicate, citing evidence and testimony at
trial demonstrating that the defendant knew corruption
was pervasive in Azerbaijan; that he was aware of his
business partner’s reputation for misconduct; that he
had created two U.S. companies in order to shield
himself and other investors from potential liability for
payments made in violation of the FCPA; and that the
defendant expressed concerns during a conference call
about whether his business partner and company were
bribing officials.
The court of appeals also rejected the defendant’s
contention that the conscious avoidance charge had
improperly permitted the jury to convict him based on
negligence, explaining that ample evidence in the record
showed that the defendant had “serious concerns”
about the legality of his partner’s business practices
“and worked to avoid learning exactly what [he] was
doing,” and noting that the district court had specifically
instructed the jury not to convict based on negligence.
What Affirmative Defenses Are
Available?
The FCPA’s anti-bribery provisions contain two affirmative
defenses: (1) that the payment was lawful under the
written laws of the foreign country (the “local law” defense),
and (2) that the money was spent as part of demonstrating a
product or performing a contractual obligation (the “reasonable
and bona fide business expenditure” defense). Because
these are affirmative defenses, the defendant bears the burden
of proving them.
The Local Law Defense
For the local law defense to apply, a defendant must
establish that “the payment, gift, offer, or promise of anything
of value that was made, was lawful under the written
laws and regulations of the foreign official’s, political
party’s, party official’s, or candidate’s country.” 141 The defendant
must establish that the payment was lawful under the
foreign country’s written laws and regulations at the time
of the offense. In creating the local law defense in 1988,
Congress sought “to make clear that the absence of written
laws in a foreign official’s country would not by itself be sufficient
to satisfy this defense.” 142 Thus, the fact that bribes
may not be prosecuted under local law is insufficient to
establish the defense. In practice, the local law defense arises
infrequently, as the written laws and regulations of countries
rarely, if ever, permit corrupt payments. Nevertheless,
if a defendant can establish that conduct that otherwise
falls within the scope of the FCPA’s anti-bribery provisions
was lawful under written, local law, he or she would have a
defense to prosecution.
In United States v. Kozeny, the defendant unsuccessfully
sought to assert the local law defense regarding the law
of Azerbaijan. The parties disputed the contents and applicability
of Azeri law, and each presented expert reports and
testimony on behalf of their conflicting interpretations. The
court ruled that the defendant could not invoke the FCPA’s
affirmative defense because Azeri law did not actually legalize
the bribe payment. The court concluded that an exception
under Azeri law relieving bribe payors who voluntarily
23
disclose bribe payments to the authorities of criminal liability
did not make the bribes legal. 143
Reasonable and Bona Fide Expenditures
The FCPA allows companies to provide reasonable
and bona fide travel and lodging expenses to a foreign
official, and it is an affirmative defense where expenses
are directly related to the promotion, demonstration, or
explanation of a company’s products or services, or are
related to a company’s execution or performance of a contract
with a foreign government or agency. 144 Trips that
are primarily for personal entertainment purposes, however,
are not bona fide business expenses and may violate
the FCPA’s anti-bribery provisions. 145 Moreover, when
expenditures, bona fide or not, are mischaracterized in a
company’s books and records, or where unauthorized or
improper expenditures occur due to a failure to implement
adequate internal controls, they may also violate
the FCPA’s accounting provisions. Purposeful mischaracterization
of expenditures may also, of course, indicate a
corrupt intent.
DOJ and SEC have consistently recognized that businesses,
both foreign and domestic, are permitted to pay for
reasonable expenses associated with the promotion of their
products and services or the execution of existing contracts.
In addition, DOJ has frequently provided guidance about
legitimate promotional and contract-related expenses—
addressing travel and lodging expenses in particular—
through several opinion procedure releases. Under the circumstances
presented in those releases, 146 DOJ opined that
the following types of expenditures on behalf of foreign
officials did not warrant FCPA enforcement action:
• travel and expenses to visit company facilities or
operations;
• travel and expenses for training; and
• product demonstration or promotional activities,
including travel and expenses for meetings.
Whether any particular payment is a bona fide expenditure
necessarily requires a fact-specific analysis. But the
following non-exhaustive list of safeguards, compiled from
several releases, may be helpful to businesses in evaluating
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The FCPA:
Anti-Bribery Provisions
whether a particular expenditure is appropriate or may risk
violating the FCPA:
• Do not select the particular officials who will participate
in the party’s proposed trip or program 147
or else select them based on pre-determined, meritbased
criteria. 148
• Pay all costs directly to travel and lodging vendors
and/or reimburse costs only upon presentation of a
receipt. 149
• Do not advance funds or pay for reimbursements
in cash. 150
• Ensure that any stipends are reasonable approximations
of costs likely to be incurred 151 and/or that
expenses are limited to those that are necessary and
reasonable. 152
• Ensure the expenditures are transparent,
both within the company and to the foreign
government. 153
• Do not condition payment of expenses on any
action by the foreign official. 154
• Obtain written confirmation that payment of the
expenses is not contrary to local law. 155
• Provide no additional compensation, stipends, or
spending money beyond what is necessary to pay
for actual expenses incurred. 156
• Ensure that costs and expenses on behalf of the
foreign officials will be accurately recorded in the
company’s books and records. 157
In sum, while certain expenditures are more likely to
raise red flags, they will not give rise to prosecution if they
are (1) reasonable, (2) bona fide, and (3) directly related
to (4) the promotion, demonstration, or explanation of
products or services or the execution or performance of
a contract. 158
24
What Are Facilitating or Expediting
Payments?
The FCPA’s bribery prohibition contains a narrow
exception for “facilitating or expediting payments” made in
furtherance of routine governmental action. 159 The facilitating
payments exception applies only when a payment is
made to further “routine governmental action” that involves
non-discretionary acts. 160 Examples of “routine governmental
action” include processing visas, providing police protection
or mail service, and supplying utilities like phone
service, power, and water. Routine government action does
not include a decision to award new business or to continue
business with a particular party. 161 Nor does it include acts
that are within an official’s discretion or that would constitute
misuse of an official’s office. 162 Thus, paying an official a
small amount to have the power turned on at a factory might
be a facilitating payment; paying an inspector to ignore the
fact that the company does not have a valid permit to operate
the factory would not be a facilitating payment.
Examples of “Routine Governmental Action”
An action which is ordinarily and commonly
performed by a foreign official in—
• obtaining permits, licenses, or other official
documents to qualify a person to do business in a
foreign country;
• processing governmental papers, such as visas and
work orders;
• providing police protection, mail pickup and
delivery, or scheduling inspections associated with
contract performance or inspections related to
transit of goods across country;
• providing phone service, power and water supply,
loading and unloading cargo, or protecting
perishable products or commodities from
deterioration; or
• actions of a similar nature.
Whether a payment falls within the exception is not
dependent on the size of the payment, though size can be
telling, as a large payment is more suggestive of corrupt
intent to influence a non-routine governmental action. But,
like the FCPA’s anti-bribery provisions more generally, the
facilitating payments exception focuses on the purpose of the
payment rather than its value. For instance, an Oklahomabased
corporation violated the FCPA when its subsidiary
paid Argentine customs officials approximately $166,000
to secure customs clearance for equipment and materials
that lacked required certifications or could not be imported
under local law and to pay a lower-than-applicable duty
rate. The company’s Venezuelan subsidiary had also paid
Venezuelan customs officials approximately $7,000 to permit
the importation and exportation of equipment and materials
not in compliance with local regulations and to avoid a full
inspection of the imported goods. 163 In another case, three
subsidiaries of a global supplier of oil drilling products and
services were criminally charged with authorizing an agent to
make at least 378 corrupt payments (totaling approximately
$2.1 million) to Nigerian Customs Service officials for preferential
treatment during the customs process, including the
reduction or elimination of customs duties. 164
Labeling a bribe as a “facilitating payment” in a company’s
books and records does not make it one. A Swiss
offshore drilling company, for example, recorded payments
to its customs agent in the subsidiary’s “facilitating
payment” account, even though company personnel
believed the payments were, in fact, bribes. The company
was charged with violating both the FCPA’s anti-bribery
and accounting provisions. 165
Although true facilitating payments are not illegal
under the FCPA, they may still violate local law in the
countries where the company is operating, and the OECD’s
Working Group on Bribery recommends that all countries
encourage companies to prohibit or discourage facilitating
payments, which the United States has done regularly. 166
In addition, other countries’ foreign bribery laws, such as
the United Kingdom’s, may not contain an exception for
facilitating payments. 167 Individuals and companies should
therefore be aware that although true facilitating payments
25
are permissible under the FCPA, they may still subject a
company or individual to sanctions. As with any expenditure,
facilitating payments may still violate the FCPA if they are
not properly recorded in an issuer’s books and records. 168
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Hypothetical: Facilitating Payments
Company A is a large multi-national mining company with operations in Foreign Country, where it recently identified
a significant new ore deposit It has ready buyers for the new ore but has limited capacity to get it to market In order to
increase the size and speed of its ore export, Company A will need to build a new road from its facility to the port that can
accommodate larger trucks Company A retains an agent in Foreign Country to assist it in obtaining the required permits,
including an environmental permit, to build the road The agent informs Company A’s vice president for international
operations that he plans to make a one-time small cash payment to a clerk in the relevant government office to ensure
that the clerk files and stamps the permit applications expeditiously, as the agent has experienced delays of three months
when he has not made this “grease” payment The clerk has no discretion about whether to file and stamp the permit
applications once the requisite filing fee has been paid The vice president authorizes the payment
A few months later, the agent tells the vice president that he has run into a problem obtaining a necessary environmental
permit. It turns out that the planned road construction would adversely impact an environmentally sensitive and protected
local wetland. While the problem could be overcome by rerouting the road, such rerouting would cost Company A $1
million more and would slow down construction by six months. It would also increase the transit time for the ore and
reduce the number of monthly shipments. The agent tells the vice president that he is good friends with the director of
Foreign Country’s Department of Natural Resources and that it would only take a modest cash payment to the director
and the “problem would go away.” The vice president authorizes the payment, and the agent makes it. After receiving the
payment, the director issues the permit, and Company A constructs its new road through the wetlands.
Was the payment to the clerk a violation of the FCPA?
No. Under these circumstances, the payment to the clerk would qualify as a facilitating payment, since it is a one-time,
small payment to obtain a routine, non-discretionary governmental service that Company A is entitled to receive (i.e., the
stamping and filing of the permit application). However, while the payment may qualify as an exception to the FCPA’s
anti-bribery provisions, it may violate other laws, both in Foreign Country and elsewhere. In addition, if the payment is not
accurately recorded, it could violate the FCPA’s books and records provision.
Was the payment to the director a violation of the FCPA?
Yes. The payment to the director of the Department of Natural Resources was in clear violation of the FCPA, since it
was designed to corruptly influence a foreign official into improperly approving a permit. The issuance of the environmental
permit was a discretionary act, and indeed, Company A should not have received it. Company A, its vice president, and the
local agent may all be prosecuted for authorizing and paying the bribe.
26
Does the FCPA Apply to Cases of
Extortion or Duress?
Situations involving extortion or duress will not give
rise to FCPA liability because a payment made in response to
true extortionate demands under imminent threat of physical
harm cannot be said to have been made with corrupt intent
or for the purpose of obtaining or retaining business. 169 In
enacting the FCPA, Congress recognized that real-world
situations might arise in which a business is compelled to pay
an official in order to avoid threats to health and safety. As
Congress explained, “a payment to an official to keep an oil
rig from being dynamited should not be held to be made with
the requisite corrupt purpose.” 170
Mere economic coercion, however, does not amount to
extortion. As Congress noted when it enacted the FCPA:
“The defense that the payment was demanded on the part of
a government official as a price for gaining entry into a market
or to obtain a contract would not suffice since at some
point the U.S. company would make a conscious decision
whether or not to pay a bribe.” 171 The fact that the payment
was “first proposed by the recipient … does not alter the corrupt
purpose on the part of the person paying the bribe.” 172
This distinction between extortion and economic coercion
was recognized by the court in United States v. Kozeny.
There, the court concluded that although an individual who
makes a payment under duress (i.e., upon threat of physical
harm) will not be criminally liable under the FCPA, 173 a
bribe payor who claims payment was demanded as a price for
gaining market entry or obtaining a contract “cannot argue
that he lacked the intent to bribe the official because he made
the ‘conscious decision’ to pay the official.” 174 While the
bribe payor in this situation “could have turned his back and
walked away,” in the oil rig example, “he could not.” 175
Businesses operating in high-risk countries may face
real threats of violence or harm to their employees, and
payments made in response to imminent threats to health
or safety do not violate the FCPA. 176 If such a situation
arises, and to ensure the safety of its employees, companies
should immediately contact the appropriate U.S. embassy
for assistance.
Principles of Corporate Liability for
Anti-Bribery Violations
General principles of corporate liability apply to the
FCPA. Thus, a company is liable when its directors, officers,
employees, or agents, acting within the scope of their employment,
commit FCPA violations intended, at least in part, to
benefit the company. 177 Similarly, just as with any other statute,
DOJ and SEC look to principles of parent-subsidiary
and successor liability in evaluating corporate liability.
Parent-Subsidiary Liability
There are two ways in which a parent company may
be liable for bribes paid by its subsidiary. First, a parent may
have participated sufficiently in the activity to be directly
liable for the conduct—as, for example, when it directed its
subsidiary’s misconduct or otherwise directly participated
in the bribe scheme.
Second, a parent may be liable for its subsidiary’s conduct
under traditional agency principles. The fundamental
characteristic of agency is control. 178 Accordingly, DOJ and
SEC evaluate the parent’s control—including the parent’s
knowledge and direction of the subsidiary’s actions, both
generally and in the context of the specific transaction—
when evaluating whether a subsidiary is an agent of the parent.
Although the formal relationship between the parent
and subsidiary is important in this analysis, so are the practical
realities of how the parent and subsidiary actually interact.
If an agency relationship exists, a subsidiary’s actions
and knowledge are imputed to its parent. 179 Moreover,
under traditional principles of respondeat superior, a company
is liable for the acts of its agents, including its employees,
undertaken within the scope of their employment and
intended, at least in part, to benefit the company. 180 Thus,
if an agency relationship exists between a parent and a
subsidiary, the parent is liable for bribery committed by
the subsidiary’s employees. For example, SEC brought an
administrative action against a parent for bribes paid by the
president of its indirect, wholly owned subsidiary. In that
matter, the subsidiary’s president reported directly to the
CEO of the parent issuer, and the issuer routinely identified
27
the president as a member of its senior management in its
annual filing with SEC and in annual reports. Additionally,
the parent’s legal department approved the retention of the
third-party agent through whom the bribes were arranged
despite a lack of documented due diligence and an agency
agreement that violated corporate policy; also, an official of
the parent approved one of the payments to the third-party
agent. 181 Under these circumstances, the parent company
had sufficient knowledge and control of its subsidiary’s
actions to be liable under the FCPA.
Successor Liability
Companies acquire a host of liabilities when they
merge with or acquire another company, including those arising
out of contracts, torts, regulations, and statutes. As a general
legal matter, when a company merges with or acquires
another company, the successor company assumes the predecessor
company’s liabilities. 182 Successor liability is an integral
component of corporate law and, among other things, prevents
companies from avoiding liability by reorganizing. 183
Successor liability applies to all kinds of civil and criminal
liabilities, 184 and FCPA violations are no exception. Whether
successor liability applies to a particular corporate transaction
depends on the facts and the applicable state, federal,
and foreign law. Successor liability does not, however, create
liability where none existed before. For example, if an issuer
were to acquire a foreign company that was not previously
subject to the FCPA’s jurisdiction, the mere acquisition of
that foreign company would not retroactively create FCPA
liability for the acquiring issuer.
DOJ and SEC encourage companies to conduct preacquisition
due diligence and improve compliance programs
and internal controls after acquisition for a variety
of reasons. First, due diligence helps an acquiring company
to accurately value the target company. Contracts obtained
through bribes may be legally unenforceable, business
obtained illegally may be lost when bribe payments are
stopped, there may be liability for prior illegal conduct, and
the prior corrupt acts may harm the acquiring company’s
reputation and future business prospects. Identifying these
issues before an acquisition allows companies to better
chapter 2
The FCPA:
Anti-Bribery Provisions
evaluate any potential post-acquisition liability and thus
properly assess the target’s value. 185 Second, due diligence
reduces the risk that the acquired company will continue to
pay bribes. Proper pre-acquisition due diligence can identify
business and regional risks and can also lay the foundation
for a swift and successful post-acquisition integration
into the acquiring company’s corporate control and compliance
environment. Third, the consequences of potential
violations uncovered through due diligence can be handled
by the parties in an orderly and efficient manner through
negotiation of the costs and responsibilities for the investigation
and remediation. Finally, comprehensive due diligence
demonstrates a genuine commitment to uncovering
and preventing FCPA violations.
In a significant number of instances, DOJ and
SEC have declined to take action against companies
that voluntarily disclosed and remediated conduct
and cooperated with DOJ and SEC in the merger and
acquisition context. 186 And DOJ and SEC have only
taken action against successor companies in limited circumstances,
generally in cases involving egregious and
sustained violations or where the successor company
directly participated in the violations or failed to stop the
misconduct from continuing after the acquisition. In one
case, a U.S.-based issuer was charged with books and records
and internal controls violations for continuing a kickback
scheme originated by its predecessor. 187 Another recent case
involved a merger between two tobacco leaf merchants,
where prior to the merger each company committed
FCPA violations through its foreign subsidiaries, involving
multiple countries over the course of many years. At each
company, the bribes were directed by the parent company’s
senior management. The two issuers then merged to form
a new public company. Under these circumstances—the
merger of two public companies that had each engaged in
28
Practical Tips to Reduce FCPA Risk in Mergers and Acquisitions
Companies pursuing mergers or acquisitions can take certain steps to identify and potentially reduce FCPA risks:
• M&A Opinion Procedure Release Requests: One option is to seek an opinion from DOJ in anticipation of a
potential acquisition, such as occurred with Opinion Release 08-02 That case involved special circumstances,
namely, severely limited pre-acquisition due diligence available to the potential acquiring company, and, because
it was an opinion release (i e , providing certain assurances by DOJ concerning prospective conduct), it necessarily
imposed demanding standards and prescriptive timeframes in return for specific assurances from DOJ, which
SEC, as a matter of discretion, also honors Thus, obtaining an opinion from DOJ can be a good way to address
specific due diligence challenges, but, because of the nature of such an opinion, it will likely contain more stringent
requirements than may be necessary in all circumstances
• M&A Risk-Based FCPA Due Diligence and Disclosure: As a practical matter, most acquisitions will typically not
require the type of prospective assurances contained in an opinion from DOJ DOJ and SEC encourage companies
engaging in mergers and acquisitions to: (1) conduct thorough risk-based FCPA and anti-corruption due diligence
on potential new business acquisitions; (2) ensure that the acquiring company’s code of conduct and compliance
policies and procedures regarding the FCPA and other anti-corruption laws apply as quickly as is practicable to
newly acquired businesses or merged entities; (3) train the directors, officers, and employees of newly acquired
businesses or merged entities, and when appropriate, train agents and business partners, on the FCPA and other
relevant anti-corruption laws and the company’s code of conduct and compliance policies and procedures; (4)
conduct an FCPA-specific audit of all newly acquired or merged businesses as quickly as practicable; and (5) disclose
any corrupt payments discovered as part of its due diligence of newly acquired entities or merged entities DOJ
and SEC will give meaningful credit to companies who undertake these actions, and, in appropriate circumstances,
DOJ and SEC may consequently decline to bring enforcement actions
bribery—both the new entity and the foreign subsidiaries
were liable under the FCPA. The new parent entered into
a non-prosecution agreement with DOJ and settled a civil
action with SEC, while the company’s subsidiaries, which
also merged, pleaded guilty. 188
More often, DOJ and SEC have pursued enforcement
actions against the predecessor company (rather
than the acquiring company), particularly when the
acquiring company uncovered and timely remedied the
violations or when the government’s investigation of
the predecessor company preceded the acquisition. In
one such case, an Ohio-based health care company’s due
diligence of an acquisition target uncovered FCPA violations
by the target’s subsidiary, and, before the merger
was completed, the subsidiary’s violations were disclosed
to DOJ and SEC. The subsidiary pleaded guilty and
paid a $2 million criminal fine, 189 the acquisition target
settled with SEC and paid a $500,000 civil penalty, 190
and no successor liability was sought against the acquiring
entity. In another case, a Pennsylvania-based issuer
that supplied heating and air conditioning products and
services was subject to an ongoing investigation by DOJ
and SEC at the time that it was acquired; DOJ and SEC
resolved enforcement actions only against the predecessor
company, which had by that time become a wholly owned
subsidiary of the successor company. 191
DOJ and SEC have also brought actions only against a
predecessor company where its FCPA violations are discovered
after acquisition. For example, when a Florida-based
U.S. company discovered in post-acquisition due diligence
that the telecommunications company (a domestic concern)
it had acquired had engaged in foreign bribery, the
successor company disclosed the FCPA violations to DOJ.
It then conducted an internal investigation, cooperated
fully with DOJ, and took appropriate remedial action—
including terminating senior management at the acquired
29
company. No enforcement action was taken against the successor,
but the predecessor company pleaded guilty to one
count of violating the FCPA and agreed to pay a $2 million
fine. 192 Later, four executives from the predecessor company
were convicted of FCPA violations, three of whom received
terms of imprisonment. 193
On occasion, when an enforcement action has
been taken against a predecessor company, the successor
seeks assurances that it will not be subject to a future
enforcement action. In one such case, a Dutch predecessor
resolved FCPA charges with DOJ through a deferred
prosecution agreement. 194 While both the predecessor
and successor signed the agreement, which included a
commitment to ongoing cooperation and an improved
compliance program, only the predecessor company was
charged; in signing the agreement, the successor company
gained the certainty of conditional release from criminal
liability, even though it was not being pursued for FCPA
violations. 195 In another case, after a Connecticut-based
company uncovered FCPA violations by a California
company it sought to acquire, both companies voluntarily
disclosed the conduct to DOJ and SEC. 196 The predecessor
company resolved its criminal liability through a
non-prosecution agreement with DOJ that included an
$800,000 monetary penalty and also settled with SEC,
paying a total of $1.1 million in disgorgement, pre-judgment
interest, and civil penalties. The successor company
proceeded with the acquisition and separately entered
into a non-prosecution agreement with DOJ in which it
agreed, among other things, to ensure full performance of
the predecessor company’s non-prosecution agreement.
This agreement provided certainty to the successor concerning
its FCPA liability. 197
Importantly, a successor company’s voluntary disclosure,
appropriate due diligence, and implementation of an
effective compliance program may also decrease the likelihood
of an enforcement action regarding an acquired company’s
post-acquisition conduct when pre-acquisition due
diligence is not possible. 198
chapter 2
The FCPA:
Anti-Bribery Provisions
30
Hypothetical: Successor Liability Where Acquired Company Was Not Previously
Subject to the FCPA
Company A is a Delaware corporation with its principal offices in the United States and whose shares are listed on
a national U.S. exchange. Company A is considering acquiring Foreign Company, which is not an issuer or a domestic
concern. Foreign Company takes no actions within the United States that would make it subject to territorial jurisdiction.
Company A’s proposed acquisition would make Foreign Company a subsidiary of Company A.
Scenario 1:
Prior to acquiring Foreign Company, Company A engages in extensive due diligence of Foreign Company, including: (1)
having its legal, accounting, and compliance departments review Foreign Company’s sales and financial data, its customer
contracts, and its third-party and distributor agreements; (2) performing a risk-based analysis of Foreign Company’s customer
base; (3) performing an audit of selected transactions engaged in by Foreign Company; and (4) engaging in discussions
with Foreign Company’s general counsel, vice president of sales, and head of internal audit regarding all corruption risks,
compliance efforts, and any other corruption-related issues that have surfaced at Foreign Company over the past ten years.
This due diligence aims to determine whether Foreign Company has appropriate anti-corruption and compliance policies
in place, whether Foreign Company’s employees have been adequately trained regarding those policies, how Foreign
Company ensures that those policies are followed, and what remedial actions are taken if the policies are violated.
During the course of its due diligence, Company A learns that Foreign Company has made several potentially
improper payments in the form of an inflated commission to a third-party agent in connection with a government contract
with Foreign Country. Immediately after the acquisition, Company A discloses the conduct to DOJ and SEC, suspends
and terminates those employees and the third-party agent responsible for the payments, and makes certain that the
illegal payments have stopped. It also quickly integrates Foreign Company into Company A’s own robust internal controls,
including its anti-corruption and compliance policies, which it communicates to its new employees through required online
and in-person training in the local language. Company A also requires Foreign Company’s third-party distributors and other
agents to sign anti-corruption certifications, complete training, and sign new contracts that incorporate FCPA and anticorruption
representations and warranties and audit rights.
Based on these facts, could DOJ or SEC prosecute Company A?
No. Although DOJ and SEC have jurisdiction over Company A because it is an issuer, neither could pursue Company
A for conduct that occurred prior to its acquisition of Foreign Company. As Foreign Company was neither an issuer nor a
domestic concern and was not subject to U.S. territorial jurisdiction, DOJ and SEC have no jurisdiction over its pre-acquisition
misconduct. The acquisition of a company does not create jurisdiction where none existed before.
Importantly, Company A’s extensive pre-acquisition due diligence allowed it to identify and halt the corruption. As
there was no continuing misconduct post-acquisition, the FCPA was not violated.
Scenario 2:
Company A performs only minimal and pro forma pre-acquisition due diligence. It does not conduct a risk-based
analysis, and its review of Foreign Company’s data, contracts, and third-party and distributor agreements is cursory.
Company A acquires Foreign Company and makes it a wholly owned subsidiary. Although Company A circulates its
compliance policies to all new personnel after the acquisition, it does not translate the compliance policies into the local
language or train its new personnel or third-party agents on anti-corruption issues.
A few months after the acquisition, an employee in Company A’s international sales office (Sales Employee) learns
from a legacy Foreign Company employee that for years the government contract that generated most of Foreign
Company’s revenues depended on inflated commissions to a third-party agent “to make the right person happy at Foreign
Government Agency.” Sales Employee is told that unless the payments continue the business will likely be lost, which
would mean that Company A’s new acquisition would quickly become a financial failure. The payments continue for two
(cont’d)
31
chapter 2
The FCPA:
Anti-Bribery Provisions
years after the acquisition. After another employee of Company A reports the long-running bribe scheme to a director at
Foreign Government Agency, Company A stops the payments and DOJ and SEC investigate.
Based on these facts, would DOJ or SEC charge Company A?
Yes. DOJ and SEC have prosecuted companies like Company A in similar circumstances. Any charges would not,
however, be premised upon successor liability, but rather on Company A’s post-acquisition bribe payments, which
themselves created criminal and civil liability for Company A.
Scenario 3:
Under local law, Company A’s ability to conduct pre-acquisition due diligence on Foreign Company is limited. In the
due diligence it does conduct, Company A determines that Foreign Company is doing business in high-risk countries
and in high-risk industries but finds no red flags specific to Foreign Company’s operations. Post-acquisition, Company
A conducts extensive due diligence and determines that Foreign Company had paid bribes to officials with Foreign
Government Agency. Company A takes prompt action to remediate the problem, including following the measures set
forth in Opinion Procedure Release No. 08-02. Among other actions, it voluntarily discloses the misconduct to DOJ and
SEC, ensures all bribes are immediately stopped, takes remedial action against all parties involved in the corruption, and
quickly incorporates Foreign Company into a robust compliance program and Company A’s other internal controls.
Based on these facts, would DOJ or SEC prosecute Company A?
DOJ and SEC have declined to prosecute companies like Company A in similar circumstances Companies can follow
the measures set forth in Opinion Procedure Release No 08-02, or seek their own opinions, where adequate pre-acquisition
due diligence is not possible
Hypothetical: Successor Liability Where Acquired Company Was Already Subject to
the FCPA
Both Company A and Company B are Delaware corporations with their principal offices in the United States Both
companies’ shares are listed on a national U S exchange
Scenario 1:
Company A is considering acquiring several of Company B’s business lines. Prior to the acquisition, Company A engages
in extensive due diligence, including: (1) having its legal, accounting, and compliance departments review Company B’s
sales and financial data, its customer contracts, and its third-party and distributor agreements; (2) performing a risk-based
analysis of Company B’s customer base; (3) performing an audit of selected transactions engaged in by Company B; and
(4) engaging in discussions with Company B’s general counsel, vice president of sales, and head of internal audit regarding
all corruption risks, compliance efforts, and any other major corruption-related issues that have surfaced at Company B
over the past ten years. This due diligence aims to determine whether Company B has appropriate anti-corruption and
compliance policies in place, whether Company B’s employees have been adequately trained regarding those policies,
how Company B ensures that those policies are followed, and what remedial actions are taken if the policies are violated.
During the course of its due diligence, Company A learns that Company B has made several potentially improper
payments in connection with a government contract with Foreign Country. As a condition of the acquisition, Company A
requires Company B to disclose the misconduct to the government. Company A makes certain that the illegal payments
(cont’d)
32
have stopped and quickly integrates Company B’s business lines into Company A’s own robust internal controls, including
its anti-corruption and compliance policies, which it communicates to its new employees through required online and inperson
training in the local language. Company A also requires Company B’s third-party distributors and other agents to
sign anti-corruption certifications, complete training, and sign new contracts that incorporate FCPA and anti-corruption
representations and warranties and audit rights.
Based on these facts, would DOJ or SEC prosecute?
DOJ and SEC have declined to prosecute companies like Company A in similar circumstances. DOJ and SEC
encourage companies like Company A to conduct extensive FCPA due diligence. By uncovering the corruption, Company
A put itself in a favorable position, and, because the corrupt payments have stopped, Company A has no continuing
liability. Whether DOJ and SEC might charge Company B depends on facts and circumstances beyond the scope of this
hypothetical. DOJ would consider its Principles of Federal Prosecution of Business Organizations and SEC would consider
the factors contained in the Seaboard Report, both of which are discussed in Chapter 5. In general, the more egregious
and long-standing the corruption, the more likely it is that DOJ and SEC would prosecute Company B. In certain limited
circumstances, DOJ and SEC have in the past declined to bring charges against acquired companies, recognizing that
acquiring companies may bear much of the reputational damage and costs associated with such charges.
Scenario 2:
Company A plans to acquire Company B Although, as in Scenario 1, Company A conducts extensive due diligence, it
does not uncover the bribery until after the acquisition Company A then makes certain that the illegal payments stop and
voluntarily discloses the misconduct to DOJ and SEC It quickly integrates Company B into Company A’s own robust internal
controls, including its anti-corruption and compliance policies, which it communicates to its new employees through required
online and in-person training in the local language Company A also requires Company B’s third-party distributors and other
agents to sign anti-corruption certifications, complete training, and sign new contracts that incorporate FCPA and anticorruption
representations and warranties and audit rights
Based on these facts, would DOJ or SEC prosecute?
Absent unusual circumstances not contemplated by this hypothetical, DOJ and SEC are unlikely to prosecute
Company A for the pre-acquisition misconduct of Company B, provided that Company B still exists in a form that would
allow it to be prosecuted separately (e.g., Company B is a subsidiary of Company A). DOJ and SEC understand that no
due diligence is perfect and that society benefits when companies with strong compliance programs acquire and improve
companies with weak ones. At the same time, however, neither the liability for corruption—nor the harms caused by it—
are eliminated when one company acquires another. Whether DOJ and SEC will pursue a case against Company B (or, in
unusual circumstances, Company A) will depend on consideration of all the factors in the Principles of Federal Prosecution
of Business Organizations and the Seaboard Report, respectively.
Scenario 3:
Company A merges with Company B, which is in the same line of business and interacts with the same Foreign
Government customers, and forms Company C Due diligence before the merger reveals that both Company A and
Company B have been engaging in similar bribery In both cases, the bribery was extensive and known by high-level
management within the companies
Based on these facts, would DOJ or SEC prosecute?
Yes. DOJ and SEC have prosecuted companies like Company C on the basis of successor liability. Company C is a
combination of two companies that both violated the FCPA, and their merger does not eliminate their liability. In addition,
since Company C is an ongoing concern, DOJ and SEC may impose a monitorship to ensure that the bribery has ceased
and a compliance program is developed to prevent future misconduct.
33
Additional Principles of Criminal
Liability for Anti-Bribery Violations:
Aiding and Abetting and Conspiracy
Under federal law, individuals or companies that aid
or abet a crime, including an FCPA violation, are as guilty as
if they had directly committed the offense themselves. The
aiding and abetting statute provides that whoever “commits
an offense against the United States or aids, abets, counsels,
commands, induces or procures its commission,” or “willfully
causes an act to be done which if directly performed
by him or another would be an offense against the United
States,” is punishable as a principal. 199 Aiding and abetting is
not an independent crime, and the government must prove
that an underlying FCPA violation was committed. 200
Individuals and companies, including foreign nationals
and companies, may also be liable for conspiring to
violate the FCPA—i.e., for agreeing to commit an FCPA
violation—even if they are not, or could not be, independently
charged with a substantive FCPA violation. For
instance, a foreign, non-issuer company could be convicted
of conspiring with a domestic concern to violate the FCPA.
Under certain circumstances, it could also be held liable
for the domestic concern’s substantive FCPA violations
under Pinkerton v. United States, which imposes liability on
a defendant for reasonably foreseeable crimes committed
by a co-conspirator in furtherance of a conspiracy that the
defendant joined. 201
A foreign company or individual may be held liable
for aiding and abetting an FCPA violation or for conspiring
to violate the FCPA, even if the foreign company or individual
did not take any act in furtherance of the corrupt
payment while in the territory of the United States. In conspiracy
cases, the United States generally has jurisdiction
over all the conspirators where at least one conspirator is
an issuer, domestic concern, or commits a reasonably foreseeable
overt act within the United States. 202 For example,
if a foreign company or individual conspires to violate the
FCPA with someone who commits an overt act within the
United States, the United States can prosecute the foreign
company or individual for the conspiracy. The same principle
applies to aiding and abetting violations. For instance,
chapter 2
The FCPA:
Anti-Bribery Provisions
even though they took no action in the United States,
Japanese and European companies were charged with conspiring
with and aiding and abetting a domestic concern’s
FCPA violations. 203
Additional Principles of Civil Liability
for Anti-Bribery Violations: Aiding and
Abetting and Causing
Both companies and individuals can be held civilly
liable for aiding and abetting FCPA anti-bribery violations
if they knowingly or recklessly provide substantial assistance
to a violator. 204 Similarly, in the administrative proceeding
context, companies and individuals may be held
liable for causing FCPA violations. 205 This liability extends
to the subsidiaries and agents of U.S. issuers.
In one case, the U.S. subsidiary of a Swiss freight forwarding
company was held civilly liable for paying bribes on
behalf of its customers in several countries. 206 Although the
U.S. subsidiary was not an issuer for purposes of the FCPA,
it was an “agent” of several U.S. issuers. By paying bribes on
behalf of its issuers’ customers, the subsidiary both directly
violated and aided and abetted the issuers’ FCPA violations.
What Is the Applicable Statute of
Limitations?
Statute of Limitations in Criminal Cases
The FCPA’s anti-bribery and accounting provisions
do not specify a statute of limitations for criminal actions.
Accordingly, the general five-year limitations period set
forth in 18 U.S.C. § 3282 applies to substantive criminal
violations of the Act. 207
In cases involving FCPA conspiracies, the government
may be able to reach conduct occurring before the
five-year limitations period applicable to conspiracies
34
under 18 U.S.C. § 371. For conspiracy offenses, the government
generally need prove only that one act in furtherance
of the conspiracy occurred during the limitations period,
thus enabling the government to prosecute bribes paid or
accounting violations occurring more than five years prior
to the filing of formal charges. 208
There are at least two ways in which the applicable
limitations period is commonly extended. First, companies
or individuals cooperating with DOJ may enter into
a tolling agreement that voluntarily extends the limitations
period. Second, under 18 U.S.C. § 3292, the government
may seek a court order suspending the statute of limitations
posed in a criminal case for up to three years in order to
obtain evidence from foreign countries. Generally, the suspension
period begins when the official request is made by
the U.S. government to the foreign authority and ends on
the date on which the foreign authority takes final action
on the request. 209
Statute of Limitations in Civil Actions
In civil cases brought by SEC, the statute of limitations
is set by 28 U.S.C. § 2462, which provides for a fiveyear
limitation on any “suit or proceeding for the enforcement
of any civil fine, penalty, or forfeiture.” The five-year
period begins to run “when the claim first accrued.” The
five-year limitations period applies to SEC actions seeking
civil penalties, but it does not prevent SEC from
seeking equitable remedies, such as an injunction or the
disgorgement of ill-gotten gains, for conduct pre-dating
the five-year period. In cases against individuals who are
not residents of the United States, the statute is tolled for
any period when the defendants are not “found within the
United States in order that proper service may be made
thereon.” 210 Furthermore, companies or individuals cooperating
with SEC may enter into tolling agreements that
voluntarily extend the limitations period.
35
chapter 2
The FCPA:
Anti-Bribery Provisions
36

chapter 3
The FCPA:
Accounting Provisions
THE FCPA: ACCOUNTING
PROVISIONS
In addition to the anti-bribery provisions, the FCPA contains accounting provisions
applicable to public companies. The FCPA’s accounting provisions operate
in tandem with the anti-bribery provisions 211 and prohibit off-the-books
accounting. Company management and investors rely on a company’s financial
statements and internal accounting controls to ensure transparency in the financial
health of the business, the risks undertaken, and the transactions between
the company and its customers and business partners. The accounting provisions
are designed to “strengthen the accuracy of the corporate books and
records and the reliability of the audit process which constitute the foundations
of our system of corporate disclosure.” 212
The accounting provisions consist of two primary
components. First, under the “books and records” provision,
issuers must make and keep books, records, and
accounts that, in reasonable detail, accurately and fairly
reflect an issuer’s transactions and dispositions of an issuer’s
assets. 213 Second, under the “internal controls” provision,
issuers must devise and maintain a system of internal
accounting controls sufficient to assure management’s control,
authority, and responsibility over the firm’s assets. 214
These components, and other aspects of the accounting
provisions, are discussed in greater detail below.
Although the accounting provisions were originally
enacted as part of the FCPA, they do not apply only to bribery-related
violations. Rather, the accounting provisions
ensure that all public companies account for all of their
assets and liabilities accurately and in reasonable detail,
and they form the backbone for most accounting fraud and
issuer disclosure cases brought by DOJ and SEC. 215
38
In the past, “corporate bribery has
been concealed by the falsification of
corporate books and records” and the
accounting provisions “remove[] this
avenue of coverup.”
Senate Report No. 95-114, at 3 (1977)
What Is Covered by the Accounting
Provisions?
Books and Records Provision
Bribes, both foreign and domestic, are often mischaracterized
in companies’ books and records. Section 13(b)(2)(A) of
the Exchange Act (15 U.S.C. § 78m(b)(2)(A)), commonly
called the “books and records” provision, requires issuers
to “make and keep books, records, and accounts, which, in
reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the issuer.” 216 The “in
reasonable detail” qualification was adopted by Congress
“in light of the concern that such a standard, if unqualified,
might connote a degree of exactitude and precision which
is unrealistic.” 217 The addition of this phrase was intended
to make clear “that the issuer’s records should reflect transactions
in conformity with accepted methods of recording
economic events and effectively prevent off-the-books slush
funds and payments of bribes.” 218
The term “reasonable detail” is defined in the statute
as the level of detail that would “satisfy prudent officials in
the conduct of their own affairs.” 219 Thus, as Congress noted
when it adopted this definition, “[t]he concept of reasonableness
of necessity contemplates the weighing of a number of
relevant factors, including the costs of compliance.” 220
Although the standard is one of reasonable detail,
it is never appropriate to mischaracterize transactions in a
company’s books and records. 221 Bribes are often concealed
under the guise of legitimate payments, such as commissions
or consulting fees.
In instances where all the elements of a violation of
the anti-bribery provisions are not met—where, for example,
there was no use of interstate commerce—companies
nonetheless may be liable if the improper payments are inaccurately
recorded. Consistent with the FCPA’s approach
to prohibiting payments of any value that are made with a
corrupt purpose, there is no materiality threshold under the
books and records provision. In combination with the internal
controls provision, the requirement that issuers maintain
books and records that accurately and fairly reflect the
corporation’s transactions “assure[s], among other things,
that the assets of the issuer are used for proper corporate
purpose[s].” 222 As with the anti-bribery provisions, DOJ’s
and SEC’s enforcement of the books and records provision
has typically involved misreporting of either large bribe payments
or widespread inaccurate recording of smaller payments
made as part of a systemic pattern of bribery.
Bribes Have Been Mischaracterized As:
• Commissions or Royalties
• Consulting Fees
• Sales and Marketing Expenses
• Scientific Incentives or Studies
• Travel and Entertainment Expenses
• Rebates or Discounts
• After Sales Service Fees
• Miscellaneous Expenses
• Petty Cash Withdrawals
• Free Goods
• Intercompany Accounts
• Supplier / Vendor Payments
• Write-offs
• “Customs Intervention” Payments
39
Internal Controls Provision
The payment of bribes often occurs in companies that
have weak internal control environments. Internal controls
over financial reporting are the processes used by companies
to provide reasonable assurances regarding the reliability
of financial reporting and the preparation of financial
statements. They include various components, such as: a
control environment that covers the tone set by the organization
regarding integrity and ethics; risk assessments; control
activities that cover policies and procedures designed
to ensure that management directives are carried out (e.g.,
approvals, authorizations, reconciliations, and segregation
of duties); information and communication; and monitoring.
Section 13(b)(2)(B) of the Exchange Act (15 U.S.C.
§ 78m(b)(2)(B)), commonly called the “internal controls”
provision, requires issuers to:
devise and maintain a system of internal accounting
controls sufficient to provide reasonable assurances
that—
(i) transactions are executed in accordance with management’s
general or specific authorization;
(ii) transactions are recorded as necessary (I) to permit
preparation of financial statements in conformity
with generally accepted accounting principles or any
other criteria applicable to such statements, and (II)
to maintain accountability for assets;
(iii) access to assets is permitted only in accordance
with management’s general or specific authorization;
and
(iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals
and appropriate action is taken with respect to any
differences …. 223
chapter 3
The FCPA:
Accounting Provisions
An effective compliance program is a critical component
of an issuer’s internal controls. Fundamentally,
the design of a company’s internal controls must take into
account the operational realities and risks attendant to the
company’s business, such as: the nature of its products or
services; how the products or services get to market; the
nature of its work force; the degree of regulation; the extent
of its government interaction; and the degree to which it
has operations in countries with a high risk of corruption. A
company’s compliance program should be tailored to these
differences. Businesses whose operations expose them to a
high risk of corruption will necessarily devise and employ
different internal controls than businesses that have a lesser
exposure to corruption, just as a financial services company
would be expected to devise and employ different internal
controls than a manufacturer.
A 2008 case against a German manufacturer of industrial
and consumer products illustrates a systemic internal
controls problem involving bribery that was unprecedented
in scale and geographic reach. From 2001 to 2007, the company
created elaborate payment schemes—including slush
Like the “reasonable detail” requirement in the
books and records provision, the Act defines “reasonable
assurances” as “such level of detail and degree of assurance
as would satisfy prudent officials in the conduct of their
own affairs.” 224
The Act does not specify a particular set of controls
that companies are required to implement. Rather, the
internal controls provision gives companies the flexibility
to develop and maintain a system of controls that is appropriate
to their particular needs and circumstances.
Companies with ineffective internal
controls often face risks of embezzlement
and self-dealing by employees, commercial
bribery, export control problems, and
violations of other U.S. and local laws.
40
funds, off-the-books accounts, and systematic payments to
business consultants and other intermediaries—to facilitate
bribery. Payments were made in ways that obscured their
purpose and the ultimate recipients of the money. In some
cases, employees obtained large amounts of cash from cash
desks and then transported the cash in suitcases across international
borders. Authorizations for some payments were
placed on sticky notes and later removed to avoid any permanent
record. The company made payments totaling approximately
$1.36 billion through various mechanisms, including
$805.5 million as bribes and $554.5 million for unknown
purposes. 225 The company was charged with internal controls
and books and records violations, along with anti-bribery
violations, and paid over $1.6 billion to resolve the case with
authorities in the United States and Germany. 226
The types of internal control failures identified in the
above example exist in many other cases where companies
were charged with internal controls violations. 227 A 2010
case against a multi-national automobile manufacturer
involved bribery that occurred over a long period of time in
multiple countries. 228 In that case, the company used dozens
of ledger accounts, known internally as “internal third
party accounts,” to maintain credit balances for the benefit
of government officials. 229 The accounts were funded
through several bogus pricing mechanisms, such as “price
surcharges,” “price inclusions,” or excessive commissions. 230
The company also used artificial discounts or rebates on
sales contracts to generate the money to pay the bribes. 231
The bribes also were made through phony sales intermediaries
and corrupt business partners, as well as through the
use of cash desks. 232 Sales executives would obtain cash from
the company in amounts as high as hundreds of thousands
of dollars, enabling the company to obscure the purpose
and recipients of the money paid to government officials. 233
In addition to bribery charges, the company was charged
with internal controls and books and records violations.
Good internal controls can prevent not only FCPA
violations, but also other illegal or unethical conduct by the
company, its subsidiaries, and its employees. DOJ and SEC
have repeatedly brought FCPA cases that also involved
other types of misconduct, such as financial fraud, 234
commercial bribery, 235 export controls violations, 236 and
embezzlement or self-dealing by company employees. 237
Potential Reporting and Anti-Fraud Violations
Issuers have reporting obligations under Section
13(a) of the Exchange Act, which requires issuers to file
an annual report that contains comprehensive information
about the issuer. Failure to properly disclose material information
about the issuer’s business, including material revenue,
expenses, profits, assets, or liabilities related to bribery
of foreign government officials, may give rise to anti-fraud
and reporting violations under Sections 10(b) and 13(a) of
the Exchange Act.
For example, a California-based technology company
was charged with reporting violations, in addition to violations
of the FCPA’s anti-bribery and accounting provisions,
when its bribery scheme led to material misstatements in its
SEC filings. 238 The company was awarded contracts procured
through bribery of Chinese officials that generated material
revenue and profits. The revenue and profits helped the company
offset losses incurred to develop new products expected
to become the company’s future source of revenue growth.
The company improperly recorded the bribe payments as
sales commission expenses in its books and records.
Companies engaged in bribery may also be engaged
in activity that violates the anti-fraud and reporting provisions.
For example, an oil and gas pipeline company and
its employees engaged in a long-running scheme to use the
company’s petty cash accounts in Nigeria to make a variety
of corrupt payments to Nigerian tax and court officials
using false invoices. 239 The company and its employees also
engaged in a fraudulent scheme to minimize the company’s
tax obligations in Bolivia by using false invoices to claim
false offsets to its value-added tax obligations. The scheme
resulted in material overstatements of the company’s net
income in the company’s financial statements, which violated
the Exchange Act’s anti-fraud and reporting provisions.
Both schemes also violated the books and records
and internal controls provisions.
41
What Are Management’s Other Obligations?
Sarbanes-Oxley Act of 2002
In 2002, in response to a series of accounting scandals
involving U.S. companies, Congress enacted the Sarbanes-
Oxley Act (Sarbanes-Oxley or SOX), 240 which strengthened
the accounting requirements for issuers. All issuers
must comply with Sarbanes-Oxley’s requirements, several
of which have FCPA implications.
SOX Section 302 (15 U.S.C. § 7241)—Responsibility
of Corporate Officers for the Accuracy and Validity of
Corporate Financial Reports
Section 302 of Sarbanes-Oxley requires that a company’s
“principal officers” (typically the Chief Executive
Officer (CEO) and Chief Financial Officer (CFO)) take
responsibility for and certify the integrity of their company’s
financial reports on a quarterly basis. Under Exchange
Act Rule 13a-14, which is commonly called the “SOX certification”
rule, each periodic report filed by an issuer must
include a certification signed by the issuer’s principal executive
officer and principal financial officer that, among other
things, states that: (i) based on the officer’s knowledge, the
report contains no material misstatements or omissions;
(ii) based on the officer’s knowledge, the relevant financial
statements are accurate in all material respects; (iii) internal
controls are properly designed; and (iv) the certifying
officers have disclosed to the issuer’s audit committee and
auditors all significant internal control deficiencies.
SOX Section 404 (15 U.S.C. § 7262)—Reporting
on the State of a Company’s Internal Controls over
Financial Reporting
Sarbanes-Oxley also strengthened a company’s
required disclosures concerning the state of its internal control
over financial reporting. Under Section 404, issuers are
required to present in their annual reports management’s
conclusion regarding the effectiveness of the company’s
internal controls over financial reporting. This statement
must also assess the effectiveness of such internal controls
and procedures. In addition, the company’s independent
chapter 3
The FCPA:
Accounting Provisions
auditor must attest to and report on its assessment of the
effectiveness of the company’s internal controls over financial
reporting.
As directed by Section 404, SEC has adopted
rules requiring issuers and their independent auditors to
report to the public on the effectiveness of the company’s
internal controls over financial reporting. 241 These
internal controls include those related to illegal acts and
fraud—including acts of bribery—that could result in a
material misstatement of the company’s financial statements.
242 In 2007, SEC issued guidance on controls over
financial reporting. 243
SOX Section 802 (18 U.S.C. §§ 1519 and 1520)—
Criminal Penalties for Altering Documents
Section 802 of Sarbanes-Oxley prohibits altering,
destroying, mutilating, concealing, or falsifying records,
documents, or tangible objects with the intent to obstruct,
impede, or influence a potential or actual federal investigation.
This section also prohibits any accountant from knowingly
and willfully violating the requirement that all audit
or review papers be maintained for a period of five years.
Who Is Covered by the Accounting
Provisions?
Civil Liability for Issuers, Subsidiaries, and Affiliates
The FCPA’s accounting provisions apply to every
issuer that has a class of securities registered pursuant to
Section 12 of the Exchange Act or that is required to file
annual or other periodic reports pursuant to Section 15(d)
of the Exchange Act. 244 These provisions apply to any issuer
whose securities trade on a national securities exchange in
the United States, including foreign issuers with exchangetraded
American Depository Receipts. 245 They also apply
42
to companies whose stock trades in the over-the-counter
market in the United States and which file periodic reports
with the Commission, such as annual and quarterly reports.
Unlike the FCPA’s anti-bribery provisions, the accounting
provisions do not apply to private companies. 246
Although the FCPA’s accounting requirements are
directed at “issuers,” an issuer’s books and records include
those of its consolidated subsidiaries and affiliates. An issuer’s
responsibility thus extends to ensuring that subsidiaries
or affiliates under its control, including foreign subsidiaries
and joint venture partners, comply with the accounting
provisions. For instance, DOJ and SEC brought enforcement
actions against a California company for violating the
FCPA’s accounting provisions when two Chinese joint ventures
in which it was a partner paid more than $400,000 in
bribes over a four-year period to obtain business in China. 247
Sales personnel in China made the illicit payments by obtaining
cash advances from accounting personnel, who recorded
the payments on the books as “business fees” or “travel and
entertainment” expenses. Although the payments were made
exclusively in China by Chinese employees of the joint venture,
the California company failed to have adequate internal
controls and failed to act on red flags indicating that its affiliates
were engaged in bribery. The California company paid
$1.15 million in civil disgorgement and a criminal monetary
penalty of $1.7 million.
Companies may not be able to exercise the same level
of control over a minority-owned subsidiary or affiliate as
they do over a majority or wholly owned entity. Therefore,
if a parent company owns less than 50% of a subsidiary or
affiliate, the parent is only required to use its best efforts
to cause the minority-owned subsidiary or affiliate to
devise and maintain a system of internal accounting controls
consistent with the issuer’s own obligations under
the FCPA. 248 In evaluating an issuer’s good faith efforts,
all the circumstances—including “the relative degree of
the issuer’s ownership of the domestic or foreign firm and
the laws and practices governing the business operations
of the country in which such firm is located”—are taken
into account. 249
Civil Liability for Individuals and Other Entities
Companies (including subsidiaries of issuers) and
individuals may also face civil liability for aiding and abetting
or causing an issuer’s violation of the accounting provisions.
250 For example, in April 2010, SEC charged four
individuals—a Country Manager, a Senior Vice President
of Sales, a Regional Financial Director, and an International
Controller of a U.S. issuer—for their roles in schemes to
bribe Kyrgyz and Thai government officials to purchase
tobacco from their employer. The complaint alleged that,
among other things, the individuals aided and abetted the
issuer company’s violations of the books and records and
internal controls provisions by “knowingly provid[ing]
substantial assistance to” the parent company. 251 All four
executives settled the charges against them, consenting to
the entry of final judgments permanently enjoining them
from violating the accounting and anti-bribery provisions,
with two executives paying civil penalties. 252 As in other
areas of federal securities law, corporate officers also can be
held liable as control persons. 253
Similarly, in October 2011, SEC brought an administrative
action against a U.S. water valve manufacturer and
a former employee of the company’s Chinese subsidiary
for violations of the FCPA’s accounting provisions. 254 The
Chinese subsidiary had made improper payments to employees
of certain design institutes to create design specifications
that favored the company’s valve products. The payments
were disguised as sales commissions in the subsidiary’s books
and records, thereby causing the U.S. issuer’s books and
records to be inaccurate. The general manager of the subsidiary,
who approved the payments and knew or should have
known that they were improperly recorded, was ordered to
cease-and-desist from committing or causing violations of
the accounting provisions, among other charges. 255
Additionally, individuals and entities can be held
directly civilly liable for falsifying an issuer’s books and
records or for circumventing internal controls. Exchange
Act Rule 13b2-1 provides: “No person shall, directly or
indirectly, falsify or cause to be falsified, any book, record
or account subject to [the books and records provision] of
the Securities Exchange Act.” 256 And Section 13(b)(5) of
43
the Exchange Act (15 U.S.C. § 78m(b)(5)) provides that
“[n]o person shall knowingly circumvent or knowingly fail
to implement a system of internal accounting controls or
knowingly falsify any book, record, or account ….” 257 The
Exchange Act defines “person” to include a “natural person,
company, government, or political subdivision, agency, or
instrumentality of a government.” 258
An issuer’s officers and directors may also be held civilly
liable for making false statements to a company’s auditor.
Exchange Act Rule 13b2-2 prohibits officers and directors
from making (or causing to be made) materially false
or misleading statements, including an omission of material
facts, to an accountant. This liability arises in connection
with any audit, review, or examination of a company’s financial
statements or in connection with the filing of any document
with SEC. 259
Finally, the principal executive and principal financial
officer, or persons performing similar functions, can
be held liable for violating Exchange Act Rule 13a-14 by
signing false personal certifications required by SOX.
Thus, for example, in January 2011, SEC charged the former
CEO of a U.S. issuer for his role in schemes to bribe
Iraqi government officials in connection with the United
Nations Oil-For-Food Programme and to bribe Iraqi and
Indonesian officials to purchase the company’s fuel additives.
There, the company used false invoices and sham consulting
contracts to support large bribes that were passed
on to foreign officials through an agent, and the bribes were
mischaracterized as legitimate commissions and travel fees
in the company’s books and records. The officer directed
and authorized the bribe payments and their false recording
in the books and records. He also signed annual and quarterly
SOX certifications in which he falsely represented that
the company’s financial statements were fairly presented
and the company’s internal controls sufficiently designed,
as well as annual representations to the company’s external
auditors where he falsely stated that he complied with the
company’s code of ethics and was unaware of any violations
of the code of ethics by anyone else. The officer was charged
with aiding and abetting violations of the books and records
and internal controls provisions, circumventing internal
chapter 3
The FCPA:
Accounting Provisions
controls, falsifying books and records, making false statements
to accountants, and signing false certifications. 260 He
consented to the entry of an injunction and paid disgorgement
and a civil penalty. 261 He also later pleaded guilty in
the United Kingdom to conspiring to corrupt Iraqi and
Indonesian officials. 262
Criminal Liability for Accounting Violations
Criminal liability can be imposed on companies
and individuals for knowingly failing to comply with the
FCPA’s books and records or internal controls provisions. 263
As with the FCPA’s anti-bribery provisions, individuals are
only subject to the FCPA’s criminal penalties for violations
of the accounting provisions if they acted “willfully.” 264
For example, a French company was criminally
charged with failure to implement internal controls and
failure to keep accurate books and records, among other
violations. 265 As part of its deferred prosecution agreement,
the company admitted to numerous internal control failures,
including failure to implement sufficient anti-bribery
compliance policies, maintain a sufficient system for the
selection and approval of consultants, and conduct appropriate
audits of payments to purported “business consultants.”
266 Likewise, a German company pleaded guilty to
internal controls and books and records violations where,
from 2001 through 2007, it made payments totaling
approximately $1.36 billion through various mechanisms,
including $805.5 million as bribes and $554.5 million for
unknown purposes. 267
Individuals can be held criminally liable for accounting
violations. For example, a former managing director of a U.S.
bank’s real estate business in China pleaded guilty to conspiring
to evade internal accounting controls in order to transfer
a multi-million dollar ownership interest in a Shanghai
building to himself and a Chinese public official with whom
44
he had a personal friendship. The former managing director
repeatedly made false representations to his employer about
the transaction and the ownership interests involved. 268
Conspiracy and Aiding and Abetting Liability
As with the FCPA’s anti-bribery provisions, companies
(including subsidiaries of issuers) and individuals may
face criminal liability for conspiring to commit or for aiding
and abetting violations of the accounting provisions.
For example, the subsidiary of a Houston-based
company pleaded guilty both to conspiring to commit and
to aiding and abetting the company’s books and records
and anti-bribery violations. 269 The subsidiary paid bribes
of over $4 million and falsely characterized the payments
as “commissions,” “fees,” or “legal services,” consequently
causing the company’s books and records to be inaccurate.
Although the subsidiary was not an issuer and therefore
could not be charged directly with an accounting violation,
it was criminally liable for its involvement in the parent
company’s accounting violation.
Similarly, a U.S. subsidiary of a Swiss freight forwarding
company that was not an issuer was charged with
conspiring to commit and with aiding and abetting the
books and records violations of its customers, who were
issuers and therefore subject to the FCPA’s accounting
provisions. 270 The U.S. subsidiary substantially assisted the
issuer-customers in violating the FCPA’s books and records
provision by masking the true nature of the bribe payments
in the invoices it submitted to the issuer-customers. 271 The
subsidiary thus faced criminal liability for its involvement
in the issuer-customers’ FCPA violations even though it
was not itself subject to the FCPA’s accounting provisions.
company’s operations and financial condition. A company’s
financial statements should be complete and fairly represent
the company’s financial condition. 272 Thus, under U.S.
GAAP, any payments to foreign government officials must
be properly accounted for in a company’s books, records,
and financial statements.
U.S. laws, including SEC Rules, require issuers to
undergo an annual external audit of their financial statements
and to make those audited financial statements available to
the public by filing them with SEC. SEC Rules and the rules
and standards issued by the Public Company Accounting
Oversight Board (PCAOB) under SEC oversight, require
external auditors to be independent of the companies that
they audit. Independent auditors must comply with the rules
and standards set forth by the PCAOB when they perform
an audit of a public company. These audit standards govern,
for example, the auditor’s responsibility concerning material
errors, irregularities, or illegal acts by a client and its officers,
directors, and employees. Additionally, the auditor has a
responsibility to obtain an understanding of an entity’s internal
controls over financial reporting as part of its audit and
must communicate all significant deficiencies and material
weaknesses identified during the audit to management and
the audit committee. 273
Under Section 10A of the Exchange Act, independent
auditors who discover an illegal act, such as the payment
of bribes to domestic or foreign government officials,
have certain obligations in connection with their audits of
public companies. 274 Generally, Section 10A requires auditors
who become aware of illegal acts to report such acts to
appropriate levels within the company and, if the company
fails to take appropriate action, to notify SEC.
Auditor Obligations
All public companies in the United States must file
annual financial statements that have been prepared in
conformity with U.S. Generally Accepted Accounting
Principles (U.S. GAAP). These accounting principles are
among the most comprehensive in the world. U.S. GAAP
requires an accounting of all assets, liabilities, revenue, and
expenses as well as extensive disclosures concerning the
45
chapter 3
The FCPA:
Accounting Provisions
46

chapter 4
Other Related
U.S. Laws
OTHER RELATED U.S. LAWS
Businesses and individuals should be aware that conduct that violates the
FCPA’s anti-bribery or accounting provisions may also violate other statutes or
regulations. Moreover, payments to foreign government officials and intermediaries
may violate these laws even if all of the elements of an FCPA violation
are not present.
Travel Act
The Travel Act, 18 U.S.C. § 1952, prohibits travel
in interstate or foreign commerce or using the mail or any
facility in interstate or foreign commerce, with the intent
to distribute the proceeds of any unlawful activity or to
promote, manage, establish, or carry on any unlawful activity.
275 “Unlawful activity” includes violations of not only
the FCPA, but also state commercial bribery laws. Thus,
bribery between private commercial enterprises may, in
some circumstances, be covered by the Travel Act. Said differently,
if a company pays kickbacks to an employee of a
private company who is not a foreign official, such privateto-private
bribery could possibly be charged under the
Travel Act.
DOJ has previously charged both individual and
corporate defendants in FCPA cases with violations of
the Travel Act. 276 For instance, an individual investor was
convicted of conspiracy to violate the FCPA and the Travel
Act in 2009 where the relevant “unlawful activity” under
the Travel Act was an FCPA violation involving a bribery
scheme in Azerbaijan. 277 Also in 2009, a California company
that engaged in both bribery of foreign officials in violation
of the FCPA and commercial bribery in violation of
California state law pleaded guilty to conspiracy to violate
the FCPA and the Travel Act, among other charges. 278
Money Laundering
Many FCPA cases also involve violations of antimoney
laundering statutes. 279 For example, two Florida
executives of a Miami-based telecommunications company
were convicted of FCPA and money laundering conduct
where they conducted financial transactions involving the
proceeds of specified unlawful activities—violations of the
FCPA, the criminal bribery laws of Haiti, and wire fraud—
in order to conceal and disguise these proceeds. Notably,
although foreign officials cannot be prosecuted for FCPA
48
violations, 280 three former Haitian officials involved in the
same scheme were convicted of money laundering. 281
Mail and Wire Fraud
The mail and wire fraud statutes may also apply. In
2006, for example, a wholly owned foreign subsidiary of
a U.S. issuer pleaded guilty to both FCPA and wire fraud
counts where the scheme included overbilling the subsidiary’s
customers—both government and private—and
using part of the overcharged money to pay kickbacks to the
customers’ employees. The wire fraud charges alleged that
the subsidiary had funds wired from its parent’s Oregon
bank account to off-the-books bank accounts in South
Korea that were controlled by the subsidiary. The funds,
amounting to almost $2 million, were then paid to managers
of state-owned and private steel production companies
in China and South Korea as illegal commission payments
and kickbacks that were disguised as refunds, commissions,
and other seemingly legitimate expenses. 282
sale of defense articles and services valued at $500,000 or
more triggers disclosure requirements concerning fees and
commissions, including bribes, in an aggregate amount of
$100,000 or more. 285 Violations of AECA and ITAR can
result in civil and criminal penalties. 286
Tax Violations
Individuals and companies who violate the FCPA may
also violate U.S. tax law, which explicitly prohibits tax deductions
for bribes, such as false sales “commissions” deductions
intended to conceal corrupt payments. 287 Internal Revenue
Service-Criminal Investigation has been involved in a number
of FCPA investigations involving tax violations, as well as
other financial crimes like money laundering.
Certification and Reporting Violations
Certain other licensing, certification, and reporting
requirements imposed by the U.S. government can also be
implicated in the foreign bribery context. For example, as
a condition of its facilitation of direct loans and loan guarantees
to a foreign purchaser of U.S. goods and services,
the Export-Import Bank of the United States requires the
U.S. supplier to make certifications concerning commissions,
fees, or other payments paid in connection with the
financial assistance and that it has not and will not violate
the FCPA. 283 A false certification may give rise to criminal
liability for false statements. 284
Similarly, manufacturers, exporters, and brokers of
certain defense articles and services are subject to registration,
licensing, and reporting requirements under the
Arms Export Control Act (AECA), 22 U.S.C. § 2751, et
seq., and its implementing regulations, the International
Traffic in Arms Regulations (ITAR), 22 C.F.R. § 120, et
seq. For example, under AECA and ITAR, all manufacturers
and exporters of defense articles and services must register
with the Directorate of Defense Trade Controls. The
49
chapter 4
Other Related
U.S. Laws
50

chapter 5
Guiding Principles
of Enforcement
GUIDING PRINCIPLES OF
ENFORCEMENT
What Does DOJ Consider When
Deciding Whether to Open an
Investigation or Bring Charges?
Whether and how DOJ will commence, decline,
or otherwise resolve an FCPA matter is guided by the
Principles of Federal Prosecution in the case of individuals,
and the Principles of Federal Prosecution of Business
Organizations in the case of companies.
DOJ Principles of Federal Prosecution
The Principles of Federal Prosecution, set forth in
Chapter 9-27.000 of the U.S. Attorney’s Manual, 288 provide
guidance for DOJ prosecutors regarding initiating
or declining prosecution, selecting charges, and plea-bargaining.
The Principles of Federal Prosecution provide that
prosecutors should recommend or commence federal prosecution
if the putative defendant’s conduct constitutes a
federal offense and the admissible evidence will probably be
sufficient to obtain and sustain a conviction unless (1) no
substantial federal interest would be served by prosecution;
(2) the person is subject to effective prosecution in another
jurisdiction; or (3) an adequate non-criminal alternative to
prosecution exists. In assessing the existence of a substantial
federal interest, the prosecutor is advised to “weigh all relevant
considerations,” including the nature and seriousness
of the offense; the deterrent effect of prosecution; the person’s
culpability in connection with the offense; the person’s
history with respect to criminal activity; the person’s
willingness to cooperate in the investigation or prosecution
of others; and the probable sentence or other consequences
if the person is convicted. The Principles of Federal
Prosecution also set out the considerations to be weighed
when deciding whether to enter into a plea agreement with
an individual defendant, including the nature and seriousness
of the offense and the person’s willingness to cooperate,
as well as the desirability of prompt and certain disposition
of the case and the expense of trial and appeal. 289
DOJ Principles of Federal Prosecution of Business
Organizations
The Principles of Federal Prosecution of Business
Organizations, set forth in Chapter 9-28.000 of the U.S.
Attorney’s Manual, 290 provide guidance regarding the resolun
of cases involving corporate wrongdoing. The Principles
tio
of Federal Prosecution of Business Organizations recognize
that resolution of corporate criminal cases by means other
52
than indictment, including non-prosecution and deferred
prosecution agreements, may be appropriate in certain circumstances.
Nine factors are considered in conducting an
investigation, determining whether to charge a corporation,
and negotiating plea or other agreements:
• the nature and seriousness of the offense, including
the risk of harm to the public;
• the pervasiveness of wrongdoing within the corporation,
including the complicity in, or the condoning
of, the wrongdoing by corporate management;
• the corporation’s history of similar misconduct,
including prior criminal, civil, and regulatory
enforcement actions against it;
• the corporation’s timely and voluntary disclosure of
wrongdoing and its willingness to cooperate in the
investigation of its agents;
• the existence and effectiveness of the corporation’s
pre-existing compliance program;
• the corporation’s remedial actions, including any
efforts to implement an effective corporate compliance
program or improve an existing one, replace
responsible management, discipline or terminate
wrongdoers, pay restitution, and cooperate with the
relevant government agencies;
• collateral consequences, including whether there
is disproportionate harm to shareholders, pension
holders, employees, and others not proven personally
culpable, as well as impact on the public arising
from the prosecution;
• the adequacy of the prosecution of individuals
responsible for the corporation’s malfeasance; and
• the adequacy of remedies such as civil or regulatory
enforcement actions.
As these factors illustrate, in many investigations it
will be appropriate for a prosecutor to consider a corporation’s
pre-indictment conduct, including voluntary disclosure,
cooperation, and remediation, in determining whether
to seek an indictment. In assessing a corporation’s cooperation,
prosecutors are prohibited from requesting attorneyclient
privileged materials with two exceptions—when a
corporation or its employee asserts an advice-of-counsel
defense and when the attorney-client communications were
in furtherance of a crime or fraud. Otherwise, an organization’s
cooperation may only be assessed on the basis of
whether it disclosed the relevant facts underlying an investigation—and
not on the basis of whether it has waived its
attorney-client privilege or work product protection. 291
What Does SEC Consider When
Deciding Whether to Open an
Investigation or Bring Charges?
SEC’s Enforcement Manual, published by SEC’s
Enforcement Division and available on SEC’s website, 292
sets forth information about how SEC conducts investigations,
as well as the guiding principles that SEC staff
considers when determining whether to open or close an
investigation and whether civil charges are merited. There
are various ways that potential FCPA violations come to
the attention of SEC staff, including: tips from informants
or whistleblowers; information developed in other investigations;
self-reports or public disclosures by companies;
referrals from other offices or agencies; public sources, such
as media reports and trade publications; and proactive
investigative techniques, including risk-based initiatives.
Investigations can be formal, such as where SEC has issued
a formal order of investigation that authorizes its staff to
issue investigative subpoenas for testimony and documents,
or informal, such as where the staff proceeds with the investigation
without the use of investigative subpoenas.
In determining whether to open an investigation and,
if so, whether an enforcement action is warranted, SEC
staff considers a number of factors, including: the statutes
or rules potentially violated; the egregiousness of the potential
violation; the potential magnitude of the violation;
whether the potentially harmed group is particularly vulnerable
or at risk; whether the conduct is ongoing; whether
the conduct can be investigated efficiently and within the
statute of limitations period; and whether other authorities,
including federal or state agencies or regulators, might be
better suited to investigate the conduct. SEC staff also may
53
consider whether the case involves a possibly widespread
industry practice that should be addressed, whether the
case involves a recidivist, and whether the matter gives SEC
an opportunity to be visible in a community that might not
otherwise be familiar with SEC or the protections afforded
by the securities laws.
For more information about the Enforcement
Division’s procedures concerning investigations, enforcement
actions, and cooperation with other regulators, see
the Enforcement Manual at http://www.sec.gov/divisions/
enforce.shtml.
Self-Reporting, Cooperation, and
Remedial Efforts
While the conduct underlying any FCPA investigation
is obviously a fundamental and threshold consideration
in deciding what, if any, action to take, both DOJ
and SEC place a high premium on self-reporting, along
with cooperation and remedial efforts, in determining the
appropriate resolution of FCPA matters.
Criminal Cases
Under DOJ’s Principles of Federal Prosecution of
Business Organizations, federal prosecutors consider a
company’s cooperation in determining how to resolve a
corporate criminal case. Specifically, prosecutors consider
whether the company made a voluntary and timely disprovide
rel-
closure as well as the company’s willingness to
evant information and evidence and identify relevant actors
inside and outside the company, including senior executives.
In addition, prosecutors may consider a company’s
remedial actions, including efforts to improve an existing
compliance program or appropriate disciplining of wrongdoers.
293 A company’s remedial measures should be meaningful
and illustrate its recognition of the seriousness of the
misconduct, for example, by taking steps to implement the
personnel, operational, and organizational changes necessary
to establish an awareness among employees that criminal
conduct will not be tolerated. 294
The Principles of Federal Prosecution similarly provide
that prosecutors may consider an individual’s willingness
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to cooperate in deciding whether a prosecution should
be undertaken and how it should be resolved. Although a
willingness to cooperate will not, by itself, generally relieve
a person of criminal liability, it may be given “serious consideration”
in evaluating whether to enter into a plea agreement
with a defendant, depending on the nature and value
of the cooperation offered. 295
The U.S. Sentencing Guidelines similarly take into
account an individual defendant’s cooperation and voluntary
disclosure. Under § 5K1.1, a defendant’s cooperation,
if sufficiently substantial, may justify the government filing
a motion for a reduced sentence. And under § 5K2.16, a
defendant’s voluntary disclosure of an offense prior to its
discovery—if the offense was unlikely to have been discovered
otherwise—may warrant a downward departure in
certain circumstances.
Chapter 8 of the Sentencing Guidelines, which governs
the sentencing of organizations, takes into account an
organization’s remediation as part of an “effective compliance
and ethics program.” One of the seven elements of
such a program provides that after the detection of criminal
conduct, “the organization shall take reasonable steps
to respond appropriately to the criminal conduct and to
prevent further similar criminal conduct, including making
any necessary modifications to the organization’s
compliance and ethics program.” 296 Having an effective
compliance and ethics program may lead to a three-point
reduction in an organization’s culpability score under
§ 8C2.5, which affects the fine calculation under the
Guidelines. Similarly, an organization’s self-reporting,
cooperation, and acceptance of responsibility may lead to
fine reductions under § 8C2.5(g) by decreasing the culpability
score. Conversely, an organization will not qualify
for the compliance program reduction when it unreasonably
delayed reporting the offense. 297 Similar to § 5K1.1
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for individuals, organizations can qualify for departures
pursuant to § 8C4.1 of the Guidelines for cooperating in
the prosecution of others.
Civil Cases
SEC’s Framework for Evaluating Cooperation by
Companies
SEC’s framework for evaluating cooperation by companies
is set forth in its 2001 Report of Investigation Pursuant
to Section 21(a) of the Securities Exchange Act of 1934 and
Commission Statement on the Relationship of Cooperation to
Agency Enforcement Decisions, which is commonly known
as the Seaboard Report. 298 The report, which explained the
Commission’s decision not to take enforcement action
against a public company for certain accounting violations
caused by its subsidiary, details the many factors SEC considers
in determining whether, and to what extent, it grants leniency
to companies for cooperating in its investigations and
for related good corporate citizenship. Specifically, the report
identifies four broad measures of a company’s cooperation:
• self-policing prior to the discovery of the misconduct,
including establishing effective compliance
procedures and an appropriate tone at the top;
• self-reporting of misconduct when it is discovered,
including conducting a thorough review of the
nature, extent, origins, and consequences of the misconduct,
and promptly, completely, and effectively
disclosing the misconduct to the public, to regulatory
agencies, and to self-regulatory organizations;
• remediation, including dismissing or appropriately
disciplining wrongdoers, modifying and improving
internal controls and procedures to prevent
recurrence of the misconduct, and appropriately
compensating those adversely affected; and
• cooperation with law enforcement authorities,
including providing SEC staff with all information
relevant to the underlying violations and the
company’s remedial efforts.
Since every enforcement matter is different, this analytical
framework sets forth general principles but does not
limit SEC’s broad discretion to evaluate every case individually
on its own unique facts and circumstances. Similar
to SEC’s treatment of cooperating individuals, credit
for cooperation by companies may range from taking no
enforcement action to pursuing reduced sanctions in connection
with enforcement actions.
SEC’s Framework for Evaluating Cooperation by
Individuals
In 2010, SEC announced a new cooperation program
for individuals. 299 SEC staff has a wide range of tools to
facilitate and reward cooperation by individuals, from taking
no enforcement action to pursuing reduced sanctions in
connection with enforcement actions. Although the evaluation
of cooperation depends on the specific circumstances,
SEC generally evaluates four factors to determine whether,
to what extent, and in what manner to credit cooperation
by individuals:
• the assistance provided by the cooperating individual
in SEC’s investigation or related enforcement
actions, including, among other things: the
value and timeliness of the cooperation, including
whether the individual was the first to report the
misconduct to SEC or to offer his or her cooperation;
whether the investigation was initiated based
upon the information or other cooperation by the
individual; the quality of the cooperation, including
whether the individual was truthful and the
cooperation was complete; the time and resources
conserved as a result of the individual’s cooperation;
and the nature of the cooperation, such as the
type of assistance provided;
• the importance of the matter in which the individual
provided cooperation;
• the societal interest in ensuring that the cooperating
individual is held accountable for his or her
misconduct, including the severity of the individual’s
misconduct, the culpability of the individual,
and the efforts undertaken by the individual to
remediate the harm; and
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• the appropriateness of a cooperation credit in light
of the profile of the cooperating individual.
Corporate Compliance Program
In a global marketplace, an effective compliance program
is a critical component of a company’s internal controls
and is essential to detecting and preventing FCPA violations.
300 Effective compliance programs are tailored to the
company’s specific business and to the risks associated with
that business. They are dynamic and evolve as the business
and the markets change.
An effective compliance program promotes “an organizational
culture that encourages ethical conduct and a
commitment to compliance with the law.” 301 Such a program
protects a company’s reputation, ensures investor value and
confidence, reduces uncertainty in business transactions, and
secures a company’s assets. 302 A well-constructed, thoughtfully
implemented, and consistently enforced compliance
and ethics program helps prevent, detect, remediate, and
report misconduct, including FCPA violations.
In addition to considering whether a company has
self-reported, cooperated, and taken appropriate remedial
actions, DOJ and SEC also consider the adequacy of a
company’s compliance program when deciding what, if any,
action to take. The program may influence whether or not
charges should be resolved through a deferred prosecution
agreement (DPA) or non-prosecution agreement (NPA),
as well as the appropriate length of any DPA or NPA, or
the term of corporate probation. It will often affect the
penalty amount and the need for a monitor or self-reporting.
303 As discussed above, SEC’s Seaboard Report focuses,
among other things, on a company’s self-policing prior to
the discovery of the misconduct, including whether it had
established effective compliance procedures. 304 Likewise,
three of the nine factors set forth in DOJ’s Principles of
Federal Prosecution of Business Organizations relate, either
directly or indirectly, to a compliance program’s design and
implementation, including the pervasiveness of wrongdoing
within the company, the existence and effectiveness of
the company’s pre-existing compliance program, and the
company’s remedial actions. 305 DOJ also considers the U.S.
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Sentencing Guidelines’ elements of an effective compliance
program, as set forth in § 8B2.1 of the Guidelines.
These considerations reflect the recognition that
a company’s failure to prevent every single violation does
not necessarily mean that a particular company’s compliance
program was not generally effective. DOJ and SEC
understand that “no compliance program can ever prevent
all criminal activity by a corporation’s employees,” 306 and
they do not hold companies to a standard of perfection. An
assessment of a company’s compliance program, including
its design and good faith implementation and enforcement,
is an important part of the government’s assessment of
whether a violation occurred, and if so, what action should
be taken. In appropriate circumstances, DOJ and SEC may
decline to pursue charges against a company based on the
company’s effective compliance program, or may otherwise
seek to reward a company for its program, even when that
program did not prevent the particular underlying FCPA
violation that gave rise to the investigation. 307
DOJ and SEC have no formulaic requirements
regarding compliance programs. Rather, they employ a
common-sense and pragmatic approach to evaluating compliance
programs, making inquiries related to three basic
questions:
• Is the company’s compliance program well
designed?
• Is it being applied in good faith?
• Does it work? 308
This guide contains information regarding some of
the basic elements DOJ and SEC consider when evaluating
compliance programs. Although the focus is on compliance
with the FCPA, given the existence of anti-corruption
laws in many other countries, businesses should consider
designing programs focused on anti-corruption compliance
more broadly. 309
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Hallmarks of Effective Compliance
Programs
Individual companies may have different compliance
needs depending on their size and the particular risks associated
with their businesses, among other factors. When it
comes to compliance, there is no one-size-fits-all program.
Thus, the discussion below is meant to provide insight into
the aspects of compliance programs that DOJ and SEC
assess, recognizing that companies may consider a variety
of factors when making their own determination of what
is appropriate for their specific business needs. 310 Indeed,
small- and medium-size enterprises likely will have different
compliance programs from large multi-national corporations,
a fact DOJ and SEC take into account when evaluating
companies’ compliance programs.
Compliance programs that employ a “check-the-box”
approach may be inefficient and, more importantly, ineffective.
Because each compliance program should be tailored
to an organization’s specific needs, risks, and challenges,
the information provided below should not be considered
a substitute for a company’s own assessment of the corporate
compliance program most appropriate for that particular
business organization. In the end, if designed carefully,
implemented earnestly, and enforced fairly, a company’s
compliance program—no matter how large or small the
organization—will allow the company generally to prevent
violations, detect those that do occur, and remediate them
promptly and appropriately.
Commitment from Senior Management and a
Clearly Articulated Policy Against Corruption
Within a business organization, compliance begins
with the board of directors and senior executives setting
the proper tone for the rest of the company. Managers and
employees take their cues from these corporate leaders.
Thus, DOJ and SEC consider the commitment of corporate
leaders to a “culture of compliance” 311 and look to see
if this high-level commitment is also reinforced and implemented
by middle managers and employees at all levels of
a business. A well-designed compliance program that is
not enforced in good faith, such as when corporate management
explicitly or implicitly encourages employees to
engage in misconduct to achieve business objectives, will be
ineffective. DOJ and SEC have often encountered companies
with compliance programs that are strong on paper but
that nevertheless have significant FCPA violations because
management has failed to effectively implement the program
even in the face of obvious signs of corruption. This
may be the result of aggressive sales staff preventing compliance
personnel from doing their jobs effectively and of
senior management, more concerned with securing a valuable
business opportunity than enforcing a culture of compliance,
siding with the sales team. The higher the financial
stakes of the transaction, the greater the temptation for
management to choose profit over compliance.
A strong ethical culture directly supports a strong
compliance program. By adhering to ethical standards,
senior managers will inspire middle managers to reinforce
those standards. Compliant middle managers, in turn, will
encourage employees to strive to attain those standards
throughout the organizational structure. 312
In short, compliance with the FCPA and ethical rules
must start at the top. DOJ and SEC thus evaluate whether
senior management has clearly articulated company standards,
communicated them in unambiguous terms, adhered
to them scrupulously, and disseminated them throughout
the organization.
Code of Conduct and Compliance Policies and
Procedures
A company’s code of conduct is often the foundation
upon which an effective compliance program is built. As
DOJ has repeatedly noted in its charging documents, the
most effective codes are clear, concise, and accessible to all
employees and to those conducting business on the company’s
behalf. Indeed, it would be difficult to effectively
implement a compliance program if it was not available in
the local language so that employees in foreign subsidiaries
can access and understand it. When assessing a compliance
program, DOJ and SEC will review whether the company
57
has taken steps to make certain that the code of conduct
remains current and effective and whether a company has
periodically reviewed and updated its code.
Whether a company has policies and procedures that
outline responsibilities for compliance within the company,
detail proper internal controls, auditing practices, and documentation
policies, and set forth disciplinary procedures
will also be considered by DOJ and SEC. These types of
policies and procedures will depend on the size and nature
of the business and the risks associated with the business.
Effective policies and procedures require an in-depth
understanding of the company’s business model, including
its products and services, third-party agents, customers,
government interactions, and industry and geographic
risks. Among the risks that a company may need to address
include the nature and extent of transactions with foreign
governments, including payments to foreign officials; use
of third parties; gifts, travel, and entertainment expenses;
charitable and political donations; and facilitating and
expediting payments. For example, some companies with
global operations have created web-based approval processes
to review and approve routine gifts, travel, and entertainment
involving foreign officials and private customers
with clear monetary limits and annual limitations. Many of
these systems have built-in flexibility so that senior management,
or in-house legal counsel, can be apprised of and, in
appropriate circumstances, approve unique requests. These
types of systems can be a good way to conserve corporate
resources while, if properly implemented, preventing and
detecting potential FCPA violations.
Regardless of the specific policies and procedures
implemented, these standards should apply to personnel at
all levels of the company.
Oversight, Autonomy, and Resources
In appraising a compliance program, DOJ and SEC
also consider whether a company has assigned responsibility
for the oversight and implementation of a company’s
compliance program to one or more specific senior
executives within an organization. 313 Those individuals
must have appropriate authority within the organization,
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adequate autonomy from management, and sufficient
resources to ensure that the company’s compliance program
is implemented effectively. 314 Adequate autonomy generally
includes direct access to an organization’s governing
authority, such as the board of directors and committees
of the board of directors (e.g., the audit committee). 315
Depending on the size and structure of an organization,
it may be appropriate for day-to-day operational responsibility
to be delegated to other specific individuals within
a company. 316 DOJ and SEC recognize that the reporting
structure will depend on the size and complexity of an
organization. Moreover, the amount of resources devoted
to compliance will depend on the company’s size, complexity,
industry, geographical reach, and risks associated with
the business. In assessing whether a company has reasonable
internal controls, DOJ and SEC typically consider whether
the company devoted adequate staffing and resources to the
compliance program given the size, structure, and risk profile
of the business.
Risk Assessment
Assessment of risk is fundamental to developing a
strong compliance program, and is another factor DOJ
and SEC evaluate when assessing a company’s compliance
program. 317 One-size-fits-all compliance programs are
generally ill-conceived and ineffective because resources
inevitably are spread too thin, with too much focus on lowrisk
markets and transactions to the detriment of high-risk
areas. Devoting a disproportionate amount of time policing
modest entertainment and gift-giving instead of focusing
on large government bids, questionable payments to
third-party consultants, or excessive discounts to resellers
and distributors may indicate that a company’s compliance
program is ineffective. A $50 million contract with a
government agency in a high-risk country warrants greater
58
scrutiny than modest and routine gifts and entertainment.
Similarly, performing identical due diligence on all thirdparty
agents, irrespective of risk factors, is often counterproductive,
diverting attention and resources away from
those third parties that pose the most significant risks.
DOJ and SEC will give meaningful credit to a company
that implements in good faith a comprehensive, risk-based
compliance program, even if that program does not prevent
an infraction in a low risk area because greater attention
and resources had been devoted to a higher risk area.
Conversely, a company that fails to prevent an FCPA violation
on an economically significant, high-risk transaction
because it failed to perform a level of due diligence commensurate
with the size and risk of the transaction is likely
to receive reduced credit based on the quality and effectiveness
of its compliance program.
As a company’s risk for FCPA violations increases,
that business should consider increasing its compliance
procedures, including due diligence and periodic internal
audits. The degree of appropriate due diligence is fact-specific
and should vary based on industry, country, size, and
nature of the transaction, and the method and amount of
third-party compensation. Factors to consider, for instance,
include risks presented by: the country and industry sector,
the business opportunity, potential business partners, level
of involvement with governments, amount of government
regulation and oversight, and exposure to customs and
immigration in conducting business affairs. When assessing
a company’s compliance program, DOJ and SEC take into
account whether and to what degree a company analyzes
and addresses the particular risks it faces.
Training and Continuing Advice
Compliance policies cannot work unless effectively
communicated throughout a company. Accordingly, DOJ
and SEC will evaluate whether a company has taken steps to
ensure that relevant policies and procedures have been communicated
throughout the organization, including through
periodic training and certification for all directors, officers,
relevant employees, and, where appropriate, agents and
business partners. 318 For example, many larger companies
have implemented a mix of web-based and in-person training
conducted at varying intervals. Such training typically
covers company policies and procedures, instruction on
applicable laws, practical advice to address real-life scenarios,
and case studies. Regardless of how a company chooses
to conduct its training, however, the information should
be presented in a manner appropriate for the targeted audience,
including providing training and training materials
in the local language. For example, companies may want to
consider providing different types of training to their sales
personnel and accounting personnel with hypotheticals
or sample situations that are similar to the situations they
might encounter. In addition to the existence and scope of
a company’s training program, a company should develop
appropriate measures, depending on the size and sophistication
of the particular company, to provide guidance and
advice on complying with the company’s ethics and compliance
program, including when such advice is needed
urgently. Such measures will help ensure that the compliance
program is understood and followed appropriately at
all levels of the company.
Incentives and Disciplinary Measures
In addition to evaluating the design and implementation
of a compliance program throughout an organization,
enforcement of that program is fundamental to its effectiveness.
319 A compliance program should apply from the
board room to the supply room—no one should be beyond
its reach. DOJ and SEC will thus consider whether, when
enforcing a compliance program, a company has appropriate
and clear disciplinary procedures, whether those procedures
are applied reliably and promptly, and whether they
are commensurate with the violation. Many companies
have found that publicizing disciplinary actions internally,
where appropriate under local law, can have an important
deterrent effect, demonstrating that unethical and unlawful
actions have swift and sure consequences.
DOJ and SEC recognize that positive incentives can
also drive compliant behavior. These incentives can take many
59
forms such as personnel evaluations and promotions, rewards
for improving and developing a company’s compliance program,
and rewards for ethics and compliance leadership. 320
Some organizations, for example, have made adherence to
compliance a significant metric for management’s bonuses so
that compliance becomes an integral part of management’s
everyday concern. Beyond financial incentives, some companies
have highlighted compliance within their organizations
by recognizing compliance professionals and internal audit
staff. Others have made working in the company’s compliance
organization a way to advance an employee’s career.
SEC, for instance, has encouraged companies to embrace
methods to incentivize ethical and lawful behavior:
[M]ake integrity, ethics and compliance part of the
promotion, compensation and evaluation processes
as well. For at the end of the day, the most effective
way to communicate that “doing the right thing” is a
priority, is to reward it. Conversely, if employees are
led to believe that, when it comes to compensation
and career advancement, all that counts is short-term
profitability, and that cutting ethical corners is an acceptable
way of getting there, they’ll perform to that
measure. To cite an example from a different walk
of life: a college football coach can be told that the
graduation rates of his players are what matters, but
he’ll know differently if the sole focus of his contract
extension talks or the decision to fire him is his winloss
record. 321
No matter what the disciplinary scheme or potential
incentives a company decides to adopt, DOJ and SEC will
consider whether they are fairly and consistently applied
across the organization. No executive should be above compliance,
no employee below compliance, and no person
within an organization deemed too valuable to be disciplined,
if warranted. Rewarding good behavior and sanctioning
bad behavior reinforces a culture of compliance and
ethics throughout an organization.
Third-Party Due Diligence and Payments
DOJ’s and SEC’s FCPA enforcement actions demonstrate
that third parties, including agents, consultants,
and distributors, are commonly used to conceal the payment
of bribes to foreign officials in international business
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transactions. Risk-based due diligence is particularly important
with third parties and will also be considered by DOJ
and SEC in assessing the effectiveness of a company’s compliance
program.
Although the degree of appropriate due diligence
may vary based on industry, country, size and nature of the
transaction, and historical relationship with the third-party,
some guiding principles always apply.
First, as part of risk-based due diligence, companies
should understand the qualifications and associations of
its third-party partners, including its business reputation,
and relationship, if any, with foreign officials. The degree of
scrutiny should increase as red flags surface.
Second, companies should have an understanding of
the business rationale for including the third party in the
transaction. Among other things, the company should
understand the role of and need for the third party and
ensure that the contract terms specifically describe the services
to be performed. Additional considerations include
payment terms and how those payment terms compare to
typical terms in that industry and country, as well as the
timing of the third party’s introduction to the business.
Moreover, companies may want to confirm and document
that the third party is actually performing the work for
which it is being paid and that its compensation is commensurate
with the work being provided.
Third, companies should undertake some form of
ongoing monitoring of third-party relationships. 322 Where
appropriate, this may include updating due diligence periodically,
exercising audit rights, providing periodic training,
and requesting annual compliance certifications by the
third party.
In addition to considering a company’s due diligence
on third parties, DOJ and SEC also assess whether
the company has informed third parties of the company’s
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Compliance Program Case Study
Recent DOJ and SEC actions relating to a financial institution’s real estate transactions with a government agency
in China illustrate the benefits of implementing and enforcing a comprehensive risk-based compliance program. The
case involved a joint venture real estate investment in the Luwan District of Shanghai, China, between a U.S.-based
financial institution and a state-owned entity that functioned as the District’s real estate arm. The government entity
conducted the transactions through two special purpose vehicles (“SPVs”), with the second SPV purchasing a 12%
stake in a real estate project.
The financial institution, through a robust compliance program, frequently trained its employees, imposed a
comprehensive payment-approval process designed to prevent bribery, and staffed a compliance department with
a direct reporting line to the board of directors. As appropriate given the industry, market, and size and structure of
the transactions, the financial institution (1) provided extensive FCPA training to the senior executive responsible for
the transactions and (2) conducted extensive due diligence on the transactions, the local government entity, and the
SPVs. Due diligence on the entity included reviewing Chinese government records; speaking with sources familiar
with the Shanghai real estate market; checking the government entity’s payment records and credit references;
conducting an on-site visit and placing a pretextual telephone call to the entity’s offices; searching media sources;
and conducting background checks on the entity’s principals. The financial institution vetted the SPVs by obtaining
a letter with designated bank account information from a Chinese official associated with the government entity (the
“Chinese Official”); using an international law firm to request and review 50 documents from the SPVs’ Canadian
attorney; interviewing the attorney; and interviewing the SPVs’ management.
Notwithstanding the financial institution’s robust compliance program and good faith enforcement of it, the
company failed to learn that the Chinese Official personally owned nearly 50% of the second SPV (and therefore a
nearly 6% stake in the joint venture) and that the SPV was used as a vehicle for corrupt payments. This failure was
due, in large part, to misrepresentations by the Chinese Official, the financial institution’s executive in charge of
the project, and the SPV’s attorney that the SPV was 100% owned and controlled by the government entity. DOJ
and SEC declined to take enforcement action against the financial institution, and its executive pleaded guilty to
conspiracy to violate the FCPA’s internal control provisions and also settled with SEC.
compliance program and commitment to ethical and lawful
business practices and, where appropriate, whether it
has sought assurances from third parties, through certifications
and otherwise, of reciprocal commitments. These can
be meaningful ways to mitigate third-party risk.
Confidential Reporting and Internal Investigation
An effective compliance program should include a
mechanism for an organization’s employees and others to
report suspected or actual misconduct or violations of the
company’s policies on a confidential basis and without fear of
retaliation. 323 Companies may employ, for example, anonymous
hotlines or ombudsmen. Moreover, once an allegation
is made, companies should have in place an efficient, reliable,
and properly funded process for investigating the allegation
and documenting the company’s response, including any
disciplinary or remediation measures taken. Companies will
want to consider taking “lessons learned” from any reported
violations and the outcome of any resulting investigation to
update their internal controls and compliance program and
focus future training on such issues, as appropriate.
Continuous Improvement: Periodic Testing and
Review
Finally, a good compliance program should constantly
evolve. A company’s business changes over time, as do the
environments in which it operates, the nature of its customers,
the laws that govern its actions, and the standards of its
61
industry. In addition, compliance programs that do not just
exist on paper but are followed in practice will inevitably
uncover compliance weaknesses and require enhancements.
Consequently, DOJ and SEC evaluate whether companies
regularly review and improve their compliance programs
and not allow them to become stale.
According to one survey, 64% of general counsel whose
companies are subject to the FCPA say there is room for
improvement in their FCPA training and compliance programs.
324 An organization should take the time to review and
test its controls, and it should think critically about its potential
weaknesses and risk areas. For example, some companies
have undertaken employee surveys to measure their compliance
culture and strength of internal controls, identify best
practices, and detect new risk areas. Other companies periodically
test their internal controls with targeted audits to make
certain that controls on paper are working in practice. DOJ
and SEC will give meaningful credit to thoughtful efforts
to create a sustainable compliance program if a problem is
later discovered. Similarly, undertaking proactive evaluations
before a problem strikes can lower the applicable penalty
range under the U.S. Sentencing Guidelines. 325 Although the
nature and the frequency of proactive evaluations may vary
depending on the size and complexity of an organization, the
idea behind such efforts is the same: continuous improvement
and sustainability. 326
Mergers and Acquisitions: Pre-Acquisition Due
Diligence and Post-Acquisition Integration
In the context of the FCPA, mergers and acquisitions
present both risks and opportunities. A company
that does not perform adequate FCPA due diligence prior
to a merger or acquisition may face both legal and business
risks. 327 Perhaps most commonly, inadequate due diligence
can allow a course of bribery to continue—with all the
attendant harms to a business’s profitability and reputation,
as well as potential civil and criminal liability.
In contrast, companies that conduct effective FCPA
due diligence on their acquisition targets are able to evaluate
more accurately each target’s value and negotiate for the
costs of the bribery to be borne by the target. In addition,
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such actions demonstrate to DOJ and SEC a company’s
commitment to compliance and are taken into account
when evaluating any potential enforcement action. For
example, DOJ and SEC declined to take enforcement
action against an acquiring issuer when the issuer, among
other things, uncovered the corruption at the company
being acquired as part of due diligence, ensured that the
corruption was voluntarily disclosed to the government,
cooperated with the investigation, and incorporated the
acquired company into its compliance program and internal
controls. On the other hand, SEC took action against
the acquired company, and DOJ took action against a subsidiary
of the acquired company. 328 When pre-acquisition
due diligence is not possible, DOJ has described procedures,
contained in Opinion Procedure Release No. 08-02,
pursuant to which companies can nevertheless be rewarded
if they choose to conduct thorough post-acquisition FCPA
due diligence. 329
FCPA due diligence, however, is normally only a
portion of the compliance process for mergers and acquisitions.
DOJ and SEC evaluate whether the acquiring company
promptly incorporated the acquired company into all
of its internal controls, including its compliance program.
Companies should consider training new employees, reevaluating
third parties under company standards, and, where
appropriate, conducting audits on new business units.
For example, as a result of due diligence conducted
by a California-based issuer before acquiring the majority
interest in a joint venture, the issuer learned of corrupt payments
to obtain business. However, the issuer only implemented
its internal controls “halfway” so as not to “choke
the sales engine and cause a distraction for the sales guys.”
As a result, the improper payments continued, and the
issuer was held liable for violating the FCPA’s internal controls
and books and records provisions. 330
62
Other Guidance on Compliance and
International Best Practices
In addition to this guide, the U.S. Departments of
Commerce and State have both issued publications that contain
guidance regarding compliance programs. The Department
of Commerce’s International Trade Administration has published
Business Ethics: A Manual for Managing a Responsible
Business Enterprise in Emerging Market Economies, 331 and the
Department of State has published Fighting Global Corruption:
Business Risk Management. 332
There is also an emerging international consensus on
compliance best practices, and a number of inter-governmental
and non-governmental organizations have issued
guidance regarding best practices for compliance. 333 Most
notably, the OECD’s 2009 Anti-Bribery Recommendation
and its Annex II, Good Practice Guidance on Internal
Controls, Ethics, and Compliance, 334 published in February
2010, were drafted based on consultations with the private
sector and civil society and set forth specific good practices
for ensuring effective compliance programs and measures
for preventing and detecting foreign bribery. In addition,
businesses may wish to refer to the following resources:
• Asia-Pacific Economic Cooperation—Anti-
Corruption Code of Conduct for Business; 335
• International Chamber of Commerce—ICC Rules
on Combating Corruption; 336
• Transparency International—Business Principles for
Countering Bribery; 337
• United Nations Global Compact—The Ten
Principles; 338
• World Bank—Integrity Compliance
Guidelines; 339 and
• World Economic Forum—Partnering Against
Corruption–Principles for Countering Bribery. 340
Hypothetical: Third-Party Vetting
Part 1: Consultants
Company A, a U.S. issuer headquartered in Delaware, wants to start doing business in a country that poses high risks
of corruption. Company A learns about a potential $50 million contract with the country’s Ministry of Immigration. This
is a very attractive opportunity to Company A, both for its profitability and to open the door to future projects with the
government. At the suggestion of the company’s senior vice president of international sales (Sales Executive), Company A
hires a local businessman who assures them that he has strong ties to political and government leaders in the country and
can help them win the contract. Company A enters into a consulting contract with the local businessman (Consultant). The
agreement requires Consultant to use his best efforts to help the company win the business and provides for Consultant to
receive a significant monthly retainer as well as a success fee of 3% of the value of any contract the company wins.
What steps should Company A consider taking before hiring Consultant?
There are several factors here that might lead Company A to perform heightened FCPA-related due diligence prior
to retaining Consultant: (1) the market (high-risk country); (2) the size and significance of the deal to the company; (3) the
company’s first time use of this particular consultant; (4) the consultant’s strong ties to political and government leaders;
(5) the success fee structure of the contract; and (6) the vaguely-defined services to be provided. In order to minimize the
likelihood of incurring FCPA liability, Company A should carefully vet Consultant and his role in the transaction, including
close scrutiny of the relationship between Consultant and any Ministry of Immigration officials or other government officials.
Although there is nothing inherently illegal about contracting with a third party that has close connections to politicians
and government officials to perform legitimate services on a transaction, this type of relationship can be susceptible to
corruption. Among other things, Company A may consider conducting due diligence on Consultant, including background
(cont’d)
63
chapter 5
Guiding Principles
of Enforcement
and reference checks; ensuring that the contract spells out exactly what services and deliverables (such as written status
reports or other documentation) Consultant is providing; training Consultant on the FCPA and other anti-corruption laws;
requiring Consultant to represent that he will abide by the FCPA and other anti-corruption laws; including audit rights in the
contract (and exercising those rights); and ensuring that payments requested by Consultant have the proper supporting
documentation before they are approved for payment.
Part 2: Distributors and Local Partners
Assume the following alternative facts:
Instead of hiring Consultant, Company A retains an often-used local distributor (Distributor) to sell Company A’s
products to the Ministry of Immigration In negotiating the pricing structure, Distributor, which had introduced the project
to Company A, claims that the standard discount price to Distributor creates insufficient margin for Distributor to cover
warehousing, distribution, installation, marketing, and training costs and requests an additional discount or rebate, or, in
the alternative, a contribution to its marketing efforts, either in the form of a lump sum or as a percentage of the total
contract. The requested discount/allowance is significantly larger than usual, although there is precedent at Company
A for granting this level of discount in unique circumstances. Distributor further advises Company A that the Ministry’s
procurement officials responsible for awarding the contract have expressed a strong preference for including a particular
local company (Local Partner) in the transaction as a subcontractor of Company A to perform installation, training, and
other services that would normally have been performed by Distributor or Company A. According to Distributor, the
Ministry has a solid working relationship with Local Partner, and it would cause less disruption for Local Partner to perform
most of the on-site work at the Ministry. One of the principals (Principal 1) of the Local Partner is an official in another
government ministry.
What additional compliance considerations do these alternative facts raise?
As with Consultant in the first scenario above, Company A should carefully vet Distributor and Local Partner and their
roles in the transaction in order to minimize the likelihood of incurring FCPA liability. While Company A has an established
relationship with Distributor, the fact that Distributor has requested an additional discount warrants further inquiry into
the economic justification for the change, particularly where, as here, the proposed transaction structure contemplates
paying Local Partner to provide many of the same services that Distributor would otherwise provide. In many cases, it may
be appropriate for distributors to receive larger discounts to account for unique circumstances in particular transactions.
That said, a common mechanism to create additional margin for bribe payments is through excessive discounts or rebates
to distributors. Accordingly, when a company has pre-existing relationships with distributors and other third parties,
transaction-specific due diligence—including an analysis of payment terms to confirm that the payment is commensurate
with the work being performed—can be critical even in circumstances where due diligence of the distributor or other third
party raises no initial red flags.
Company A should carefully scrutinize the relationship among Local Partner, Distributor, and Ministry of Immigration
officials. While there is nothing inherently illegal about contracting with a third party that is recommended by the end-user,
or even hiring a government official to perform legitimate services on a transaction unrelated to his or her government
job, these facts raise additional red flags that warrant significant scrutiny. Among other things, Company A would be
well-advised to require Principal 1 to verify that he will have no role in the Ministry of Immigration’s decision to award
the contract to Company A, notify the Ministry of Immigration and his own ministry of his proposed involvement in the
transaction, and certify that he will abide by the FCPA and other anti-corruption laws and that his involvement in the
transaction is permitted under local law.
(cont’d)
64
Assume the following additional facts:
Under its company policy for a government transaction of this size, Company A requires both finance and compliance
approval. The finance officer is concerned that the discounts to Distributor are significantly larger than what they have
approved for similar work and will cut too deeply into Company A’s profit margin. The finance officer is also skeptical about
including Local Partner to perform some of the same services that Company A is paying Distributor to perform. Unsatisfied
with Sales Executive’s explanation, she requests a meeting with Distributor and Principal 1. At the meeting, Distributor
and Principal 1 offer vague and inconsistent justifications for the payments and fail to provide any supporting analysis, and
Principal 1 seems to have no real expertise in the industry. During a coffee break, Distributor comments to Sales Executive
that the finance officer is naïve about “how business is done in my country.” Following the meeting, Sales Executive
dismisses the finance officer’s concerns, assuring her that the proposed transaction structure is reasonable and legitimate.
Sales Executive also reminds the finance officer that “the deal is key to their growth in the industry.”
The compliance officer focuses his due diligence on vetting Distributor and Local Partner and hires a business investigative
firm to conduct a background check. Distributor appears reputable, capable, and financially stable and is willing to take on
real risk in the project, financial and otherwise. However, the compliance officer learns that Distributor has established an
off-shore bank account for the transaction. The compliance officer further learns that Local Partner’s business was organized
two years ago and appears financially stable but has no expertise in the industry and has established an off-shore shell
company and bank account to conduct this transaction. The background check also reveals that Principal 1 is a former college
roommate of a senior official of the Ministry of Immigration. The Sales Executive dismisses the compliance officer’s concerns,
commenting that what Local Partner does with its payments “isn’t our problem.” Sales Executive also strongly objects to the
compliance officer’s request to meet with Principal 1 to discuss the off-shore company and account, assuring him that it was
done for legitimate tax purposes and complaining that if Company A continues to “harass” Local Partner and Distributor, they
would partner with Company A’s chief competitor. The compliance officer and the finance officer discuss their concerns with
each other but ultimately sign off on the deal even though their questions had not been answered. Their decision is motivated
in large part by their conversation with Sales Executive, who told them that this was the region’s most important contract
and that the detailed FCPA questionnaires and robust anti-corruption representations in the contracts placed the burden on
Distributor and Local Partner to act ethically.
Company A goes forward with the Distributor and Local Partner agreements and wins the contract after six months. The
finance officer approves Company A’s payments to Local Partner via the offshore account, even though Local Partner’s invoices
did not contain supporting detail or documentation of any services provided. Company A recorded the payments as legitimate
operational expenses on its books and records. Sales Executive received a large year-end bonus due to the award of the contract.
In fact, Local Partner and Distributor used part of the payments and discount margin, respectively, to funnel bribe payments
to several Ministry of Immigration officials, including Principal 1’s former college roommate, in exchange for awarding the
contract to Company A. Thousands of dollars are also wired to the personal offshore bank account of Sales Executive.
How would DOJ and SEC evaluate the potential FCPA liability of Company A and its employees?
This is not the case of a single “rogue employee” circumventing an otherwise robust compliance program. Although
Company A’s finance and compliance officers had the correct instincts to scrutinize the structure and economics of the
transaction and the role of the third parties, their due diligence was incomplete. When the initial inquiry identified significant
red flags, they approved the transaction despite knowing that their concerns were unanswered or the answers they received
raised additional concerns and red flags. Relying on due diligence questionnaires and anti-corruption representations is
insufficient, particularly when the risks are readily apparent. Nor can Company A or its employees shield themselves from
liability because it was Distributor and Local Partner—rather than Company A directly—that made the payments.
The facts suggest that Sales Executive had actual knowledge of or was willfully blind to the consultant’s payment of
the bribes. He also personally profited from the scheme (both from the kickback and from the bonus he received from the
company) and intentionally discouraged the finance and compliance officers from learning the full story. Sales Executive is
therefore subject to liability under the anti-bribery, books and records, and internal controls provisions of the FCPA, and
others may be as well. Company A may also be liable for violations of the anti-bribery, books and records, and internal
controls provisions of the FCPA given the number and significance of red flags that established a high probability of bribery
and the role of employees and agents acting on the company’s behalf.
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Guiding Principles
of Enforcement
66

chapter 6
FCPA Penalties,
Sanctions, and
Remedies
FCPA PENALTIES, SANCTIONS,
AND REMEDIES
What Are the Potential Consequences
for Violations of the FCPA?
The FCPA provides for different criminal and civil
penalties for companies and individuals.
Criminal Penalties
For each violation of the anti-bribery provisions, the
FCPA provides that corporations and other business entities
are subject to a fine of up to $2 million. 341 Individuals,
including officers, directors, stockholders, and agents of
companies, are subject to a fine of up to $100,000 and
imprisonment for up to five years. 342
For each violation of the accounting provisions, the
FCPA provides that corporations and other business entities
are subject to a fine of up to $25 million. 343 Individuals
are subject to a fine of up to $5 million and imprisonment
for up to 20 years. 344
Under the Alternative Fines Act, 18 U.S.C. § 3571(d),
courts may impose significantly higher fines than those provided
by the FCPA—up to twice the benefit that the defendant
sought to obtain by making the corrupt payment, as
long as the facts supporting the increased fines are included
in the indictment and either proved to the jury beyond a
reasonable doubt or admitted in a guilty plea proceeding. 345
Fines imposed on individuals may not be paid by their
employer or principal. 346
U.S. Sentencing Guidelines
When calculating penalties for violations of the FCPA,
DOJ focuses its analysis on the U.S. Sentencing Guidelines
(Guidelines) 347 in all of its resolutions, including guilty pleas,
DPAs, and NPAs. The Guidelines provide a very detailed and
predictable structure for calculating penalties for all federal
crimes, including violations of the FCPA. To determine the
appropriate penalty, the “offense level” is first calculated by
examining both the severity of the crime and facts specific to
the crime, with appropriate reductions for cooperation and
acceptance of responsibility, and, for business entities, additional
factors such as voluntary disclosure, cooperation, preexisting
compliance programs, and remediation.
The Guidelines provide for different penalties for the
different provisions of the FCPA. The initial offense level
for violations of the anti-bribery provisions is determined
under § 2C1.1, while violations of the accounting provisions
are assessed under § 2B1.1. For individuals, the initial
offense level is modified by factors set forth in Chapters 3,
4, and 5 of the Guidelines 348 to identify a final offense level.
This final offense level, combined with other factors, is used
68
to determine whether the Guidelines would recommend
that incarceration is appropriate, the length of any term of
incarceration, and the appropriate amount of any fine. For
corporations, the offense level is modified by factors particular
to organizations as described in Chapter 8 to determine
the applicable organizational penalty.
For example, violations of the anti-bribery provisions
are calculated pursuant to § 2C1.1. The offense level
is determined by first identifying the base offense level; 349
adding additional levels based on specific offense characteristics,
including whether the offense involved more than
one bribe, the value of the bribe or the benefit that was conferred,
and the level of the public official; 350 adjusting the
offense level based on the defendant’s role in the offense; 351
and using the total offense level as well as the defendant’s
criminal history category to determine the advisory guideline
range. 352 For violations of the accounting provisions
assessed under § 2B1.1, the procedure is generally the
same, except that the specific offense characteristics differ.
For instance, for violations of the FCPA’s accounting provisions,
the offense level may be increased if a substantial
part of the scheme occurred outside the United States or if
the defendant was an officer or director of a publicly traded
company at the time of the offense. 353
For companies, the offense level is calculated pursuant
to §§ 2C1.1 or 2B1.1 in the same way as for an
individual—by starting with the base offense level and
increasing it as warranted by any applicable specific
offense characteristics. The organizational guidelines
found in Chapter 8, however, provide the structure for
determining the final advisory guideline fine range for
organizations. The base fine consists of the greater of the
amount corresponding to the total offense level, calculated
pursuant to the Guidelines, or the pecuniary gain or
loss from the offense. 354 This base fine is then multiplied
by a culpability score that can either reduce the fine to as
little as five percent of the base fine or increase the recommended
fine to up to four times the amount of the base
fine. 355 As described in § 8C2.5, this culpability score is
calculated by taking into account numerous factors such
as the size of the organization committing the criminal
acts; the involvement in or tolerance of criminal activity
by high-level personnel within the organization; and
prior misconduct or obstructive behavior. The culpability
score is reduced if the organization had an effective preexisting
compliance program to prevent violations and if
the organization voluntarily disclosed the offense, cooperated
in the investigation, and accepted responsibility for
the criminal conduct. 356
Civil Penalties
Although only DOJ has the authority to pursue criminal
actions, both DOJ and SEC have civil enforcement
authority under the FCPA. DOJ may pursue civil actions
for anti-bribery violations by domestic concerns (and their
officers, directors, employees, agents, or stockholders) and
foreign nationals and companies for violations while in the
United States, while SEC may pursue civil actions against
issuers and their officers, directors, employees, agents, or
stockholders for violations of the anti-bribery and the
accounting provisions. 357
For violations of the anti-bribery provisions, corporations
and other business entities are subject to a civil
penalty of up to $16,000 per violation. 358 Individuals,
including officers, directors, stockholders, and agents of
companies, are similarly subject to a civil penalty of up to
$16,000 per violation, 359 which may not be paid by their
employer or principal. 360
For violations of the accounting provisions, SEC may
obtain a civil penalty not to exceed the greater of (a) the
gross amount of the pecuniary gain to the defendant as a
result of the violations or (b) a specified dollar limitation.
The specified dollar limitations are based on the egregiousness
of the violation, ranging from $7,500 to $150,000 for
an individual and $75,000 to $725,000 for a company. 361
SEC may obtain civil penalties both in actions filed in federal
court and in administrative proceedings. 362
Collateral Consequences
In addition to the criminal and civil penalties described
above, individuals and companies who violate the FCPA may
face significant collateral consequences, including suspension
69
or debarment from contracting with the federal government,
cross-debarment by multilateral development banks, and the
suspension or revocation of certain export privileges.
Debarment
Under federal guidelines governing procurement,
an individual or company that violates the FCPA or other
criminal statutes may be barred from doing business with the
federal government. The Federal Acquisition Regulations
(FAR) provide for the potential suspension or debarment
of companies that contract with the government upon
conviction of or civil judgment for bribery, falsification or
destruction of records, the making of false statements, or
“[c]ommission of any other offense indicating a lack of business
integrity or business honesty that seriously and directly
affects the present responsibility of a Government contractor
or subcontractor.” 363 These measures are not intended
to be punitive and may be imposed only if “in the public’s
interest for the Government’s protection.” 364
Under the FAR, a decision to debar or suspend is discretionary.
The decision is not made by DOJ prosecutors or
SEC staff, but instead by independent debarment authorities
within each agency, such as the Department of Defense or
the General Services Administration, which analyze a number
of factors to determine whether a company should be suspended,
debarred, or otherwise determined to be ineligible
for government contracting. Such factors include whether
the contractor has effective internal control systems in place,
self-reported the misconduct in a timely manner, and has
taken remedial measures. 365 If a cause for debarment exists,
the contractor has the burden of demonstrating to the satisfaction
of the debarring official that it is presently responsible
and that debarment is not necessary. 366 Each federal department
and agency determines the eligibility of contractors
with whom it deals. However, if one department or agency
debars or suspends a contractor, the debarment or suspension
applies to the entire executive branch of the federal government,
unless a department or agency shows compelling reasons
not to debar or suspend the contractor. 367
Although guilty pleas, DPAs, and NPAs do not result
in automatic debarment from U.S. government contracting,
chapter 6
FCPA Penalties,
Sanctions, and
Remedies
committing a federal crime and the factual admissions
underlying a resolution are factors that the independent
debarment authorities may consider. Moreover, indictment
alone can lead to suspension of the right to do business
with the government. 368 The U.S. Attorney’s Manual also
provides that when a company engages in fraud against the
government, a prosecutor may not negotiate away an agency’s
right to debar or delist the company as part of the plea
bargaining process. 369 In making debarment determinations,
contracting agencies, including at the state and local
level, may consult with DOJ in advance of awarding a contract.
Depending on the circumstances, DOJ may provide
information to contracting authorities in the context of
the corporate settlement about the facts and circumstances
underlying the criminal conduct and remediation measures
undertaken by the company, if any. This information sharing
is not advocacy, and the ultimate debarment decisions
are squarely within the purview of the independent debarment
authorities. In some situations, the contracting agency
may impose its own oversight requirements in order for a
company that has admitted to violations of federal law to be
awarded federal contracts, such as the Corporate Integrity
Agreements often required by the Department of Health
and Human Services.
Cross-Debarment by Multilateral Development
Banks
Multilateral Development Banks (MDBs), like the
World Bank, also have the ability to debar companies and
individuals for corrupt practices. 370 Each MDB has its own
process for evaluating alleged corruption in connection
with MDB-funded projects. When appropriate, DOJ and
SEC work with MDBs to share evidence and refer cases.
On April 9, 2010, the African Development Bank Group,
the Asian Development Bank, the European Bank for
70
Reconstruction and Development, the Inter-American
Development Bank Group, and the World Bank Group
entered into an agreement under which entities debarred
by one MDB will be sanctioned for the same misconduct
by other signatory MDBs. 371 This cross-debarment agreement
means that if a company is debarred by one MDB, it
is debarred by all. 372
Loss of Export Privileges
Companies and individuals who violate the FCPA
may face consequences under other regulatory regimes,
such as the Arms Export Control Act (AECA), 22 U.S.C.
§ 2751, et seq., and its implementing regulations, the
International Traffic in Arms Regulations (ITAR), 22
C.F.R. § 120, et seq. AECA and ITAR together provide
for the suspension, revocation, amendment, or denial of an
arms export license if an applicant has been indicted or convicted
for violating the FCPA. 373 They also set forth certain
factors for the Department of State’s Directorate of Defense
Trade Controls (DDTC) 374 to consider when determining
whether to grant, deny, or return without action license
applications for certain types of defense materials. One of
those factors is whether there is reasonable cause to believe
that an applicant for a license has violated (or conspired
to violate) the FCPA; if so, the Department of State “may
disapprove the application.” 375 In addition, it is the policy
of the Department of State not to consider applications for
licenses involving any persons who have been convicted of
violating the AECA or convicted of conspiracy to violate
the AECA. 376 In an action related to the criminal resolution
of a U.K. military products manufacturer, the DDTC
imposed a “policy of denial” for export licenses on three of
the company’s subsidiaries that were involved in violations
of AECA and ITAR. 377
When Is a Compliance Monitor or
Independent Consultant Appropriate?
One of the primary goals of both criminal prosecutions
and civil enforcement actions against companies that
violate the FCPA is ensuring that such conduct does not
occur again. As a consequence, enhanced compliance and
reporting requirements may be part of criminal and civil
resolutions of FCPA matters. The amount of enhanced
compliance and kind of reporting required varies according
to the facts and circumstances of individual cases.
In criminal cases, a company’s sentence, or a DPA or
NPA with a company, may require the appointment of an
independent corporate monitor. Whether a monitor is
appropriate depends on the specific facts and circumstances
of the case. In 2008, DOJ issued internal guidance regarding
the selection and use of corporate monitors in DPAs
and NPAs with companies. Additional guidance has since
been issued. 378 A monitor is an independent third party who
assesses and monitors a company’s adherence to the compliance
requirements of an agreement that was designed to
reduce the risk of recurrence of the company’s misconduct.
Appointment of a monitor is not appropriate in all circumstances,
but it may be appropriate, for example, where a company
does not already have an effective internal compliance
program or needs to establish necessary internal controls. In
addition, companies are sometimes allowed to engage in selfmonitoring,
typically in cases when the company has made
a voluntary disclosure, has been fully cooperative, and has
demonstrated a genuine commitment to reform.
Factors DOJ and SEC Consider
When Determining Whether a Compliance
Monitor Is Appropriate Include:
• Seriousness of the offense
• Duration of the misconduct
• Pervasiveness of the misconduct, including
whether the conduct cuts across geographic and/
or product lines
• Nature and size of the company
• Quality of the company’s compliance program at
the time of the misconduct
• Subsequent remediation efforts
71
In civil cases, a company may similarly be required
to retain an independent compliance consultant or monitor
to provide an independent, third-party review of the
company’s internal controls. The consultant recommends
improvements, to the extent necessary, which the company
must adopt. When both DOJ and SEC require a company
to retain a monitor, the two agencies have been able
to coordinate their requirements so that the company can
retain one monitor to fulfill both sets of requirements.
The most successful monitoring relationships are
those in which the company embraces the monitor or consultant.
If the company takes the recommendations and
suggestions seriously and uses the monitoring period as a
time to find and fix any outstanding compliance issues, the
company can emerge from the monitorship with a stronger,
long-lasting compliance program.
chapter 6
FCPA Penalties,
Sanctions, and
Remedies
72

chapter 7
Resolutions
RESOLUTIONS
What Are the Different Types of
Resolutions with DOJ?
Criminal Complaints, Informations, and Indictments
Charges against individuals and companies are
brought in three different ways under the Federal Rules of
Criminal Procedure: criminal complaints, criminal informations,
and indictments.
DOJ may agree to resolve criminal FCPA matters
against companies either through a declination or, in
appropriate cases, a negotiated resolution resulting in a plea
agreement, deferred prosecution agreement, or non-prosecution
agreement. For individuals, a negotiated resolution
will generally take the form of a plea agreement, which may
include language regarding cooperation, or a non-prosecution
cooperation agreement. When negotiated resolutions
cannot be reached with companies or individuals, the matter
may proceed to trial.
Plea Agreements
Plea agreements—whether with companies or
individuals—are governed by Rule 11 of the Federal
Rules of Criminal Procedure. The defendant generally
admits to the facts supporting the charges, admits
guilt, and is convicted of the charged crimes when the
plea agreement is presented to and accepted by a court.
The plea agreement may jointly recommend a sentence
or fine, jointly recommend an analysis under the U.S.
Sentencing Guidelines, or leave such items open for
argument at the time of sentencing.
Deferred Prosecution Agreements
Under a deferred prosecution agreement, or a DPA
as it is commonly known, DOJ files a charging document
with the court, 379 but it simultaneously requests that the
prosecution be deferred, that is, postponed for the purpose
of allowing the company to demonstrate its good
conduct. DPAs generally require a defendant to agree to
pay a monetary penalty, waive the statute of limitations,
cooperate with the government, admit the relevant facts,
and enter into certain compliance and remediation commitments,
potentially including a corporate compliance
monitor. DPAs describe the company’s conduct, cooperation,
and remediation, if any, and provide a calculation of
the penalty pursuant to the U.S. Sentencing Guidelines.
In addition to being publicly filed, DOJ places all of its
DPAs on its website. If the company successfully completes
the term of the agreement (typically two or three
years), DOJ will then move to dismiss the filed charges. A
company’s successful completion of a DPA is not treated
as a criminal conviction.
74
Non-Prosecution Agreements
Under a non-prosecution agreement, or an NPA as
it is commonly known, DOJ maintains the right to file
charges but refrains from doing so to allow the company
to demonstrate its good conduct during the term of the
NPA. Unlike a DPA, an NPA is not filed with a court but is
instead maintained by the parties. In circumstances where
an NPA is with a company for FCPA-related offenses, it is
made available to the public through DOJ’s website. The
requirements of an NPA are similar to those of a DPA,
and generally require a waiver of the statute of limitations,
ongoing cooperation, admission of the material facts, and
compliance and remediation commitments, in addition to
payment of a monetary penalty. If the company complies
with the agreement throughout its term, DOJ does not file
criminal charges. If an individual complies with the terms
of his or her NPA, namely, truthful and complete cooperation
and continued law-abiding conduct, DOJ will not pursue
criminal charges.
Declinations
As discussed above, DOJ’s decision to bring or decline
to bring an enforcement action under the FCPA is made
pursuant to the Principles of Federal Prosecution, in the case
of individuals, and the Principles of Federal Prosecution
of Business Organizations, in the case of companies. As
described, in the case of individuals, the Principles of Federal
Prosecution advise prosecutors to weigh all relevant considerations,
including:
• federal law enforcement priorities;
• the nature and seriousness of the offense;
• the deterrent effect of prosecution;
• the person’s culpability in connection with the
offense;
• the person’s history of criminal activity;
• the person’s willingness to cooperate in the investigation
or prosecution of others; and
• the probable sentence or other consequences if the
person is convicted. 380
The Principles of Federal Prosecution provide additional
commentary about each of these factors. For
instance, they explain that prosecutors should take into
account federal law enforcement priorities because federal
law enforcement and judicial resources are not sufficient
to permit prosecution of every alleged offense over which
federal jurisdiction exists. The deterrent effect of prosecution
should also be kept in mind because some offenses,
“although seemingly not of great importance by themselves,
if commonly committed would have a substantial cumulative
impact on the community.” 381
As discussed above, the Principles of Federal
Prosecution of Business Organizations require prosecutors to
consider nine factors when determining whether to prosecute
a corporate entity for an FCPA violation, including the
nature and seriousness of the offense; the pervasiveness of
wrongdoing within the company; the company’s history of
similar conduct; the existence and effectiveness of the company’s
pre-existing compliance program; and the adequacy
of remedies, such as civil or regulatory enforcement actions.
Pursuant to these guidelines, DOJ has declined to
prosecute both individuals and corporate entities in numerous
cases based on the particular facts and circumstances
presented in those matters, taking into account the available
evidence. 382 To protect the privacy rights and other
interests of the uncharged and other potentially interested
parties, DOJ has a long-standing policy not to provide,
without the party’s consent, non-public information on
matters it has declined to prosecute. To put DOJ’s declinations
in context, however, in the past two years alone, DOJ
has declined several dozen cases against companies where
potential FCPA violations were alleged.
As mentioned above, there are rare occasions in
which, in conjunction with the public filing of charges
against an individual, it is appropriate to disclose that a
company is not also being prosecuted. That was done in a
recent case where a former employee was charged but the
former corporate employer was not. 383
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What Are the Different Types of
Resolutions with SEC?
Civil Injunctive Actions and Remedies
In a civil injunctive action, SEC seeks a court order
compelling the defendant to obey the law in the future.
Violating such an order can result in civil or criminal contempt
proceedings. Civil contempt sanctions, brought by
SEC, are remedial rather than punitive in nature and serve
one of two purposes: to compensate the party injured as a
result of the violation of the injunction or force compliance
with the terms of the injunction.
Where a defendant has profited from a violation of
law, SEC can obtain the equitable relief of disgorgement
of ill-gotten gains and pre-judgment interest and can also
obtain civil money penalties pursuant to Sections 21(d)(3)
and 32(c) of the Exchange Act. SEC may also seek ancillary
relief (such as an accounting from a defendant). Pursuant
to Section 21(d)(5), SEC also may seek, and any federal
court may grant, any other equitable relief that may be
appropriate or necessary for the benefit of investors, such
as enhanced remedial measures or the retention of an independent
compliance consultant or monitor.
Civil Administrative Actions and Remedies
SEC has the ability to institute various types of administrative
proceedings against a person or an entity that it
believes has violated the law. This type of enforcement action
is brought by SEC’s Enforcement Division and is litigated
before an SEC administrative law judge (ALJ). The ALJ’s
decision is subject to appeal directly to the Securities and
Exchange Commission itself, and the Commission’s decision
is in turn subject to review by a U.S. Court of Appeals.
Administrative proceedings provide for a variety of
relief. For regulated persons and entities, such as brokerdealers
and investment advisers and persons associated with
them, sanctions include censure, limitation on activities,
suspension of up to twelve months, and bar from association
or revocation of registration. For professionals such as
attorneys and accountants, SEC can order in Rule 102(e)
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proceedings that the professional be censured, suspended,
or barred from practicing before SEC. 384 SEC staff can seek
an order from an administrative law judge requiring the
respondent to cease and desist from any current or future
violations of the securities laws. In addition, SEC can obtain
disgorgement, pre-judgment interest, and civil money penalties
in administrative proceedings under Section 21B
of the Exchange Act, and also can obtain other equitable
relief, such as enhanced remedial measures or the retention
of an independent compliance consultant or monitor.
Deferred Prosecution Agreements
A deferred prosecution agreement is a written agreement
between SEC and a potential cooperating individual
or company in which SEC agrees to forego an enforcement
action against the individual or company if the individual
or company agrees to, among other things: (1) cooperate
truthfully and fully in SEC’s investigation and related
enforcement actions; (2) enter into a long-term tolling
agreement; (3) comply with express prohibitions and/
or undertakings during a period of deferred prosecution;
and (4) under certain circumstances, agree either to admit
or not to contest underlying facts that SEC could assert
to establish a violation of the federal securities laws. If the
agreement is violated during the period of deferred prosecution,
SEC staff may recommend an enforcement action to
the Commission against the individual or company for the
original misconduct as well as any additional misconduct.
Furthermore, if the Commission authorizes the enforcement
action, SEC staff may use any factual admissions
made by the cooperating individual or company in support
of a motion for summary judgment, while maintaining the
ability to bring an enforcement action for any additional
misconduct at a later date.
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In May of 2011, SEC entered into its first deferred
prosecution agreement against a company for violating the
FCPA. 385 In that case, a global manufacturer of steel pipe
products violated the FCPA by bribing Uzbekistan government
officials during a bidding process to supply pipelines
for transporting oil and natural gas. The company made
almost $5 million in profits when it was subsequently
awarded several contracts by the Uzbekistan government.
The company discovered the misconduct during a worldwide
review of its operations and brought it to the government’s
attention. In addition to self-reporting, the company
conducted a thorough internal investigation; provided
complete, real-time cooperation with SEC and DOJ staff;
and undertook extensive remediation, including enhanced
anti-corruption procedures and training. Under the terms
of the DPA, the company paid $5.4 million in disgorgement
and prejudgment interest. The company also paid a
$3.5 million monetary penalty to resolve a criminal investigation
by DOJ through an NPA. 386
For further information about deferred prosecution
agreements, see SEC’s Enforcement Manual. 387
Non-Prosecution Agreements
A non-prosecution agreement is a written agreement
between SEC and a potential cooperating individual or company,
entered into in limited and appropriate circumstances,
that provides that SEC will not pursue an enforcement
action against the individual or company if the individual or
company agrees to, among other things: (1) cooperate truthfully
and fully in SEC’s investigation and related enforcement
actions; and (2) comply, under certain circumstances,
with express undertakings. If the agreement is violated, SEC
staff retains its ability to recommend an enforcement action
to the Commission against the individual or company.
For further information about non-prosecution
agreements, see SEC’s Enforcement Manual. 388
Enforcement Manual. The same factors that apply to SEC
staff ’s determination of whether to recommend an enforcement
action against an individual or entity apply to the
decision to close an investigation without recommending
enforcement action. 389
Generally, SEC staff considers, among other things:
• the seriousness of the conduct and potential violations;
• the resources available to SEC staff to pursue the
investigation;
• the sufficiency and strength of the evidence;
• the extent of potential investor harm if an action is
not commenced; and
• the age of the conduct underlying the potential
violations.
SEC has declined to take enforcement action against
both individuals and companies based on the facts and circumstances
present in those matters, where, for example,
the conduct was not egregious, the company fully cooperated,
and the company identified and remediated the
misconduct quickly. SEC Enforcement Division policy is
to notify individuals and entities at the earliest opportunity
when the staff has determined not to recommend an
enforcement action against them to the Commission. This
notification takes the form of a termination letter.
In order to protect the privacy rights and other interests
of the uncharged and other potentially interested parties,
SEC does not provide non-public information on matters
it has declined to prosecute.
What Are Some Examples of Past
Declinations by DOJ and SEC?
Neither DOJ nor SEC typically publicizes declinations
but, to provide some insight into the process, the following
are recent, anonymized examples of matters DOJ
and SEC have declined to pursue:
Termination Letters and Declinations
As discussed above, SEC’s decision to bring or
decline to bring an enforcement action under the FCPA is
made pursuant to the guiding principles set forth in SEC’s
Example 1: Public Company Declination
DOJ and SEC declined to take enforcement action
against a public U.S. company. Factors taken into consideration
included:
77
• The company discovered that its employees had
received competitor bid information from a third
party with connections to the foreign government.
• The company began an internal investigation,
withdrew its contract bid, terminated the employees
involved, severed ties to the third-party agent, and
voluntarily disclosed the conduct to DOJ’s Antitrust
Division, which also declined prosecution.
• During the internal investigation, the company
uncovered various FCPA red flags, including prior
concerns about the third-party agent, all of which
the company voluntarily disclosed to DOJ and SEC.
• The company immediately took substantial steps to
improve its compliance program.
Example 2: Public Company Declination
DOJ and SEC declined to take enforcement action
against a public U.S. company. Factors taken into consideration
included:
• With knowledge of employees of the company’s
subsidiary, a retained construction company
paid relatively small bribes, which were wrongly
approved by the company’s local law firm, to foreign
building code inspectors.
• When the company’s compliance department
learned of the bribes, it immediately ended the
conduct, terminated its relationship with the construction
company and law firm, and terminated or
disciplined the employees involved.
• The company completed a thorough internal investigation
and voluntarily disclosed to DOJ and SEC.
• The company reorganized its compliance department,
appointed a new compliance officer dedicated
to anti-corruption, improved the training
and compliance program, and undertook a
review of all of the company’s international thirdparty
relationships.
Example 3: Public Company Declination
DOJ and SEC declined to take enforcement action
against a U.S. publicly held industrial services company for
chapter 7
Resolutions
bribes paid by a small foreign subsidiary. Factors taken into
consideration included:
• The company self-reported the conduct to DOJ
and SEC.
• The total amount of the improper payments was
relatively small, and the activity appeared to be
an isolated incident by a single employee at the
subsidiary.
• The profits potentially obtained from the improper
payments were very small.
• The payments were detected by the company’s
existing internal controls. The company’s audit
committee conducted a thorough independent
internal investigation. The results of the investigation
were provided to the government.
• The company cooperated fully with investigations
by DOJ and SEC.
• The company implemented significant remedial
actions and enhanced its internal control structure.
Example 4: Public Company Declination
DOJ and SEC declined to take enforcement action
against a U.S. publicly held oil-and-gas services company
for small bribes paid by a foreign subsidiary’s customs agent.
Factors taken into consideration included:
• The company’s internal controls timely detected a
potential bribe before a payment was made.
• When company management learned of the
potential bribe, management immediately reported
the issue to the company’s General Counsel and
Audit Committee and prevented the payment from
occurring.
• Within weeks of learning of the attempted bribe,
the company provided in-person FCPA training
to employees of the subsidiary and undertook
78
an extensive internal investigation to determine
whether any of the company’s subsidiaries in the
same region had engaged in misconduct.
• The company self-reported the misconduct and the
results of its internal investigation to DOJ and SEC.
• The company cooperated fully with investigations
by DOJ and SEC.
• In addition to the immediate training at the relevant
subsidiary, the company provided comprehensive
FCPA training to all of its employees and conducted
an extensive review of its anti-corruption compliance
program.
• The company enhanced its internal controls and
record-keeping policies and procedures, including
requiring periodic internal audits of customs
payments.
• As part of its remediation, the company directed that
local lawyers rather than customs agents be used to
handle its permits, with instructions that “no matter
what, we don’t pay bribes”—a policy that resulted in
a longer and costlier permit procedure.
Example 5: Public Company Declination
DOJ and SEC declined to take enforcement action
against a U.S. publicly held consumer products company
in connection with its acquisition of a foreign company.
Factors taken into consideration included:
• The company identified the potential improper
payments to local government officials as part of its
pre-acquisition due diligence.
• The company promptly developed a comprehensive
plan to investigate, correct, and remediate any
FCPA issues after acquisition.
• The company promptly self-reported the issues prior
to acquisition and provided the results of its investigation
to the government on a real-time basis.
• The acquiring company’s existing internal controls
and compliance program were robust.
• After the acquisition closed, the company implemented
a comprehensive remedial plan, ensured
that all improper payments stopped, provided
extensive FCPA training to employees of the new
subsidiary, and promptly incorporated the new
subsidiary into the company’s existing internal
controls and compliance environment.
Example 6: Private Company Declination
In 2011, DOJ declined to take prosecutorial action
against a privately held U.S. company and its foreign subsidiary.
Factors taken into consideration included:
• The company voluntarily disclosed bribes paid to
social security officials in a foreign country.
• The total amount of the bribes was small.
• When discovered, the corrupt practices were immediately
terminated.
• The conduct was thoroughly investigated, and the
results of the investigation were promptly provided
to DOJ.
• All individuals involved were either terminated
or disciplined. The company also terminated its
relationship with its foreign law firm.
• The company instituted improved training and
compliance programs commensurate with its size
and risk exposure.
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chapter 7
Resolutions
80

chapter 8
Whistleblower
Provisions and
Protections
WHISTLEBLOWER PROVISIONS
AND PROTECTIONS
Assistance and information from a whistleblower who knows of possible securities
law violations can be among the most powerful weapons in the law enforcement
arsenal. Through their knowledge of the circumstances and individuals
involved, whistleblowers can help SEC and DOJ identify potential violations
much earlier than might otherwise have been possible, thus allowing SEC and
DOJ to minimize the harm to investors, better preserve the integrity of the
U.S. capital markets, and more swiftly hold accountable those responsible for
unlawful conduct.
The Sarbanes-Oxley Act of 2002 and the Dodd-Frank
Act of 2010 both contain provisions affecting whistleblowers
who report FCPA violations. Sarbanes-Oxley prohibits
issuers from retaliating against whistleblowers and provides
that employees who are retaliated against for reporting possible
securities law violations may file a complaint with the
Department of Labor, for which they would be eligible to
receive reinstatement, back pay, and other compensation. 390
Sarbanes-Oxley also prohibits retaliation against employee
whistleblowers under the obstruction of justice statute. 391
In 2010, the Dodd-Frank Act added Section 21F to
the Exchange Act, addressing whistleblower incentives and
protections. Section 21F authorizes SEC to provide monetary
awards to eligible individuals who voluntarily come
forward with high quality, original information that leads
to an SEC enforcement action in which over $1,000,000 in
sanctions is ordered. 392 The awards range is between 10%
and 30% of the monetary sanctions recovered by the government.
The Dodd-Frank Act also prohibits employers
from retaliating against whistleblowers and creates a private
right of action for employees who are retaliated against. 393
Furthermore, businesses should be aware that retaliation
against a whistleblower may also violate state, local,
and foreign laws that provide protection of whistleblowers.
82
On August 12, 2011, the final rules for SEC’s
Whistleblower Program became effective. These rules set
forth the requirements for whistleblowers to be eligible for
awards consideration, the factors that SEC will use to determine
the amount of the award, the categories of individuals
who are excluded from award consideration, and the categories
of individuals who are subject to limitations in award
considerations. 394 The final rules strengthen incentives for
employees to report the suspected violations internally
through internal compliance programs when appropriate,
although it does not require an employee to do so in order
to qualify for an award. 395
Individuals with information about a possible violation
of the federal securities laws, including FCPA violations,
should submit that information to SEC either online
through SEC’s Tips, Complaints, and Referrals (TCR)
Intake and Resolution System (available at https://denebleo.sec.gov/TCRExternal/disclaimer.xhtml)
or by mailing
or faxing a completed Form TCR to the Commission’s
Office of the Whistleblower.
Whistleblowers can submit information anonymously.
To be considered under SEC’s whistleblower program
as eligible for a reward, however, the information
must be submitted on an anonymous whistleblower’s behalf
by an attorney. 396 Whether or not a whistleblower reports
anonymously, SEC is committed to protecting the identity
of a whistleblower to the fullest extent possible under the
statute. 397 SEC’s Office of the Whistleblower administers
SEC’s Whistleblower Program and answers questions from
the public regarding the program. Additional information
regarding SEC’s Whistleblower Program, including
answers to frequently asked questions, is available online at
http://www.sec.gov/whistleblower.
SEC Office of the Whistleblower
100 F Street NE, Mail Stop 5971
Washington, DC 20549
Facsimile: (703) 813-9322
Online Report Form: http://www.sec.gov/
whistleblower
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chapter 8
Whistleblower
Provisions and
Protections
84

chapter 9
DOJ Opinion
Procedure
DOJ OPINION PROCEDURE
DOJ’s opinion procedure is a valuable mechanism for companies and individuals
to determine whether proposed conduct would be prosecuted by DOJ
under the FCPA. 398 Generally speaking, under the opinion procedure process,
parties submit information to DOJ, after which DOJ issues an opinion about
whether the proposed conduct falls within its enforcement policy. All of DOJ’s
prior opinions are available online. 399 Parties interested in obtaining such an
opinion should follow these steps: 400
First, those seeking an opinion should evaluate whether
their question relates to actual, prospective conduct. 401 The
opinion procedure cannot be used to obtain opinions on
purely historical conduct or on hypothetical questions. DOJ
will not consider a request unless that portion of the transaction
for which an opinion is sought involves only prospective
conduct, although the transaction as a whole may have components
that already have occurred. An executed contract
is not a prerequisite and, in most—if not all—instances, an
opinion request should be made before the requestor commits
to proceed with a transaction. 402 Those seeking requests
should be aware that FCPA opinions relate only to the
FCPA’s anti-bribery provisions. 403
Second, before making the request, the company or
individual should check that they are either an issuer or a
domestic concern, as only those categories of parties can
receive an opinion. 404 If the transaction involves more than
one issuer or domestic concern, consider making a request
for an opinion jointly, as opinions only apply to the parties
that request them. 405
Third, those seeking an opinion must put their request
in writing. The request must be specific and accompanied
by all relevant and material information bearing on the conduct
and circumstances for which an opinion is requested.
Material information includes background information,
complete copies of all operative documents, and detailed
statements of all collateral or oral understandings, if any.
Those seeking opinions are under an affirmative obligation
to make full and true disclosures. 406 Materials disclosed to
DOJ will not be made public without the consent of the
party submitting them. 407
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Fourth, the request must be signed. For corporate
requestors, the signatory should be an appropriate senior
officer with operational responsibility for the conduct that is
the subject of the request and who has been designated by the
corporation’s chief executive officer. In appropriate cases, DOJ
also may require the chief executive officer to sign the request.
Those signing the request must certify that it contains a true,
correct, and complete disclosure with respect to the proposed
conduct and the circumstances of the conduct. 408
Fifth, an original and five copies of the request should
be addressed to the Assistant Attorney General in charge of
the Criminal Division, Attention: FCPA Opinion Group. 409
The mailing address is P.O. Box 28188 Central Station,
Washington, D.C. 20038. DOJ also asks that you send an
electronic courtesy copy to FCPA.Fraud@usdoj.gov.
DOJ will evaluate the request for an FCPA opinion. 410
A party may withdraw a request for an opinion at any time
prior to the release of an opinion. 411 If the request is complete
and all the relevant information has been submitted, DOJ will
respond to the request by issuing an opinion within 30 days. 412
If the request is incomplete, DOJ will identify for the requestor
what additional information or documents are required for
DOJ to review the request. Such information must be provided
to DOJ promptly. Once the additional information has
been received, DOJ will issue an opinion within 30 days of
receipt of that additional information. 413 DOJ’s FCPA opinions
state whether, for purposes of DOJ’s present enforcement
policy, the prospective conduct would violate either the issuer
or domestic concern anti-bribery provisions of the FCPA. 414
DOJ also may take other positions in the opinion as it considers
appropriate. 415 To the extent that the opinion concludes
that the proposed conduct would not violate the FCPA, a
rebuttable presumption is created that the requestor’s conduct
that was the basis of the opinion is in compliance with
the FCPA. 416 In order to provide non-binding guidance to the
business community, DOJ makes versions of its opinions publicly
available on its website. 417
If, after receiving an opinion, a party is concerned about
prospective conduct that is beyond the scope of conduct specified
in a previous request, the party may submit an additional
request for an opinion using the procedures outlined above. 418
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chapter 9
DOJ Opinion
Procedure
88

chapter 10
Conclusion
CONCLUSION
The FCPA was designed to prevent corrupt practices, protect investors,
and provide a fair playing field for those honest companies trying to win business
based on quality and price rather than bribes. Following Congress’ leadership
in enacting the FCPA 35 years ago, and through determined international
diplomatic and law enforcement efforts in the time since, laws like the FCPA
prohibiting foreign bribery have been enacted by most of the United States’
major trading partners.
This guide is designed to provide practical advice about, and useful insights
into, our enforcement considerations. For businesses desiring to compete
fairly in foreign markets, it is our goal to maximize those businesses’ ability
to comply with the FCPA in the most effective and efficient way suitable to their
business and the markets in which they operate. Through our ongoing efforts
with the U.S. and international business and legal communities and nongovernmental
organizations, DOJ and SEC can continue effectively to protect
the integrity of our markets and reduce corruption around the world.
90

APPENDIX
The Foreign
Corrupt
Practices Act
THE FOREIGN CORRUPT
PRACTICES ACT:
15 U.S.C. §§ 78dd-1, 78dd-2, 78dd-3, 78m, 78ff
15 U.S.C. § 78dd-1 [Section 30A of the Securities Exchange Act of
1934] Prohibited foreign trade practices by issuers
(a) Prohibition
It shall be unlawful for any issuer which has a class of securities registered
pursuant to section 78l of this title or which is required to file
reports under section 78o(d) of this title, or for any officer, director,
employee, or agent of such issuer or any stockholder thereof acting
on behalf of such issuer, to make use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an
offer, payment, promise to pay, or authorization of the payment of any
money, or offer, gift, promise to give, or authorization of the giving of
anything of value to—
(1) any foreign official for purposes of—
(A) (i) influencing any act or decision of such foreign official in his
official capacity, (ii) inducing such foreign official to do or omit to do
any act in violation of the lawful duty of such official, or (iii) securing
any improper advantage; or
(B) inducing such foreign official to use his influence with a foreign
government or instrumentality thereof to affect or influence any act
or decision of such government or instrumentality, in order to assist
such issuer in obtaining or retaining business for or with, or directing
business to, any person;
(2) any foreign political party or official thereof or any candidate for
foreign political office for purposes of—
(A) (i) influencing any act or decision of such party, official, or candidate
in its or his official capacity, (ii) inducing such party, official, or
candidate to do or omit to do an act in violation of the lawful duty of
such party, official, or candidate, or (iii) securing any improper advantage;
or
(B) inducing such party, official, or candidate to use its or his influence
with a foreign government or instrumentality thereof to affect or
influence any act or decision of such government or instrumentality,
in order to assist such issuer in obtaining or retaining business for or
with, or directing business to, any person; or
(3) any person, while knowing that all or a portion of such money or
thing of value will be offered, given, or promised, directly or indirectly,
to any foreign official, to any foreign political party or official thereof,
or to any candidate for foreign political office, for purposes of—
(A) (i) influencing any act or decision of such foreign official, political
party, party official, or candidate in his or its official capacity, (ii)
inducing such foreign official, political party, party official, or candidate
to do or omit to do any act in violation of the lawful duty of
such foreign official, political party, party official, or candidate, or (iii)
securing any improper advantage; or
(B) inducing such foreign official, political party, party official, or
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candidate to use his or its influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of
such government or instrumentality, in order to assist such issuer in
obtaining or retaining business for or with, or directing business to,
any person.
(b) Exception for routine governmental action
Subsections (a) and (g) of this section shall not apply to any facilitating
or expediting payment to a foreign official, political party, or party
official the purpose of which is to expedite or to secure the performance
of a routine governmental action by a foreign official, political
party, or party official.
(c) Affirmative defenses
It shall be an affirmative defense to actions under subsection (a) or (g)
of this section that—
(1) the payment, gift, offer, or promise of anything of value that was
made, was lawful under the written laws and regulations of the foreign
official’s, political party’s, party official’s, or candidate’s country; or
(2) the payment, gift, offer, or promise of anything of value that was
made, was a reasonable and bona fide expenditure, such as travel and
lodging expenses, incurred by or on behalf of a foreign official, party,
party official, or candidate and was directly related to—
(A) the promotion, demonstration, or explanation of products or services;
or
(B) the execution or performance of a contract with a foreign government
or agency thereof.
(d) Guidelines by Attorney General
Not later than one year after August 23, 1988, the Attorney General,
after consultation with the Commission, the Secretary of Commerce,
the United States Trade Representative, the Secretary of State, and the
Secretary of the Treasury, and after obtaining the views of all interested
persons through public notice and comment procedures, shall determine
to what extent compliance with this section would be enhanced
and the business community would be assisted by further clarification of
the preceding provisions of this section and may, based on such determination
and to the extent necessary and appropriate, issue—
(1) guidelines describing specific types of conduct, associated with
common types of export sales arrangements and business contracts,
which for purposes of the Department of Justice’s present enforcement
policy, the Attorney General determines would be in conformance
with the preceding provisions of this section; and
(2) general precautionary procedures which issuers may use on a voluntary
basis to conform their conduct to the Department of Justice’s
present enforcement policy regarding the preceding provisions of this
section. The Attorney General shall issue the guidelines and procedures
referred to in the preceding sentence in accordance with the provisions
of subchapter II of chapter 5 of Title 5 and those guidelines and procedures
shall be subject to the provisions of chapter 7 of that title.
(e) Opinions of Attorney General
(1) The Attorney General, after consultation with appropriate departments
and agencies of the United States and after obtaining the views
of all interested persons through public notice and comment procedures,
shall establish a procedure to provide responses to specific
inquiries by issuers concerning conformance of their conduct with the
Department of Justice’s present enforcement policy regarding the preceding
provisions of this section. The Attorney General shall, within
30 days after receiving such a request, issue an opinion in response
to that request. The opinion shall state whether or not certain specified
prospective conduct would, for purposes of the Department of
Justice’s present enforcement policy, violate the preceding provisions
of this section. Additional requests for opinions may be filed with the
Attorney General regarding other specified prospective conduct that
is beyond the scope of conduct specified in previous requests. In any
action brought under the applicable provisions of this section, there
shall be a rebuttable presumption that conduct, which is specified in a
request by an issuer and for which the Attorney General has issued an
opinion that such conduct is in conformity with the Department of
Justice’s present enforcement policy, is in compliance with the preceding
provisions of this section. Such a presumption may be rebutted by
a preponderance of the evidence. In considering the presumption for
purposes of this paragraph, a court shall weight all relevant factors,
including but not limited to whether the information submitted to
the Attorney General was accurate and complete and whether it was
within the scope of the conduct specified in any request received by
the Attorney General. The Attorney General shall establish the procedure
required by this paragraph in accordance with the provisions
of subchapter II of chapter 5 of Title 5 and that procedure shall be
subject to the provisions of chapter 7 of that title.
(2) Any document or other material which is provided to, received by,
or prepared in the Department of Justice or any other department or
agency of the United States in connection with a request by an issuer
under the procedure established under paragraph (1), shall be exempt
from disclosure under section 552 of Title 5 and shall not, except
with the consent of the issuer, be made publicly available, regardless of
whether the Attorney General responds to such a request or the issuer
withdraws such request before receiving a response.
(3) Any issuer who has made a request to the Attorney General
under paragraph (1) may withdraw such request prior to the time the
Attorney General issues an opinion in response to such request. Any
request so withdrawn shall have no force or effect.
(4) The Attorney General shall, to the maximum extent practicable,
provide timely guidance concerning the Department of Justice’s
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present enforcement policy with respect to the preceding provisions
of this section to potential exporters and small businesses that
are unable to obtain specialized counsel on issues pertaining to such
provisions. Such guidance shall be limited to responses to requests
under paragraph (1) concerning conformity of specified prospective
conduct with the Department of Justice’s present enforcement policy
regarding the preceding provisions of this section and general explanations
of compliance responsibilities and of potential liabilities under
the preceding provisions of this section.
(v) actions of a similar nature.
APPENDIX
The Foreign
Corrupt
Practices Act
(f ) Definitions
For purposes of this section:
(1)(A) The term “foreign official” means any officer or employee of
a foreign government or any department, agency, or instrumentality
thereof, or of a public international organization, or any person acting
in an official capacity for or on behalf of any such government or
department, agency, or instrumentality, or for or on behalf of any such
public international organization.
(B) For purposes of subparagraph (A), the term “public international
organization” means—
(i) an organization that is designated by Executive Order pursuant
to section 1 of the International Organizations Immunities Act (22
U.S.C. § 288); or
(ii) any other international organization that is designated by the
President by Executive order for the purposes of this section, effective
as of the date of publication of such order in the Federal Register.
(2) (A) A person’s state of mind is “knowing” with respect to conduct,
a circumstance, or a result if—
(i) such person is aware that such person is engaging in such conduct,
that such circumstance exists, or that such result is substantially certain
to occur; or
(ii) such person has a firm belief that such circumstance exists or that
such result is substantially certain to occur.
(B) When knowledge of the existence of a particular circumstance is
required for an offense, such knowledge is established if a person is
aware of a high probability of the existence of such circumstance, unless
the person actually believes that such circumstance does not exist.
(3)(A) The term “routine governmental action” means only an action
which is ordinarily and commonly performed by a foreign official in—
(i) obtaining permits, licenses, or other official documents to qualify a
person to do business in a foreign country;
(ii) processing governmental papers, such as visas and work orders;
(iii) providing police protection, mail pick-up and delivery, or scheduling
inspections associated with contract performance or inspections
related to transit of goods across country;
(iv) providing phone service, power and water supply, loading and
unloading cargo, or protecting perishable products or commodities
from deterioration; or
(B) The term “routine governmental action” does not include any
decision by a foreign official whether, or on what terms, to award
new business to or to continue business with a particular party, or
any action taken by a foreign official involved in the decision-making
process to encourage a decision to award new business to or continue
business with a particular party.
(g) Alternative Jurisdiction
(1) It shall also be unlawful for any issuer organized under the laws of
the United States, or a State, territory, possession, or commonwealth
of the United States or a political subdivision thereof and which has
a class of securities registered pursuant to section 78l of this title or
which is required to file reports under section 78o(d)) of this title, or
for any United States person that is an officer, director, employee, or
agent of such issuer or a stockholder thereof acting on behalf of such
issuer, to corruptly do any act outside the United States in furtherance
of an offer, payment, promise to pay, or authorization of the payment
of any money, or offer, gift, promise to give, or authorization of the
giving of anything of value to any of the persons or entities set forth
in paragraphs (1), (2), and (3) of this subsection (a) of this section
for the purposes set forth therein, irrespective of whether such issuer
or such officer, director, employee, agent, or stockholder makes use
of the mails or any means or instrumentality of interstate commerce
in furtherance of such offer, gift, payment, promise, or authorization.
(2) As used in this subsection, the term “United States person” means
a national of the United States (as defined in section 101 of the
Immigration and Nationality Act (8 U.S.C. § 1101)) or any corporation,
partnership, association, joint-stock company, business trust,
unincorporated organization, or sole proprietorship organized under
the laws of the United States or any State, territory, possession, or commonwealth
of the United States, or any political subdivision thereof.
15 U.S.C. § 78dd-2 Prohibited foreign trade practices by domestic
concerns
(a) Prohibition
It shall be unlawful for any domestic concern, other than an issuer
which is subject to section 78dd-1 of this title, or for any officer, director,
employee, or agent of such domestic concern or any stockholder
thereof acting on behalf of such domestic concern, to make use of
the mails or any means or instrumentality of interstate commerce
94
corruptly in furtherance of an offer, payment, promise to pay, or
authorization of the payment of any money, or offer, gift, promise to
give, or authorization of the giving of anything of value to—
(1) any foreign official for purposes of—
(A) (i) influencing any act or decision of such foreign official in his
official capacity, (ii) inducing such foreign official to do or omit to do
any act in violation of the lawful duty of such official, or (iii) securing
any improper advantage; or
(B) inducing such foreign official to use his influence with a foreign
government or instrumentality thereof to affect or influence any act
or decision of such government or instrumentality, in order to assist
such domestic concern in obtaining or retaining business for or with,
or directing business to, any person; or
(2) any foreign political party or official thereof or any candidate for
foreign political office for purposes of—
(A) (i) influencing any act or decision of such party, official, or candidate
in its or his official capacity, (ii) inducing such party, official, or candidate
to do or omit to do an act in violation of the lawful duty of such
party, official, or candidate, or (iii) securing any improper advantage; or
(B) inducing such party, official, or candidate to use its or his influence
with a foreign government or instrumentality thereof to affect or
influence any act or decision of such government or instrumentality,
in order to assist such domestic concern in obtaining or retaining business
for or with, or directing business to, any person;
(3) any person, while knowing that all or a portion of such money or
thing of value will be offered, given, or promised, directly or indirectly,
to any foreign official, to any foreign political party or official thereof,
or to any candidate for foreign political office, for purposes of—
(A) (i) influencing any act or decision of such foreign official, political
party, party official, or candidate in his or its official capacity, (ii)
inducing such foreign official, political party, party official, or candidate
to do or omit to do any act in violation of the lawful duty of
such foreign official, political party, party official, or candidate, or (iii)
securing any improper advantage; or
(B) inducing such foreign official, political party, party official, or
candidate to use his or its influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of
such government or instrumentality, in order to assist such domestic
concern in obtaining or retaining business for or with, or directing
business to, any person.
(b) Exception for routine governmental action
Subsections (a) and (i) of this section shall not apply to any facilitating
or expediting payment to a foreign official, political party, or party
official the purpose of which is to expedite or to secure the performance
of a routine governmental action by a foreign official, political
party, or party official.
(c) Affirmative defenses
It shall be an affirmative defense to actions under subsection (a) or (i)
of this section that—
(1) the payment, gift, offer, or promise of anything of value that was
made, was lawful under the written laws and regulations of the foreign
official’s, political party’s, party official’s, or candidate’s country; or
(2) the payment, gift, offer, or promise of anything of value that was
made, was a reasonable and bona fide expenditure, such as travel and
lodging expenses, incurred by or on behalf of a foreign official, party,
party official, or candidate and was directly related to—
(A) the promotion, demonstration, or explanation of products or services;
or
(B) the execution or performance of a contract with a foreign government
or agency thereof.
(d) Injunctive relief
(1) When it appears to the Attorney General that any domestic concern
to which this section applies, or officer, director, employee, agent,
or stockholder thereof, is engaged, or about to engage, in any act or
practice constituting a violation of subsection (a) or (i) of this section,
the Attorney General may, in his discretion, bring a civil action
in an appropriate district court of the United States to enjoin such act
or practice, and upon a proper showing, a permanent injunction or a
temporary restraining order shall be granted without bond.
(2) For the purpose of any civil investigation which, in the opinion of
the Attorney General, is necessary and proper to enforce this section,
the Attorney General or his designee are empowered to administer
oaths and affirmations, subpoena witnesses, take evidence, and require
the production of any books, papers, or other documents which the
Attorney General deems relevant or material to such investigation.
The attendance of witnesses and the production of documentary evidence
may be required from any place in the United States, or any
territory, possession, or commonwealth of the United States, at any
designated place of hearing.
(3) In case of contumacy by, or refusal to obey a subpoena issued to,
any person, the Attorney General may invoke the aid of any court of
the United States within the jurisdiction of which such investigation
or proceeding is carried on, or where such person resides or carries
on business, in requiring the attendance and testimony of witnesses
and the production of books, papers, or other documents. Any such
court may issue an order requiring such person to appear before the
Attorney General or his designee, there to produce records, if so
95
ordered, or to give testimony touching the matter under investigation.
Any failure to obey such order of the court may be punished by such
court as a contempt thereof. All process in any such case may be served
in the judicial district in which such person resides or may be found.
The Attorney General may make such rules relating to civil investigations
as may be necessary or appropriate to implement the provisions
of this subsection.
(e) Guidelines by Attorney General
Not later than 6 months after August 23, 1988, the Attorney General,
after consultation with the Securities and Exchange Commission, the
Secretary of Commerce, the United States Trade Representative, the
Secretary of State, and the Secretary of the Treasury, and after obtaining
the views of all interested persons through public notice and comment
procedures, shall determine to what extent compliance with
this section would be enhanced and the business community would
be assisted by further clarification of the preceding provisions of this
section and may, based on such determination and to the extent necessary
and appropriate, issue—
(1) guidelines describing specific types of conduct, associated with
common types of export sales arrangements and business contracts,
which for purposes of the Department of Justice’s present enforcement
policy, the Attorney General determines would be in conformance
with the preceding provisions of this section; and
(2) general precautionary procedures which domestic concerns may
use on a voluntary basis to conform their conduct to the Department
of Justice’s present enforcement policy regarding the preceding provisions
of this section.
The Attorney General shall issue the guidelines and procedures
referred to in the preceding sentence in accordance with the provisions
of subchapter II of chapter 5 of Title 5 and those guidelines and
procedures shall be subject to the provisions of chapter 7 of that title.
(f ) Opinions of Attorney General
(1) The Attorney General, after consultation with appropriate departments
and agencies of the United States and after obtaining the views of
all interested persons through public notice and comment procedures,
shall establish a procedure to provide responses to specific inquiries by
domestic concerns concerning conformance of their conduct with the
Department of Justice’s present enforcement policy regarding the preceding
provisions of this section. The Attorney General shall, within
30 days after receiving such a request, issue an opinion in response to
that request. The opinion shall state whether or not certain specified
prospective conduct would, for purposes of the Department of Justice’s
present enforcement policy, violate the preceding provisions of this section.
Additional requests for opinions may be filed with the Attorney
General regarding other specified prospective conduct that is beyond
the scope of conduct specified in previous requests. In any action
brought under the applicable provisions of this section, there shall be
a rebuttable presumption that conduct, which is specified in a request
by a domestic concern and for which the Attorney General has issued
an opinion that such conduct is in conformity with the Department of
Justice’s present enforcement policy, is in compliance with the preceding
provisions of this section. Such a presumption may be rebutted by a
preponderance of the evidence. In considering the presumption for purposes
of this paragraph, a court shall weigh all relevant factors, including
but not limited to whether the information submitted to the Attorney
General was accurate and complete and whether it was within the
scope of the conduct specified in any request received by the Attorney
General. The Attorney General shall establish the procedure required
by this paragraph in accordance with the provisions of subchapter II of
chapter 5 of Title 5 and that procedure shall be subject to the provisions
of chapter 7 of that title.
(2) Any document or other material which is provided to, received by,
or prepared in the Department of Justice or any other department or
agency of the United States in connection with a request by a domestic
concern under the procedure established under paragraph (1), shall
be exempt from disclosure under section 552 of Title 5 and shall not,
except with the consent of the domestic concern, by made publicly
available, regardless of whether the Attorney General response to
such a request or the domestic concern withdraws such request before
receiving a response.
(3) Any domestic concern who has made a request to the Attorney
General under paragraph (1) may withdraw such request prior to
the time the Attorney General issues an opinion in response to such
request. Any request so withdrawn shall have no force or effect.
(4) The Attorney General shall, to the maximum extent practicable,
provide timely guidance concerning the Department of Justice’s present
enforcement policy with respect to the preceding provisions of
this section to potential exporters and small businesses that are unable
to obtain specialized counsel on issues pertaining to such provisions.
Such guidance shall be limited to responses to requests under paragraph
(1) concerning conformity of specified prospective conduct
with the Department of Justice’s present enforcement policy regarding
the preceding provisions of this section and general explanations
of compliance responsibilities and of potential liabilities under the
preceding provisions of this section.
(g) Penalties
(1)(A) Any domestic concern that is not a natural person and that
violates subsection (a) or (i) of this section shall be fined not more
than $2,000,000.
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96
(B) Any domestic concern that is not a natural person and that violates
subsection (a) or (i) of this section shall be subject to a civil penalty
of not more than $10,000 imposed in an action brought by the
Attorney General.
(2)(A) Any natural person that is an officer, director, employee, or
agent of a domestic concern, or stockholder acting on behalf of such
domestic concern, who willfully violates subsection (a) or (i) of this
section shall be fined not more than $100,000 or imprisoned not
more than 5 years, or both.
(B) Any natural person that is an officer, director, employee, or agent
of a domestic concern, or stockholder acting on behalf of such domestic
concern, who violates subsection (a) or (i) of this section shall be
subject to a civil penalty of not more than $10,000 imposed in an
action brought by the Attorney General.
(3) Whenever a fine is imposed under paragraph (2) upon any officer,
director, employee, agent, or stockholder of a domestic concern, such
fine may not be paid, directly or indirectly, by such domestic concern.
(h) Definitions
For purposes of this section:
(1) The term “domestic concern” means—
(A) any individual who is a citizen, national, or resident of the United
States; and
(B) any corporation, partnership, association, joint-stock company,
business trust, unincorporated organization, or sole proprietorship
which has its principal place of business in the United States, or which
is organized under the laws of a State of the United States or a territory,
possession, or commonwealth of the United States.
(2)(A) The term “foreign official” means any officer or employee of
a foreign government or any department, agency, or instrumentality
thereof, or of a public international organization, or any person acting
in an official capacity for or on behalf of any such government or
department, agency, or instrumentality, or for or on behalf of any such
public international organization.
(B) For purposes of subparagraph (A), the term “public international
organization” means—
(i) an organization that has been designated by Executive order pursuant
to Section 1 of the International Organizations Immunities Act
(22 U.S.C. § 288); or
(ii) any other international organization that is designated by the
President by Executive order for the purposes of this section, effective
as of the date of publication of such order in the Federal Register.
(3)(A) A person’s state of mind is “knowing” with respect to conduct,
a circumstance, or a result if—
(i) such person is aware that such person is engaging in such conduct,
that such circumstance exists, or that such result is substantially certain
to occur; or
(ii) such person has a firm belief that such circumstance exists or that
such result is substantially certain to occur.
(B) When knowledge of the existence of a particular circumstance
is required for an offense, such knowledge is established if a person
is aware of a high probability of the existence of such circumstance,
unless the person actually believes that such circumstance does not
exist.
(4)(A) The term “routine governmental action” means only an action
which is ordinarily and commonly performed by a foreign official in—
(i) obtaining permits, licenses, or other official documents to qualify a
person to do business in a foreign country;
(ii) processing governmental papers, such as visas and work orders;
(iii) providing police protection, mail pick-up and delivery, or scheduling
inspections associated with contract performance or inspections
related to transit of goods across country;
(iv) providing phone service, power and water supply, loading and
unloading cargo, or protecting perishable products or commodities
from deterioration; or
(v) actions of a similar nature.
(B) The term “routine governmental action” does not include any
decision by a foreign official whether, or on what terms, to award
new business to or to continue business with a particular party, or
any action taken by a foreign official involved in the decision-making
process to encourage a decision to award new business to or continue
business with a particular party.
(5) The term “interstate commerce” means trade, commerce, transportation,
or communication among the several States, or between any
foreign country and any State or between any State and any place or
ship outside thereof, and such term includes the intrastate use of—
(A) a telephone or other interstate means of communication, or
(B) any other interstate instrumentality.
(i) Alternative Jurisdiction
(1) It shall also be unlawful for any United States person to corruptly
do any act outside the United States in furtherance of an offer, payment,
promise to pay, or authorization of the payment of any money,
or offer, gift, promise to give, or authorization of the giving of anything
of value to any of the persons or entities set forth in paragraphs
(1), (2), and (3) of subsection (a), for the purposes set forth therein,
irrespective of whether such United States person makes use of the
mails or any means or instrumentality of interstate commerce in furtherance
of such offer, gift, payment, promise, or authorization.
97
(2) As used in this subsection, a “United States person” means
a national of the United States (as defined in section 101 of the
Immigration and Nationality Act (8 U.S.C. § 1101)) or any corporation,
partnership, association, joint-stock company, business trust,
unincorporated organization, or sole proprietorship organized under
the laws of the United States or any State, territory, possession, or commonwealth
of the United States, or any political subdivision thereof.
15 U.S.C. § 78dd-3 Prohibited foreign trade practices by persons
other than issuers or domestic concerns
(a) Prohibition
It shall be unlawful for any person other than an issuer that is subject
to section 78dd-1 [Section 30A of the Exchange Act] of this title or
a domestic concern, or for any officer, director, employee, or agent of
such person or any stockholder thereof acting on behalf of such person,
while in the territory of the United States, corruptly to make use
of the mails or any means or instrumentality of interstate commerce or
to do any other act in furtherance of an offer, payment, promise to pay,
or authorization of the payment of any money, or offer, gift, promise
to give, or authorization of the giving of anything of value to—
(1) any foreign official for purposes of—
(A) (i) influencing any act or decision of such foreign official in his
official capacity, (ii) inducing such foreign official to do or omit to do
any act in violation of the lawful duty of such official, or (iii) securing
any improper advantage; or
(B) inducing such foreign official to use his influence with a foreign
government or instrumentality thereof to affect or influence any act
or decision of such government or instrumentality, in order to assist
such person in obtaining or retaining business for or with, or directing
business to, any person;
(2) any foreign political party or official thereof or any candidate for
foreign political office for purposes of—
(A) (i) influencing any act or decision of such party, official, or candidate
in its or his official capacity, (ii) inducing such party, official, or candidate
to do or omit to do an act in violation of the lawful duty of such
party, official, or candidate, or (iii) securing any improper advantage; or
(B) inducing such party, official, or candidate to use its or his influence
with a foreign government or instrumentality thereof to affect or
influence any act or decision of such government or instrumentality,
in order to assist such person in obtaining or retaining business for or
with, or directing business to, any person; or
(3) any person, while knowing that all or a portion of such money or
thing of value will be offered, given, or promised, directly or indirectly,
to any foreign official, to any foreign political party or official thereof,
or to any candidate for foreign political office, for purposes of—
(A) (i) influencing any act or decision of such foreign official, political
party, party official, or candidate in his or its official capacity, (ii)
inducing such foreign official, political party, party official, or candidate
to do or omit to do any act in violation of the lawful duty of
such foreign official, political party, party official, or candidate, or (iii)
securing any improper advantage; or
(B) inducing such foreign official, political party, party official, or candidate
to use his or its influence with a foreign government or instrumentality
thereof to affect or influence any act or decision of such government
or instrumentality, in order to assist such person in obtaining
or retaining business for or with, or directing business to, any person.
(b) Exception for routine governmental action
Subsection (a) of this section shall not apply to any facilitating or
expediting payment to a foreign official, political party, or party official
the purpose of which is to expedite or to secure the performance
of a routine governmental action by a foreign official, political party,
or party official.
(c) Affirmative defenses
It shall be an affirmative defense to actions under subsection (a) of this
section that—
(1) the payment, gift, offer, or promise of anything of value that was
made, was lawful under the written laws and regulations of the foreign
official’s, political party’s, party official’s, or candidate’s country; or
(2) the payment, gift, offer, or promise of anything of value that was
made, was a reasonable and bona fide expenditure, such as travel and
lodging expenses, incurred by or on behalf of a foreign official, party,
party official, or candidate and was directly related to—
(A) the promotion, demonstration, or explanation of products or services;
or
(B) the execution or performance of a contract with a foreign government
or agency thereof.
(d) Injunctive relief
(1) When it appears to the Attorney General that any person to which
this section applies, or officer, director, employee, agent, or stockholder
thereof, is engaged, or about to engage, in any act or practice
APPENDIX
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Practices Act
98
constituting a violation of subsection (a) of this section, the Attorney
General may, in his discretion, bring a civil action in an appropriate
district court of the United States to enjoin such act or practice,
and upon a proper showing, a permanent injunction or a temporary
restraining order shall be granted without bond.
(2) For the purpose of any civil investigation which, in the opinion of
the Attorney General, is necessary and proper to enforce this section,
the Attorney General or his designee are empowered to administer
oaths and affirmations, subpoena witnesses, take evidence, and require
the production of any books, papers, or other documents which the
Attorney General deems relevant or material to such investigation.
The attendance of witnesses and the production of documentary evidence
may be required from any place in the United States, or any
territory, possession, or commonwealth of the United States, at any
designated place of hearing.
(3) In case of contumacy by, or refusal to obey a subpoena issued to,
any person, the Attorney General may invoke the aid of any court of
the United States within the jurisdiction of which such investigation
or proceeding is carried on, or where such person resides or carries
on business, in requiring the attendance and testimony of witnesses
and the production of books, papers, or other documents. Any such
court may issue an order requiring such person to appear before the
Attorney General or his designee, there to produce records, if so
ordered, or to give testimony touching the matter under investigation.
Any failure to obey such order of the court may be punished by such
court as a contempt thereof.
(4) All process in any such case may be served in the judicial district
in which such person resides or may be found. The Attorney General
may make such rules relating to civil investigations as may be necessary
or appropriate to implement the provisions of this subsection.
(e) Penalties
(1)(A) Any juridical person that violates subsection (a) of this section
shall be fined not more than $2,000,000.
(B) Any juridical person that violates subsection (a) of this section
shall be subject to a civil penalty of not more than $10,000 imposed in
an action brought by the Attorney General.
(2)(A) Any natural person who willfully violates subsection (a) of
this section shall be fined not more than $100,000 or imprisoned not
more than 5 years, or both.
(B) Any natural person who violates subsection (a) of this section shall
be subject to a civil penalty of not more than $10,000 imposed in an
action brought by the Attorney General.
(3) Whenever a fine is imposed under paragraph (2) upon any officer,
director, employee, agent, or stockholder of a person, such fine may
not be paid, directly or indirectly, by such person.
(f ) Definitions
For purposes of this section:
(1) The term “person,” when referring to an offender, means any natural
person other than a national of the United States (as defined in
8 U.S.C. § 1101) or any corporation, partnership, association, jointstock
company, business trust, unincorporated organization, or sole
proprietorship organized under the law of a foreign nation or a political
subdivision thereof
(2)(A) The term “foreign official” means any officer or employee of
a foreign government or any department, agency, or instrumentality
thereof, or of a public international organization, or any person acting
in an official capacity for or on behalf of any such government or
department, agency, or instrumentality, or for or on behalf of any such
public international organization.
For purposes of subparagraph (A), the term “public international
organization” means—
(i) an organization that has been designated by Executive Order pursuant
to Section 1 of the International Organizations Immunities Act
(22 U.S.C. § 288); or
(ii) any other international organization that is designated by the
President by Executive order for the purposes of this section, effective
as of the date of publication of such order in the Federal Register.
(3)(A) A person’s state of mind is “knowing” with respect to conduct,
a circumstance, or a result if—
(i) such person is aware that such person is engaging in such conduct,
that such circumstance exists, or that such result is substantially certain
to occur; or
(ii) such person has a firm belief that such circumstance exists or that
such result is substantially certain to occur.
(B) When knowledge of the existence of a particular circumstance
is required for an offense, such knowledge is established if a person
is aware of a high probability of the existence of such circumstance,
unless the person actually believes that such circumstance does not
exist.
(4)(A) The term “routine governmental action” means only an action
which is ordinarily and commonly performed by a foreign official in—
(i) obtaining permits, licenses, or other official documents to qualify a
person to do business in a foreign country;
(ii) processing governmental papers, such as visas and work orders;
(iii) providing police protection, mail pick-up and delivery, or scheduling
inspections associated with contract performance or inspections
related to transit of goods across country;
(iv) providing phone service, power and water supply, loading and
unloading cargo, or protecting perishable products or commodities
from deterioration; or
(v) actions of a similar nature.
99
(B) The term “routine governmental action” does not include any
decision by a foreign official whether, or on what terms, to award
new business to or to continue business with a particular party, or
any action taken by a foreign official involved in the decision-making
process to encourage a decision to award new business to or continue
business with a particular party.
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The Foreign
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Practices Act
(5) The term “interstate commerce” means trade, commerce, transportation,
or communication among the several States, or between any
foreign country and any State or between any State and any place or
ship outside thereof, and such term includes the intrastate use of—
(A) a telephone or other interstate means of communication, or
(B) any other interstate instrumentality.
* * *
15 U.S.C. § 78m [Section 13 of the Securities Exchange Act of
1934]
Periodical and other reports
(a) Reports by issuer of security; contents
Every issuer of a security registered pursuant to section 78l of this title
shall file with the Commission, in accordance with such rules and regulations
as the Commission may prescribe as necessary or appropriate
for the proper protection of investors and to insure fair dealing in the
security—
(1) such information and documents (and such copies thereof ) as the
Commission shall require to keep reasonably current the information
and documents required to be included in or filed with an application
or registration statement filed pursuant to section 78l of this title,
except that the Commission may not require the filing of any material
contract wholly executed before July 1, 1962.
(2) such annual reports (and such copies thereof ), certified if required
by the rules and regulations of the Commission by independent public
accountants, and such quarterly reports (and such copies thereof ),
as the Commission may prescribe.
Every issuer of a security registered on a national securities exchange
shall also file a duplicate original of such information, documents,
and reports with the exchange. In any registration statement, periodic
report, or other reports to be filed with the Commission, an emerging
growth company need not present selected financial data in accordance
with section 229.301 of title 17, Code of Federal Regulations,
for any period prior to the earliest audited period presented in connection
with its first registration statement that became effective
under this chapter or the Securities Act of 1933 [15 U.S.C. §§ 77a,
et seq.] and, with respect to any such statement or reports, an emerging
growth company may not be required to comply with any new
or revised financial accounting standard until such date that a company
that is not an issuer (as defined under section 7201 of this title)
is required to comply with such new or revised accounting standard, if
such standard applies to companies that are not issuers.
(b) Form of report; books, records, and internal accounting; directives
(1) The Commission may prescribe, in regard to reports made pursuant
to this chapter, the form or forms in which the required information
shall be set forth, the items or details to be shown in the balance
sheet and the earnings statement, and the methods to be followed in
the preparation of reports, in the appraisal or valuation of assets and
liabilities, in the determination of depreciation and depletion, in the
differentiation of recurring and nonrecurring income, in the differentiation
of investment and operating income, and in the preparation,
where the Commission deems it necessary or desirable, of separate
and/or consolidated balance sheets or income accounts of any person
directly or indirectly controlling or controlled by the issuer, or any
person under direct or indirect common control with the issuer; but
in the case of the reports of any person whose methods of accounting
are prescribed under the provisions of any law of the United States,
or any rule or regulation thereunder, the rules and regulations of the
Commission with respect to reports shall not be inconsistent with
the requirements imposed by such law or rule or regulation in respect
of the same subject matter (except that such rules and regulations of
the Commission may be inconsistent with such requirements to the
extent that the Commission determines that the public interest or the
protection of investors so requires).
(2) Every issuer which has a class of securities registered pursuant to
section 78l of this title and every issuer which is required to file reports
pursuant to section 78o(d) of this title shall—
(A) make and keep books, records, and accounts, which, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of
the assets of the issuer;
(B) devise and maintain a system of internal accounting controls sufficient
to provide reasonable assurances that—
(i) transactions are executed in accordance with management’s general
or specific authorization;
(ii) transactions are recorded as necessary (I) to permit preparation of
financial statements in conformity with generally accepted accounting
100
principles or any other criteria applicable to such statements, and (II)
to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and
(iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences; and
(C) notwithstanding any other provision of law, pay the allocable
share of such issuer of a reasonable annual accounting support fee or
fees, determined in accordance with section 7219 of this title.
(3)(A) With respect to matters concerning the national security of the
United States, no duty or liability under paragraph (2) of this subsection
shall be imposed upon any person acting in cooperation with the
head of any Federal department or agency responsible for such matters
if such act in cooperation with such head of a department or agency
was done upon the specific, written directive of the head of such
department or agency pursuant to Presidential authority to issue such
directives. Each directive issued under this paragraph shall set forth
the specific facts and circumstances with respect to which the provisions
of this paragraph are to be invoked. Each such directive shall,
unless renewed in writing, expire one year after the date of issuance.
(B) Each head of a Federal department or agency of the United States
who issues such a directive pursuant to this paragraph shall maintain
a complete file of all such directives and shall, on October 1 of
each year, transmit a summary of matters covered by such directives
in force at any time during the previous year to the Permanent Select
Committee on Intelligence of the House of Representatives and the
Select Committee on Intelligence of the Senate.
(4) No criminal liability shall be imposed for failing to comply with
the requirements of paragraph (2) of this subsection except as provided
in paragraph (5) of this subsection.
(5) No person shall knowingly circumvent or knowingly fail to implement
a system of internal accounting controls or knowingly falsify any
book, record, or account described in paragraph (2).
(6) Where an issuer which has a class of securities registered pursuant
to section 78l of this title or an issuer which is required to file
reports pursuant to section 78o(d) of this title holds 50 per centum
or less of the voting power with respect to a domestic or foreign firm,
the provisions of paragraph (2) require only that the issuer proceed
in good faith to use its influence, to the extent reasonable under the
issuer’s circumstances, to cause such domestic or foreign firm to devise
and maintain a system of internal accounting controls consistent with
paragraph (2). Such circumstances include the relative degree of the
issuer’s ownership of the domestic or foreign firm and the laws and
practices governing the business operations of the country in which
such firm is located. An issuer which demonstrates good faith efforts
to use such influence shall be conclusively presumed to have complied
with the requirements of paragraph (2).
(7) For the purpose of paragraph (2) of this subsection, the terms “reasonable
assurances” and “reasonable detail” mean such level of detail
and degree of assurance as would satisfy prudent officials in the conduct
of their own affairs.
* * *
15 U.S.C. § 78ff Penalties [Section 32 of the Securities Exchange
Act of 1934]
(a) Willful violations; false and misleading statements
Any person who willfully violates any provision of this chapter (other
than section 78dd-1 of this title [Section 30A of the Exchange Act]),
or any rule or regulation thereunder the violation of which is made
unlawful or the observance of which is required under the terms of
this chapter, or any person who willfully and knowingly makes, or
causes to be made, any statement in any application, report, or document
required to be filed under this chapter or any rule or regulation
thereunder or any undertaking contained in a registration statement
as provided in subsection (d) of section 78o of this title, or by any
self-regulatory organization in connection with an application for
membership or participation therein or to become associated with a
member thereof, which statement was false or misleading with respect
to any material fact, shall upon conviction be fined not more than
$5,000,000, or imprisoned not more than 20 years, or both, except
that when such person is a person other than a natural person, a fine
not exceeding $25,000,000 may be imposed; but no person shall be
subject to imprisonment under this section for the violation of any
rule or regulation if he proves that he had no knowledge of such rule
or regulation.
(b) Failure to file information, documents, or reports
Any issuer which fails to file information, documents, or reports
required to be filed under subsection (d) of section 78o of this title or
any rule or regulation thereunder shall forfeit to the United States the
sum of $100 for each and every day such failure to file shall continue.
Such forfeiture, which shall be in lieu of any criminal penalty for such
failure to file which might be deemed to arise under subsection (a) of
this section, shall be payable into the Treasury of the United States
and shall be recoverable in a civil suit in the name of the United States.
(c) Violations by issuers, officers, directors, stockholders, employees,
or agents of issuers
(1)(A) Any issuer that violates subsection (a) or (g) of section 78dd-1
[Section 30A of the Exchange Act] of this title shall be fined not more
than $2,000,000.
(B) Any issuer that violates subsection (a) or (g) of section 78dd-1
101
[Section 30A of the Exchange Act]of this title shall be subject to a
civil penalty of not more than $10,000 imposed in an action brought
by the Commission.
(2)(A) Any officer, director, employee, or agent of an issuer, or stockholder
acting on behalf of such issuer, who willfully violates subsection
(a) or (g) of section 78dd-1 [Section 30A of the Exchange Act]
of this title shall be fined not more than $100,000, or imprisoned not
more than 5 years, or both.
APPENDIX
The Foreign
Corrupt
Practices Act
(B) Any officer, director, employee, or agent of an issuer, or stockholder
acting on behalf of such issuer, who violates subsection (a) or
(g) of section 78dd-1 [Section 30A of the Exchange Act] of this title
shall be subject to a civil penalty of not more than $10,000 imposed in
an action brought by the Commission.
(3) Whenever a fine is imposed under paragraph (2) upon any officer,
director, employee, agent, or stockholder of an issuer, such fine may
not be paid, directly or indirectly, by such issuer.
102

APPENDIX
Endnotes
ENDNOTES
1
S. Rep. No. 95-114, at 4 (1977) [hereinafter S. Rep. No. 95-114],
available at http://www.justice.gov/criminal/fraud/fcpa/history/1977/
senaterpt-95-114.pdf.
2
Id.; H.R. Rep. No. 95-640, at 4-5 (1977) [hereinafter H. R. Rep. No.
95-640], available at http://www.justice.gov/criminal/fraud/fcpa/
history/1977/houseprt-95-640.pdf. The House Report made clear
Congress’s concerns:
The payment of bribes to influence the acts or
decisions of foreign officials, foreign political parties
or candidates for foreign political office is unethical.
It is counter to the moral expectations and values of
the American public. But not only is it unethical, it
is bad business as well. It erodes public confidence
in the integrity of the free market system. It shortcircuits
the marketplace by directing business to
those companies too inefficient to compete in terms
of price, quality or service, or too lazy to engage in
honest salesmanship, or too intent upon unloading
marginal products. In short, it rewards corruption
instead of efficiency and puts pressure on ethical
enterprises to lower their standards or risk losing
business.
Id.
3
See, e.g., U.S. Agency for Int’l Dev., USAID Anticorruption
Strategy 5-6 (2005), available at http://transition.usaid.gov/policy/
ads/200/200mbo.pdf. The growing recognition that corruption poses
a severe threat to domestic and international security has galvanized
efforts to combat it in the United States and abroad. See, e.g., Int’l Anti-
Corruption and Good Governance Act of 2000, Pub. L. No. 106-309,
§ 202, 114 Stat. 1090 (codified as amended at 22 U.S.C. §§ 2151-2152
(2000)) (noting that “[w]idespread corruption endangers the stability
and security of societies, undermines democracy, and jeopardizes the
social, political, and economic development of a society. . . . [and that]
[c]orruption facilitates criminal activities, such as money laundering,
hinders economic development, inflates the costs of doing business, and
undermines the legitimacy of the government and public trust”).
4
See Maryse Tremblay & Camille Karbassi, Corruption and Human
Trafficking 4 (Transparency Int’l, Working Paper No. 3, 2011), available
at http://issuu.com/transparencyinternational/docs/ti-working_paper_
human_trafficking_28_jun_2011; U.S. Agency for Int’l Dev.,
Foreign Aid in the National Interest 40 (2002), available at
http://pdf.usaid.gov/pdf_docs/PDABW900.pdf (“No problem does
more to alienate citizens from their political leaders and institutions,
and to undermine political stability and economic development, than
endemic corruption among the government, political party leaders,
judges, and bureaucrats. The more endemic the corruption is, the more
likely it is to be accompanied by other serious deficiencies in the rule of
law: smuggling, drug trafficking, criminal violence, human rights abuses,
and personalization of power.”).
5
President George W. Bush observed in 2006 that “the culture of
corruption has undercut development and good governance and
. . . . impedes our efforts to promote freedom and democracy, end
poverty, and combat international crime and terrorism.” President’s
Statement on Kleptocracy, 2 Pub. Papers 1504 (Aug. 10, 2006),
available at http://georgewbush-whitehouse.archives.gov/news/
releases/2006/08/20060810.html. The administrations of former
President George W. Bush and President Barack Obama both recognized
the threats posed to security and stability by corruption. For instance,
in issuing a proclamation restricting the entry of certain corrupt foreign
public officials, former President George W. Bush recognized “the
serious negative effects that corruption of public institutions has on the
United States’ efforts to promote security and to strengthen democratic
institutions and free market systems. . . .” Proclamation No. 7750, 69
Fed. Reg. 2287 ( Jan. 14, 2004). Similarly, President Barack Obama’s
National Security Strategy paper, released in May 2010, expressed the
administration’s efforts and commitment to promote the recognition that
“pervasive corruption is a violation of basic human rights and a severe
impediment to development and global security.” The White House,
National Security Strategy 38 (2010), available at http://
www.whitehouse.gov/sites/default/files/rss_viewer/national_security_
strategy.pdf.
6
See, e.g., Int’l Chamber of Commerce, et al., Clean Business
Is Good Business: The Business Case Against Corruption
(2008), available at http://www.unglobalcompact.org/docs/news_
events/8.1/clean_business_is_good_business.pdf; World Health Org.,
Fact Sheet No. 335, Medicines: Corruption and Pharmaceuticals (Dec.
2009), available at http://www.who.int/mediacentre/factsheets/fs335/
en/; Daniel Kaufmann, Corruption: The Facts, Foreign Pol’y, Summer
1997, at 119-20; Paolo Mauro, Corruption and Growth, 110 Q. J. Econ.
681, 683, 705 (1995) (finding that “corruption lowers private investment
. . . [and] reduc[es] economic growth . . .”); The World Bank, The
Data Revolution: Measuring Governance and Corruption,
(Apr. 8, 2004), available at http://go.worldbank.org/87JUY8GJH0.
7
See, e.g., The Corruption Eruption, Economist (Apr. 29, 2010),
available at http://www.economist.com/node/16005114 (“The hidden
costs of corruption are almost always much higher than companies
imagine. Corruption inevitably begets ever more corruption: bribe-takers
keep returning to the trough and bribe-givers open themselves up to
blackmail.”); Daniel Kaufmann and Shang-Jin Wei, Does “Grease Money”
Speed Up the Wheels of Commerce? 2 (Nat’l Bureau of Econ. Research,
Working Paper No. 7093, 1999), available at http://www.nber.org/
papers/w7093.pdf (“Contrary to the ‘efficient grease’ theory, we find
104
that firms that pay more bribes are also likely to spend more, not less,
management time with bureaucrats negotiating regulations, and face
higher, not lower, cost of capital.”).
8
For example, in a number of recent enforcement actions, the same
employees who were directing or controlling the bribe payments were
also enriching themselves at the expense of the company. See, e.g.,
Complaint, SEC v. Peterson, No. 12-cv-2033 (E.D.N.Y. 2012), ECF
No. 1, available at http://www.sec.gov/litigation/complaints/2012/
comp-pr2012-78.pdf; Criminal Information, United States v. Peterson,
No. 12-cr-224 (E.D.N.Y. 2012), ECF No. 7 [hereinafter United States v.
Peterson], available at http://www.justice.gov/criminal/fraud/fcpa/cases/
petersong/petersong-information.pdf; Plea Agreement, United States v.
Stanley, No. 08-cr-597 (S.D. Tex. 2008), ECF No. 9 [hereinafter United
States v. Stanley], available at http://www.justice.gov/criminal/fraud/
fcpa/cases/stanleya/09-03-08stanley-plea-agree.pdf; Plea Agreement,
United States v. Sapsizian, No. 06-cr-20797 (S.D. Fla. 2007), ECF No. 42
[hereinafter United States v. Sapsizian], available at http://www.justice.
gov/criminal/fraud/fcpa/cases/sapsizianc/06-06-07sapsizian-plea.pdf.
9
See, e.g., Complaint, SEC v. Tyco Int’l Ltd., 06-cv-2942 (S.D.N.Y. 2006),
ECF No. 1 [hereinafter SEC v. Tyco Int’l], available at http://www.sec.
gov/litigation/complaints/2006/comp19657.pdf; Complaint, SEC
v. Willbros Group, Inc., No. 08-cv-1494 (S.D. Tex. 2008), ECF No. 1
[hereinafter SEC v. Willbros], available at http://www.sec.gov/litigation/
complaints/2008/comp20571.pdf.
10
See Plea Agreement, United States v. Bridgestone Corp., No. 11-cr-
651 (S.D. Tex. 2011), ECF No. 21, available at http://www.justice.gov/
criminal/fraud/fcpa/cases/bridgestone/10-05-11bridgestone-plea.pdf.
11
See S. Rep. No. 95-114, at 6; H.R. Rep. 95-640, at 4; see also A. Carl
Kotchian, The Payoff: Lockheed’s 70-Day Mission to Tokyo, Saturday
Rev., Jul. 9, 1977, at 7.
12
U.S. Sec. and Exchange Comm., Report of the Securities
and Exchange Commission on Questionable and Illegal
Corporate Payments and Practices 2-3 (1976).
13
See H.R. Rep. No. 95-640, at 4-5; S. Rep. No. 95-114, at 3-4.
14
H.R. Rep. No. 95-640, at 4-5; S. Rep. No. 95-114, at 4. The Senate
Report observed, for instance, that “[m]anagements which resort to
corporate bribery and the falsification of records to enhance their
business reveal a lack of confidence about themselves,” while citing the
Secretary of the Treasury’s testimony that “‘[p]aying bribes—apart from
being morally repugnant and illegal in most countries—is simply not
necessary for the successful conduct of business here or overseas.’” Id.
15
See S. Rep. No. 100-85, at 46 (1987) (recounting FCPA’s historical
background and explaining that “a strong antibribery statute could help
U.S. corporations resist corrupt demands . . . .”) [hereinafter S. Rep. No.
100-85].
16
S. Rep. No. 95-114, at 7.
17
Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-
418, § 5003, 102 Stat. 1107, 1415-25 (1988); see also H.R. Rep. No.
100-576, at 916-24 (1988) (discussing FCPA amendments, including
changes to standard of liability for acts of third parties) [hereinafter H.R.
Rep. No. 100-576].
18
See Omnibus Trade and Competitiveness Act of 1988, § 5003(d). The
amended statute included the following directive:
It is the sense of the Congress that the President
should pursue the negotiation of an international
agreement, among the members of the Organization
of Economic Cooperation and Development, to
govern persons from those countries concerning
acts prohibited with respect to issuers and domestic
concerns by the amendments made by this section.
Such international agreement should include a
process by which problems and conflicts associated
with such acts could be resolved.
Id.; see also S. Rep. No. 105-277, at 2 (1998) (describing efforts by
Executive Branch to encourage U.S. trading partners to enact legislation
similar to FCPA following 1988 amendments) [hereinafter S. Rep. No.
105-277].
19
Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions art. 1.1, Dec. 18, 1997, 37 I.L.M. 1
[hereinafter Anti-Bribery Convention]. The Anti-Bribery Convention
requires member countries to make it a criminal offense “for any person
intentionally to offer, promise or give any undue pecuniary or other
advantage, whether directly or through intermediaries, to a foreign
public official, for that official or for a third party, in order that the
official act or refrain from acting in relation to the performance of
official duties, in order to obtain or retain business or other improper
advantage in the conduct of international business.” The Convention
and its commentaries also call on all parties (a) to ensure that aiding and
abetting and authorization of an act of bribery are criminal offenses, (b)
to assert territorial jurisdiction “broadly so that an extensive physical
connection to the bribery act is not required,” and (c) to assert nationality
jurisdiction consistent with the general principles and conditions of each
party’s legal system. Id. at art. 1.2, cmts. 25, 26.
20
See International Anti-Bribery and Fair Competition Act of 1998, Pub.
L. 105-366, 112 Stat. 3302 (1998); see also S. Rep. No. 105-277, at 2-3
(describing amendments to “the FCPA to conform it to the requirements
of and to implement the OECD Convention”).
21
There is no private right of action under the FCPA. See, e.g., Lamb v.
Phillip Morris, Inc., 915 F.2d 1024, 1028-29 (6th Cir. 1990); McLean v.
Int’l Harvester Co., 817 F.2d 1214, 1219 (5th Cir. 1987).
22
U.S. Dept. of Justice, U.S. Attorneys’ Manual § 9-47.110
(2008) [hereinafter USAM], available at http://www.justice.gov/usao/
eousa/foia_reading_room/usam/.
23
Go to http://export.gov/worldwide_us/index.asp for more
information.
24
Additional information about publicly available market research
and due diligence assistance is available online. See In’l Trade Admin.,
Market Research and Due Diligence, available at http://export.gov/
salesandmarketing/eg_main_018204.asp. The International Company
Profile reports include a listing of the potential partner’s key officers
and senior management; banking relationships and other financial
information about the company; and market information, including
sales and profit figures and potential liabilities. They are not, however,
intended to substitute for a company’s own due diligence, and the
Commercial Service does not offer ICP in countries where Dun &
Bradstreet or other private sector vendors are already performing this
service. See In’l Trade Admin., International Company Profile, available at
http://export.gov/salesandmarketing/eg_main_018198.asp.
25
The Commercial Services’ domestic and foreign offices can also be
found at http://export.gov/usoffices/index.asp and http://export.gov/
worldwide_us/index.asp.
26
This form can be located at http://tcc.export.gov/Report_a_Barrier/
index.asp.
27
See In’l Trade Admin., “Doing Business In” Guides, available at
http://export.gov/about/eg_main_016806.asp.
28
The Business Ethics Manual is available at
http://www.ita.doc.gov/goodgovernance/business_ethics/manual.asp.
29
Information about the Advocacy Center can be found at http://export.
gov/advocacy.
30
Reports on U.S. compliance with these treaties can be found at http://
www.justice.gov/criminal/fraud/fcpa/intlagree/.
31
See Statement on Signing the International Anti-Bribery and Fair
Competition Act of 1998, 34 Weekly Comp. Pres. Doc. 2290, 2291
(Nov. 10, 1998) (“U.S. companies have had to compete on an uneven
playing field . . . . The OECD Convention . . . is designed to change all
that. Under the Convention, our major competitors will be obligated to
criminalize the bribery of foreign public officials in international business
transactions.”).
32
Colombia is also a member of the Working Group and is expected to
accede to the Anti-Bribery Convention.
33
OECD, Country Monitoring of the OECD Anti-Bribery Convention,
available at http://www.oecd.org/document/12/0,3746,
en_2649_34859_35692940_1_1_1_1,00.html.
34
OECD, Phase 3 Country Monitoring of the OECD Anti-Bribery
Convention, available at http://www.oecd.org/document/31/0,3746,
en_2649_34859_44684959_1_1_1_1,00.html.
35
OECD, Country Reports on the Implementation of the OECD Anti-
Bribery Convention, available at http://www.oecd.org/document/24/0,3
746,en_2649_34859_1933144_1_1_1_1,00.html.
36
The OECD Phase 1, 2, and 3 reports on the United States, as well as
the U.S. responses to questionnaires, are available at http://www.justice.
gov/criminal/fraud/fcpa/intlagree.
37
See OECD Working Group on Bribery, United States: Phase 3, Report
on the Application of the Convention on Combating Bribery of Foreign
105
Public Officials in International Business Transactions and the 2009
Revised Recommendation on Combating Bribery in International Business
Transactions, Oct. 2010, at 61-62 (recommending that the United States
“[c]onsolidate and summarise publicly available information on the
application of the FCPA in relevant sources”), available at http://www.
oecd.org/dataoecd/10/49/46213841.pdf.
38
United Nations Convention Against Corruption, Oct. 31, 2003, S.
Treaty Doc. No. 109-6, 2349 U.N.T.S. 41, available at http://www.
unodc.org/documents/treaties/UNCAC/Publications/Convention/08-
50026_E.pdf [hereinafter UNCAC].
39
For more information about the UNCAC review mechanism, see
Mechanism for the Review of Implementation of the United Nations
Convention Against Corruption, United Nations Office on Drugs
and Crime, available at http://www.unodc.org/documents/treaties/
UNCAC/Publications/ReviewMechanism-BasicDocuments/
Mechanism_for_the_Review_of_Implementation_-_Basic_
Documents_-_E.pdf.
40
For information about the status of UNCAC, see United Nations
Office on Drugs and Crime, UNCAC Signature and Ratification Status as
of 12 July 2012, available at http://www.unodc.org/unodc/en/treaties/
CAC/signatories.html.
41
Organization of American States, Inter-American Convention Against
Corruption, Mar. 29, 1996, 35 I.L.M. 724, available at http://www.oas.
org/juridico/english/treaties/b-58.html. For additional information
about the status of the IACAC, see Organization of American States,
Signatories and Ratifications, available at http://www.oas.org/juridico/
english/Sigs/b-58.html.
42
Council of Europe, Criminal Law Convention on Corruption, Jan. 27,
1999, 38 I.L.M. 505, available at http://conventions.coe.int/Treaty/en/
Treaties/html/173.htm.
43
For additional information about GRECO, see Council of Europe,
Group of States Against Corruption, available at http://www.coe.int/t/
dghl/monitoring/greco/default_EN.asp. The United States has not yet
ratified the GRECO convention.
44
The text of the FCPA statute is set forth in the appendix. See also Jury
Instructions at 21-27, United States v. Esquenazi, No. 09-cr-21010 (S.D.
Fla. Aug. 5, 2011), ECF No. 520 [hereinafter United States v. Esquenazi]
(FCPA jury instructions); Jury Instructions at 14-25, United States v.
Kay, No. 01-cr-914 (S.D. Tex. Oct. 6, 2004), ECF No. 142 (same), aff ’d,
513 F.3d 432, 446-52 (5th Cir. 2007), reh’g denied, 513 F.3d 461 (5th
Cir. 2008) [hereinafter United States v. Kay]; Jury Instructions at 76-87,
United States v. Jefferson, No. 07-cr-209 (E.D. Va. July 30, 2009), ECF
No. 684 [hereinafter United States v. Jefferson] (same); Jury Instructions
at 8-10, United States v. Green, No. 08-cr-59 (C.D. Cal. Sept. 11,
2009), ECF No. 288 [hereinafter United States v. Green] (same); Jury
Instructions at 23-29, United States v. Bourke, No. 05-cr-518 (S.D.N.Y.
July 2009) [hereinafter United States v. Bourke] (same, not docketed);
Jury Instructions at 2-8, United States v. Mead, No. 98-cr-240 (D.N.J.
Oct. 1998) [hereinafter United States v. Mead] (same).
45
The provisions of the FCPA applying to issuers are part of the Securities
Exchange Act of 1934 [hereinafter Exchange Act]. The anti-bribery
provisions can be found at Section 30A of the Exchange Act, 15 U.S.C.
§ 78dd-1.
46
15 U.S.C. § 78l.
47
15 U.S.C. § 78o(d).
48
SEC enforcement actions have involved a number of foreign
issuers. See, e.g., Complaint, SEC v. Magyar Telekom Plc., et al., No.
11-cv-9646 (S.D.N.Y. Dec. 29, 2011), ECF No. 1 (German and
Hungarian companies), available at http://www.sec.gov/litigation/
complaints/2011/comp22213-co.pdf; Complaint, SEC v. Alcatel-
Lucent, S.A., No. 10-cv-24620 (S.D. Fla. Dec. 27, 2010), ECF No.
1 [hereinafter SEC v. Alcatel-Lucent] (French company), available at
http://www.sec.gov/litigation/complaints/2010/comp21795.pdf;
Complaint, SEC v. ABB, Ltd., No. 10-cv-1648 (D.D.C. Sept. 29, 2010),
ECF No. 1 [hereinafter SEC v. ABB] (Swiss company), available at
http://www.sec.gov/litigation/complaints/2010/comp-pr2010-175.
pdf; Complaint, SEC v. Daimler AG, No. 10-cv-473 (D.D.C. Apr. 1,
2010), ECF No. 1 [hereinafter SEC v. Daimler AG] (German company),
available at http://sec.gov/litigation/complaints/2010/comppr2010-51.pdf;
Complaint, SEC v. Siemens Aktiengesellschaft, No. 08-
cv-2167 (D.D.C. Dec. 12, 2008), ECF No. 1 [hereinafter SEC v. Siemens
AG] (Germany company), available at http://www.sec.gov/litigation/
complaints/2008/comp20829.pdf. Certain DOJ enforcement actions
have likewise involved foreign issuers. See, e.g., Criminal Information,
United States v. Magyar Telekom, Plc., No. 11-cr-597 (E.D. Va. Dec. 29,
2011), ECF No. 1, available at http://www.justice.gov/criminal/fraud/
fcpa/cases/magyar-telekom/2011-12-29-information-magyar-telekom.
pdf; Non-Pros. Agreement, In re Deutsche Telekom AG (Dec. 29, 2011),
available at http://www.justice.gov/criminal/fraud/fcpa/cases/deutschetelekom/2011-12-29-deustche-telekom-npa.pdf;
Criminal Information,
United States v. Alcatel-Lucent, S.A., No. 10-cr-20907 (S.D. Fla. Dec.
27, 2010), ECF No. 1 [hereinafter United States v. Alcatel-Lucent, S.A.],
available at http://www.justice.gov/criminal/fraud/fcpa/cases/alcateletal/12-27-10alcatel-et-al-info.pdf;
Criminal Information, United
States v. Daimler AG, No. 10-cr-63 (D.D.C. Mar. 22, 2010), ECF No.
1 [hereinafter United States v. Daimler AG], available at http://www.
justice.gov/criminal/fraud/fcpa/cases/daimler/03-22-10daimlerag-info.
pdf; Criminal Information, United States v. Siemens Aktiengesellschaft,
No. 08-cr-367 (D.D.C. Dec. 12, 2008), ECF No. 1 [hereinafter United
States v. Siemens AG], available at http://www.justice.gov/criminal/
fraud/fcpa/cases/siemens/12-12-08siemensakt-info.pdf.
49
See http://www.sec.gov/divisions/corpfin/internatl/companies.shtml.
50
See, e.g., Complaint, SEC v. Turner, et al., No. 10-cv-1309 (D.D.C.
Aug. 4, 2010), ECF No. 1 [hereinafter, SEC v. Turner] (charging a
Lebansese/Canadian agent of a UK company listed on U.S. exchange
with violating the FCPA for bribes of Iraqi officials), available at http://
www.sec.gov/litigation/complaints/2010/comp21615.pdf; Indictment,
United States v. Naaman, No. 08-cr-246 (D.D.C. Aug. 7, 2008), ECF
No. 3 [hereinafter United States v. Naaman] (same), available at http://
www.justice.gov/criminal/fraud/fcpa/cases/naamano/08-07-08naamanindict.pdf;
Complaint, SEC v. Elkin, et al., No. 10-cv-661 (D.D.C.
Apr. 28, 2010), ECF No. 1 [hereinafter SEC v. Elkin] (charging an
employee of U.S. publicly traded company with violating FCPA for
bribery of officials in Kyrgyzstan), available at http://www.sec.gov/
litigation/complaints/2010/comp21509.pdf; Criminal Information,
United States v. Elkin, No. 10-cr-15 (W.D. Va. Aug. 3, 2010), ECF No.
8 [hereinafter United States v. Elkin] (same), available at http://www.
justice.gov/criminal/fraud/fcpa/cases/elkin/08-03-10elkin-information.
pdf; Indictment, United States v. Tesler, et al., No. 09-cr-98 (S.D. Tex.
Feb. 17, 2009), ECF No. 1 [hereinafter United States v. Tesler] (charging
a British agent of U.S. publicly traded company with violating the
FCPA for bribery of Nigerian officials), available at http://www.justice.
gov/criminal/fraud/fcpa/cases/tesler/tesler-indict.pdf; Superseding
Indictment, United States v. Sapsizian, et al., supra note 8, ECF 32
(charging a French employee of French company traded on a U.S.
exchange with violating the FCPA).
51
15 U.S.C. § 78dd-2.
52
15 U.S.C. § 78dd-2(h)(1).
53
15 U.S.C. § 78dd-2(a). See, e.g., Superseding Indictment, United States
v. Nexus Technologies, et al., No. 08-cr-522 (E.D. Pa. Oct. 28, 2009),
ECF No. 106 [hereinafter United States v. Nexus Technologies] (private
U.S. company and corporate executives charged with violating FCPA for
bribes paid in Vietnam), available at http://www.justice.gov/criminal/
fraud/fcpa/cases/nguyenn/09-04-08nguyen-indict.pdf; Indictment,
United States v. Esquenazi, supra note 44, (private U.S. company and
corporate executives charged with FCPA violations for bribes paid in
Haiti), available at http://www.justice.gov/criminal/fraud/fcpa/cases/
esquenazij/12-08-09esquenazi-indict.pdf.
54
15 U.S.C. § 78dd-3(a). As discussed above, foreign companies that
have securities registered in the United States or that are required to file
periodic reports with the SEC, including certain foreign companies with
American Depository Receipts, are covered by the FCPA’s anti-bribery
provisions governing “issuers” under 15 U.S.C. § 78dd-1.
APPENDIX
Endnotes
106
55
See International Anti-Bribery and Fair Competition Act of 1998, Pub.
L. 105-366, 112 Stat. 3302 (1998); 15 U.S.C. § 78dd-3(a); see also U.S.
Dept. of Justice, Criminal Resource Manual § 9-1018 (Nov.
2000) (the Department “interprets [Section 78dd-3(a)] as conferring
jurisdiction whenever a foreign company or national causes an act to be
done within the territory of the United States by any person acting as
that company’s or national’s agent.”). This interpretation is consistent
with U.S. treaty obligations. See S. Rep. No. 105-2177 (1998) (expressing
Congress’ intention that the 1998 amendments to the FCPA “conform
it to the requirements of and to implement the OECD Convention.”);
Anti-Bribery Convention at art. 4.1, supra note 19 (“Each Party shall
take such measures as may be necessary to establish its jurisdiction over
the bribery of a foreign public official when the offence is committed in
whole or in part in its territory.”).
56
15 U.S.C. § 78dd-3(a); see, e.g., Criminal Information, United States v.
Alcatel-Lucent France, S.A., et al., No. 10-cr-20906 (S.D. Fla. Dec. 27,
2010), ECF No. 1 [hereinafter United States v. Alcatel-Lucent France]
(subsidiary of French publicly traded company convicted of conspiracy
to violate FCPA), available at http://www.justice.gov/criminal/fraud/
fcpa/cases/alcatel-lucent-sa-etal/12-27-10alcatel-et-al-info.pdf; Criminal
Information, United States v. DaimlerChrysler Automotive Russia
SAO, No. 10-cr-64 (D.D.C. Mar. 22, 2010), ECF No. 1 (subsidiary of
German publicly traded company convicted of violating FCPA), available
at http://www.justice.gov/criminal/fraud/fcpa/cases/daimler/03-22-
10daimlerrussia-info.pdf; Criminal Information, United States v. Siemens
S.A. (Argentina), No. 08-cr-368 (D.D.C. Dec. 12, 2008), ECF No. 1
(subsidiary of German publicly traded company convicted of violating
FCPA), available at http://www.justice.gov/criminal/fraud/fcpa/cases/
siemens/12-12-08siemensargen-info.pdf.
57
See 15 U.S.C. §§ 78dd-2(h)(5) (defining “interstate commerce”), 78dd-
3(f )(5) (same); see also 15 U.S.C. §78c(a)(17).
58
15 U.S.C. §§ 78dd-2(h)(5), 78dd-3(f )(5).
59
See 15 U.S.C. § 78dd-3.
60
Criminal Information, United States v. JGC Corp., No. 11-cr-260
(S.D. Tex. Apr. 6, 2011), ECF No. 1 [hereinafter United States v. JGC
Corp.], available at http://www.justice.gov/criminal/fraud/fcpa/cases/
jgc-corp/04-6-11jgc-corp-info.pdf; Criminal Information, United States
v. Snamprogetti Netherlands B.V., No. 10-cr-460 (S.D. Tex. Jul. 7, 2010),
ECF No. 1 [hereinafter United States v. Snamprogetti], available at
http://www.justice.gov/criminal/fraud/fcpa/cases/snamprogetti/07-07-
10snamprogetti-info.pdf.
61
See 15 U.S.C. §§ 78dd-1(g) (“irrespective of whether such issuer or such
officer, director, employee, agent, or stockholder makes use of the mails
or any means or instrumentality of interstate commerce in furtherance
of such offer, gift, payment, promise, or authorization”), 78dd-2(i)
(1) (“irrespective of whether such United States person makes use of
the mails or any means or instrumentality of interstate commerce in
furtherance of such offer, gift, payment, promise, or authorization”).
62
S. Rep. No. 105-277 at 2 (“[T]he OECD Convention calls on parties
to assert nationality jurisdiction when consistent with national legal
and constitutional principles. Accordingly, the Act amends the FCPA
to provide for jurisdiction over the acts of U.S. businesses and nationals
in furtherance of unlawful payments that take place wholly outside
the United States. This exercise of jurisdiction over U.S. businesses and
nationals for unlawful conduct abroad is consistent with U.S. legal
and constitutional principles and is essential to protect U.S. interests
abroad.”).
63
Id. at 2-3.
64
15 U.S.C. §§ 78dd-1(a), 78dd-2(a), 78dd-3(a).
65
See H.R. Rep. No. 95-831, at 12 (referring to “business purpose” test).
66
See, e.g., Complaint, SEC v. Siemens AG, supra note 48; Criminal
Information, United States v. Siemens AG, supra note 48.
67
In amending the FCPA in 1988, Congress made clear that the business
purpose element, and specifically the “retaining business” prong, was
meant to be interpreted broadly:
The Conferees wish to make clear that the reference
to corrupt payments for “retaining business” in
present law is not limited to the renewal of contracts
or other business, but also includes a prohibition
against corrupt payments related to the execution
or performance of contracts or the carrying out of
existing business, such as a payment to a foreign
official for the purpose of obtaining more favorable
tax treatment. The term should not, however, be
construed so broadly as to include lobbying or other
normal representations to government officials.
H.R. Rep. No. 100-576, at 1951-52 (internal citations omitted).
68
See, e.g., Complaint, SEC v. Panalpina, Inc., No. 10-cv-4334 (S.D. Tex.
Nov. 4, 2010), ECF No. 1 [hereinafter SEC v. Panalpina, Inc.], available
at http://www.sec.gov/litigation/complaints/2010/comp21727.pdf;
Criminal Information, United States v. Panalpina, Inc., No. 10-cr-
765 (S.D. Tex. Nov. 4, 2010), ECF No. 1 [hereinafter United States v.
Panalpina, Inc.], available at http://www.justice.gov/criminal/fraud/
fcpa/cases/panalpina-inc/11-04-10panalpina-info.pdf; Criminal
Information, United States v. Panalpina World Transport (Holding)
Ltd., No. 10-cr-769 (S.D. Tex. Nov. 4, 2010), ECF No. 1, available
at http://www.justice.gov/criminal/fraud/fcpa/cases/panalpinaworld/11-04-10panalpina-world-info.pdf;
see also Press Release, U.S.
Sec. and Exchange Comm., SEC Charges Seven Oil Services and
Freight Forwarding Companies for Widespread Bribery of Customs
Officials (Nov. 4, 2010) (“The SEC alleges that the companies bribed
customs officials in more than 10 countries in exchange for such perks
as avoiding applicable customs duties on imported goods, expediting
the importation of goods and equipment, extending drilling contracts,
and lowering tax assessments.”), available at http://www.sec.gov/
news/press/2010/2010-214.htm; Press Release, U.S. Dept. of Justice,
Oil Services Companies and a Freight Forwarding Company Agree
to Resolve Foreign Bribery Investigations and to Pay More Than $156
Million in Criminal Penalties (Nov. 4, 2010) (logistics provider and its
subsidiary engaged in scheme to pay thousands of bribes totaling at least
$27 million to numerous foreign officials on behalf of customers in oil
and gas industry “to circumvent local rules and regulations relating to
the import of goods and materials into numerous foreign jurisdictions”),
available at http://www.justice.gov/opa/pr/2010/November/10-
crm-1251.html.
69
United States v. Kay, 359 F.3d 738, 755-56 (5th Cir. 2004).
70
Id. at 749. Indeed, the Kay court found that Congress’ explicit
exclusion of facilitation payments from the scope of the FCPA was
evidence that “Congress intended for the FCPA to prohibit all other
illicit payments that are intended to influence non-trivial official foreign
action in an effort to aid in obtaining or retaining business for some
person.” Id. at 749-50 (emphasis added).
71
Id. at 750.
72
Id. at 749-55.
73
Id. at 756 (“It still must be shown that the bribery was intended to
produce an effect—here, through tax savings—that would ‘assist in
obtaining or retaining business.’”).
74
The FCPA does not explicitly define “corruptly,” but in drafting the
statute Congress adopted the meaning ascribed to the same term in the
domestic bribery statute, 18 U.S.C. § 201(b). See H.R. Rep. No. 95-640,
at 7.
75
The House Report states in full:
The word “corruptly” is used in order to make
clear that the offer, payment, promise, or gift, must
be intended to induce the recipient to misuse
his official position; for example, wrongfully to
direct business to the payor or his client, to obtain
preferential legislation or regulations, or to induce a
foreign official to fail to perform an official function.
The word “corruptly” connotes an evil motive or
purpose such as that required under 18 U.S.C.
201(b) which prohibits domestic bribery. As in
18 U.S.C. 201(b), the word “corruptly” indicates
an intent or desire wrongfully to influence the
recipient. It does not require that the act [be] fully
consummated or succeed in producing the desired
outcome.
Id. The Senate Report provides a nearly identical explanation of the
meaning of the term:
The word “corruptly” is used in order to make
clear that the offer, payment, promise, or gift, must
be intended to induce the recipient to misuse
his official position in order to wrongfully direct
business to the payor or his client, or to obtain
107
preferential legislation or a favorable regulation.
The word “corruptly” connotes an evil motive or
purpose, an intent to wrongfully influence the
recipient.
S. Rep. No. 95-114, at 10.
76
See 15 U.S.C. §§ 78dd-1(a), 78dd-2(a), 78dd-3(a).
77
See, e.g., Complaint, SEC v. Monsanto Co., No. 05-cv-14 (D.D.C.
Jan. 6, 2005) (among other things, the company paid a $50,000 bribe
to influence an Indonesian official to repeal an unfavorable law, which
was not repealed despite the bribe), available at http://www.sec.gov/
litigation/complaints/comp19023.pdf; Criminal Information, United
States v. Monsanto Co., No. 05-cr-8 (D.D.C. Jan. 6, 2005), available at
http://www.justice.gov/criminal/fraud/fcpa/cases/monsanto-co/01-06-
05monsanto-info.pdf.
78
Jury instructions in FCPA cases have defined “corruptly” consistent
with the definition found in the legislative history. See, e.g., Jury
Instructions at 22-23, United States v. Esquenazi, supra note 44; Jury
Instructions at 10, United States v. Green, supra note 44; Jury Instructions
at 35, United States v. Jefferson, supra note 44; Jury Instructions at 25,
United States v. Bourke, supra note 44; Jury Instructions at 17, United
States v. Kay, supra note 44; Jury Instructions at 5, United States v. Mead,
supra note 44.
79
See Complaint, SEC v. Innospec, Inc., No. 10-cv-448 (D.D.C. Mar.
18, 2010), ECF No. 1 [hereinafter SEC v. Innospec], available at http://
www.sec.gov/litigation/complaints/2010/comp21454.pdf; Criminal
Information at 8, United States v. Innospec Inc., No. 10-cr-61 (D.D.C.
Mar. 17, 2010), ECF No. 1 [hereinafter United States v. Innospec],
available at http://www.justice.gov/criminal/fraud/fcpa/cases/innospecinc/03-17-10innospec-info.pdf.
80
See Complaint, SEC v. Innospec, supra note 79; Criminal Information,
United States v. Innospec, supra note 79.
81
See 15 U.S.C. §§ 78dd-1(c)(2)(A), 78dd-2(g)(2)(A), and 78dd-3(3)(2)
(A).
82
Compare 15 U.S.C. § 78ff(c)(1)(A) (corporate criminal liability under
issuer provision) with § 78ff(c)(2)(A) (individual criminal liability under
issuer provision); compare 15 U.S.C. § 78dd-2(g)(1)(A) (corporate
criminal liability under domestic concern provision) with § 78dd-2(g)
(2)(A) (individual criminal liability under issuer provision); compare
15 U.S.C. § 78dd-3(e)(1)(A) (corporate criminal liability for territorial
provision) with § 78dd-3(e)(2)(A) (individual criminal liability for
territorial provision). However, companies still must act corruptly.
See Section 30A(a), 15 U.S.C. § 78dd-1(a); 15 U.S.C. §§ 78dd-2(a),
78dd-3(a).
83
United States v. Kay, 513 F.3d 432, 448 (5th Cir. 2007); see also
Jury Instructions at 38, United States v. Esquenazi, supra note 44; Jury
Instructions at 10, United States v. Green, supra note 44; Jury Instructions
at 35, United States v. Jefferson, supra note 44; Jury Instructions at 25,
United States v. Bourke, supra note 44; Jury Instructions at 5, United States
v. Mead, supra note 44.
84
Bryan v. United States, 524 U.S. 184, 191-92 (1998) (construing
“willfully” in the context of 18 U.S.C. § 924(a)(1)(A)) (quoting Ratzlaf v.
United States, 510 U.S. 135, 137 (1994)); see also Kay, 513 F.3d at 446-
51 (discussing Bryan and term “willfully” under the FCPA).
85
Kay, 513 F.3d at 447-48; Stichting Ter Behartiging Van de Belangen
Van Oudaandeelhouders In Het Kapitaal Van Saybolt Int’l B.V. v.
Schreiber, 327 F.3d 173, 181 (2d Cir. 2003).
86
The phrase “anything of value” is not defined in the FCPA, but the
identical phrase under the domestic bribery statute has been broadly
construed to include both tangible and intangible benefits. See, e.g.,
United States v. Moore, 525 F.3d 1033, 1048 (11th Cir. 2008) (rejecting
defendant’s objection to instruction defining sex as a “thing of value,”
which “unambiguously covers intangible considerations”); United
States v. Gorman, 807 F.2d 1299, 1304-05 (6th Cir. 1986) (holding that
loans and promises of future employment are “things of value”); United
States v. Williams, 705 F.2d 603, 622-23 (2d Cir. 1983) (approving jury
instruction that stock could be a “thing of value” if defendant believed it
had value, even though the shares had no commercial value, and noting
that “[t]he phrase ‘anything of value’ in bribery and related statutes has
consistently been given a broad meaning”).
87
Section 30A(a), 15 U.S.C. § 78dd-1(a); 15 U.S.C. §§ 78dd-2(a), 78dd-
3(a) (emphasis added).
88
Like the FCPA, the domestic bribery statute, 18 U.S.C. § 201, prohibits
giving, offering, or promising “anything of value.” Numerous domestic
bribery cases under Section 201 have involved “small” dollar bribes.
See, e.g., United States v. Franco, 632 F.3d 880, 882-84 (5th Cir. 2011)
(affirming bribery convictions of inmate for paying correctional officer
$325 to obtain cell phone, food, and marijuana, and noting that 18
U.S.C. § 201 does not contain minimum monetary threshold); United
States v. Williams, 216 F.3d 1099, 1103 (D.C. Cir. 2000) (affirming
bribery conviction for $70 bribe to vehicle inspector); United States v.
Traitz, 871 F.2d 368, 396 (3rd Cir. 1989) (affirming bribery conviction
for $100 bribe paid to official of Occupational Health and Safety
Administration); United States v. Hsieh Hui Mei Chen, 754 F.2d 817,
822 (9th Cir. 1985) (affirming bribery convictions including $100 bribe
to immigration official); United States v. Bishton, 463 F.2d 887, 889
(D.C. Cir. 1972) (affirming bribery conviction for $100 bribe to division
chief of District of Columbia Sewer Operations Division).
89
Complaint, SEC v. Daimler AG, supra note 48; Criminal Information,
United States v. Daimler AG, supra note 48.
90
Complaint, SEC v. Halliburton Company and KBR, Inc., No. 09-cv-
399 (S.D. Tex. Feb. 11, 2009), ECF No 1 [hereinafter SEC v. Halliburton
and KBR], available at http://www.sec.gov/litigation/complaints/2009/
comp20897.pdf; Criminal Information, United States v. Kellogg
Brown & Root LLC, No. 09-cr-71, ECF No. 1 (S.D. Tex. Feb. 6, 2009)
[hereinafter United States v. KBR], available at http://www.justice.gov/
criminal/fraud/fcpa/cases/kelloggb/02-06-09kbr-info.pdf.
91
Complaint, SEC v. Halliburton and KBR, supra note 90; Criminal
Information, United States v. KBR, supra note 90.
92
See, e.g., Complaint, SEC v. RAE Sys. Inc., No. 10-cv-2093 (D.D.C.
Dec. 10, 2010), ECF No. 1 [hereinafter SEC v. RAE Sys., Inc.] (fur
coat, among other extravagant gifts), available at http://www.sec.gov/
litigation/complaints/2010/comp21770.pdf; Non-Pros. Agreement,
In re RAE Sys. Inc. (Dec. 10, 2010) [hereinafter In re RAE Sys. Inc.]
(same), available at http://www.justice.gov/criminal/fraud/fcpa/cases/
rae-systems/12-10-10rae-systems.pdf; Complaint, SEC v. Daimler AG,
supra note 48 (armored Mercedes Benz worth €300,000); Criminal
Information, United States v. Daimler AG, supra note 48 (same).
93
See Complaint, SEC v. ABB Ltd, No. 04-cv-1141 (D.D.C. July
6, 2004), ECF No. 1, available at http://www.sec.gov/litigation/
complaints/comp18775.pdf; Criminal Information, United States v.
ABB Vetco Gray Inc., et al., No. 04-cr-279 (S.D. Tex. June 22, 2004),
ECF No. 1 [hereinafter United States v. ABB Vetco Gray], available
at http://www.justice.gov/criminal/fraud/fcpa/cases/abb/06-22-
04abbvetco-info.pdf.
94
Complaint, SEC v. UTStarcom, Inc., No. 09-cv-6094 (N.D. Cal. Dec.
31, 2009), ECF No. 1 [hereinafter SEC v. UTStarcom], available at
http://www.sec.gov/litigation/complaints/2009/comp21357.pdf; Non-
Pros. Agreement, In re UTStarcom Inc. (Dec. 31, 2009) [hereinafter In re
UTStarcom], available at http://www.justice.gov/criminal/fraud/fcpa/
cases/utstarcom-inc/12-31-09utstarcom-agree.pdf.
95
Complaint, SEC v. UTStarcom, supra note 94; Non-Pros. Agreement,
In re UTStarcom, supra note 94.
96
Complaint, SEC v. UTStarcom, supra note 94; Non-Pros. Agreement,
In re UTStarcom, supra note 94.
97
Complaint, SEC v. Lucent Technologies Inc., No. 07-cv-2301 (D.D.C.
Dec. 21, 2007), ECF No.1 [hereinafter SEC v. Lucent], available at
http://www.sec.gov/litigation/complaints/2007/comp20414.pdf; Non-
Pros. Agreement, In re Lucent Technologies (Nov. 14, 2007) [hereinafter
In re Lucent], available at http://www.justice.gov/criminal/fraud/fcpa/
cases/lucent-tech/11-14-07lucent-agree.pdf.
98
Complaint, SEC v. Lucent, supra note 97; Non-Pros. Agreement, In re
Lucent, supra note 97.
99
The company consented to the entry of a final judgment permanently
APPENDIX
Endnotes
108
enjoining it from future violations of the books and records and internal
controls provisions and paid a civil penalty of $1,500,000. Complaint,
SEC v. Lucent, supra note 97. Additionally, the company entered into a
non-prosecution agreement with DOJ and paid a $1,000,000 monetary
penalty. Non-Pros. Agreement, In re Lucent, supra note 97.
100
United States v. Liebo, 923 F.2d 1308, 1311 (8th Cir. 1991).
101
Judgment, United States v. Liebo, No. 89-cr-76 (D. Minn. Jan. 31,
1992), available at http://www.justice.gov/criminal/fraud/fcpa/cases/
liebor/1992-01-31-liebor-judgment.pdf.
102
Complaint, SEC v. Schering-Plough Corp., No. 04-cv-945 (D.D.C.
June 9, 2004), ECF No. 1, available at http://www.sec.gov/litigation/
complaints/comp18740.pdf; Admin. Proceeding Order, In the Matter
of Schering-Plough Corp., Exchange Act Release No. 49838 ( June 9,
2004) (finding that company violated FCPA accounting provisions and
imposing $500,000 civil monetary penalty), available at http://www.sec.
gov/litigation/admin/34-49838.htm.
103
FCPA opinion procedure releases can be found at http://www.
justice.gov/criminal/fraud/fcpa/. In the case of the company seeking to
contribute the $1.42 million grant to a local MFI, DOJ noted that it had
undertaken each of these due diligence steps and controls, in addition to
others, that would minimize the likelihood that anything of value would
be given to any officials of the Eurasian country. U.S. Dept. of Justice,
FCPA Op. Release 10-02 ( July 16, 2010), available at http://www.
justice.gov/criminal/fraud/fcpa/opinion/2010/1002.pdf.
104
U.S. Dept. of Justice, FCPA Op. Release 95-01 ( Jan. 11,
1995), available at http://www.justice.gov/criminal/fraud/fcpa/
opinion/1995/9501.pdf.
105
Id.
106
Id.
107
U.S. Dept. of Justice, FCPA Op. Release 97-02 (Nov. 5,
1997), available at http://www.justice.gov/criminal/fraud/fcpa/
opinion/1997/9702.pdf; U.S. Dept. of Justice, FCPA Op. Release
06-01 (Oct. 16, 2006), available at http://www.justice.gov/criminal/
fraud/fcpa/opinion/2006/0601.pdf.
108
U.S. Dept. of Justice, FCPA Op. Release 06-01 (Oct. 16, 2006).
109
Id.
110
Id.
111
See Section 30A(a)(1)-(3) of the Exchange Act, 15 U.S.C. § 78dd-1(a)
(1)-(3); 15 U.S.C. §§ 78dd-2(a)(1)-(3), 78dd-3(a)(1)-(3).
112
Section 30A(f )(1)(A) of the Exchange Act, 15 U.S.C. § 78dd-1(f )(1)
(A); 15 U.S.C. §§ 78dd-2(h)(2)(A), 78dd-3(f )(2)(A).
113
Under the FCPA, any person “acting in an official capacity for
or on behalf of ” a foreign government, a department, agency, or
instrumentality thereof, or a public international organization, is a
foreign official. Section 30A(f )(1)(A), 15 U.S.C. § 78dd-1(f )(1)(A); 15
U.S.C. §§ 78dd-2(h)(2)(A), 78dd-2(f )(2)(A). See also U.S. Dept. of
Justice, FCPA Op. Release No. 10-03, at 2 (Sept. 1, 2010), available
at http://www.justice.gov/criminal/fraud/fcpa/opinion/2010/1003.pdf
(listing safeguards to ensure that consultant was not acting on behalf of
foreign government).
114
But see Sections 30A(b) and f(3)(A) of the Exchange Act, 15 U.S.C. §
78dd-1(b) & (f )(3); 15 U.S.C. §§ 78dd-2(b) & (h)(4), 78dd-3(b) & (f )
(4) (facilitating payments exception).
115
Even though payments to a foreign government may not violate the
anti-bribery provisions of the FCPA, such payments may violate other
U.S. laws, including wire fraud, money laundering, and the FCPA’s
accounting provisions. This was the case in a series of matters brought by
DOJ and SEC involving kickbacks to the Iraqi government through the
United Nations Oil-for-Food Programme. See, e.g., Complaint, SEC v.
Innospec, supra note 79; Criminal Information, United States v. Innospec,
supra note 79; Complaint, SEC v. Novo Nordisk A/S, No. 09-cv-862
(D.D.C. May 11, 2009), ECF No. 1, available at http://www.sec.gov/
litigation/complaints/2009/comp21033.pdf; Criminal Information,
United States v. Novo Nordisk A/S, No. 09-cr-126 (D.D.C. May 11,
2009), ECF No. 1, available at http://www.justice.gov/criminal/
fraud/fcpa/cases/nordiskn/05-11-09novo-info.pdf; Complaint,
SEC v. Ingersoll-Rand Company Ltd., No. 07-cv-1955 (D.D.C. Oct.
31, 2007), ECF No. 1, available at http://www.sec.gov/litigation/
complaints/2007/comp20353.pdf; Criminal Information, United States
v. Ingersoll-Rand Italiana SpA, No. 07-cr-294 (D.D.C. Oct. 31, 2007),
ECF No. 1, available at http://www.justice.gov/criminal/fraud/fcpa/
cases/ingerand-italiana/10-31-07ingersollrand-info.pdf; Complaint,
SEC v. York Int’l Corp., No. 07-cv-1750 (D.D.C. Oct. 1, 2007), ECF
No. 1 [hereinafter SEC v. York Int’l Corp.], available at http://www.sec.
gov/litigation/complaints/2007/comp20319.pdf; Criminal Information,
United States v. York Int’l Corp., No. 07-cr-253 (D.D.C. Oct. 1, 2007),
ECF No. 1 [hereinafter United States v. York Int’l Corp.], available at
http://www.justice.gov/criminal/fraud/fcpa/cases/york/10-01-07yorkinfo.pdf;
Complaint, SEC v. Textron Inc., No. 07-cv-1505 (D.D.C. Aug.
23, 2007), ECF No. 1 [hereinafter SEC v. Textron], available at http://
www.sec.gov/litigation/complaints/2007/comp20251.pdf; Non-Pros.
Agreement, In re Textron Inc. (Aug. 23, 2007), available at http://www.
justice.gov/criminal/fraud/fcpa/cases/textron-inc/08-21-07textronagree.pdf.
DOJ has issued opinion procedure releases concerning
payments (that were, in essence, donations) to government agencies or
departments. See U.S. Dept. of Justice, FCPA Op. Release 09-01
(Aug. 3, 2009) (involving donation of 100 medical devices to foreign
government), available at http://www.justice.gov/criminal/fraud/
fcpa/opinion/2009/0901.pdf; U.S. Dept. of Justice, FCPA Op.
Release 06-01 (Oct. 16, 2006) (involving contribution of $25,000 to
regional customs department to pay incentive rewards to improve local
enforcement of anti-counterfeiting laws), available at http://www.justice.
gov/criminal/fraud/fcpa/opinion/2006/0601.pdf.
116
The United States has some state-owned entities, like the Tennessee
Valley Authority, that are instrumentalities of the government. McCarthy
v. Middle Tenn. Elec. Membership Corp., 466 F.3d 399, 411 n.18
(6th Cir. 2006) (“[T]here is no question that TVA is an agency and
instrumentality of the United States.”) (internal quotes omitted).
117
During the period surrounding the FCPA’s adoption, state-owned
entities held virtual monopolies and operated under state-controlled
price-setting in many national industries around the world. See generally
World Bank, Bureaucrats in Business: The Economics
and Politics of Government Ownership, World Bank
Policy Research Report at 78 (1995); Sunita Kikeri and
Aishetu Kolo, State Enterprises, The World Bank Group
(Feb. 2006), available at http://rru.worldbank.org/documents/
publicpolicyjournal/304Kikeri_Kolo.pdf.
118
Id. at 1 (“[A]fter more than two decades of privatization, government
ownership and control remains widespread in many regions—and in
many parts of the world still dominates certain sectors.”).
119
To date, consistent with the approach taken by DOJ and SEC, all
district courts that have considered this issue have concluded that this is
an issue of fact for a jury to decide. See Order, United States v. Carson,
2011 WL 5101701, No. 09-cr-77 (C.D. Cal. May 18, 2011), ECF No.
373 [hereinafter United States v. Carson]; United States v. Aguilar, 783
F. Supp. 2d 1108 (C.D. Cal. 2011); Order, United States v. Esquenazi,
supra note 44, ECF No. 309; see also Order, United States v. O’Shea, No.
09-cr-629 (S.D. Tex. Jan. 3, 2012), ECF No. 142; Order, United States
v. Nguyen, No. 08-cr-522 (E.D. Pa. Dec. 30, 2009), ECF No. 144. These
district court decisions are consistent with the acceptance by district
courts around the country of over 35 guilty pleas by individuals who
admitted to violating the FCPA by bribing officials of state-owned or
state-controlled entities. See Government’s Opposition to Defendants’
Amended Motion to Dismiss Counts One Through Ten of the
Indictment at 18, United States v. Carson, supra note 119, ECF No. 332;
Exhibit I, United States v. Carson, supra note 119, ECF No. 335 (list of
examples of enforcement actions based on foreign officials of state-owned
entities).
120
Jury Instructions, United States v. Esquenazi, supra note 44, ECF No.
520; Order at 5 and Jury Instructions, United States v. Carson, supra note
119, ECF No. 373 and ECF No. 549; Aguilar, 783 F. Supp. 2d at 1115.
121
Criminal Information, United States v. C.E. Millier Corp., et al.,
No. 82-cr-788 (C.D. Cal. Sept. 17, 1982), available at http://www.
justice.gov/criminal/fraud/fcpa/cases/ce-miller/1982-09-17-ce-millerinformation.pdf.
122
See Complaint, SEC v. Sam P. Wallace Co., Inc., et al., No. 81-cv-
1915 (D.D.C. Aug. 31, 1982); Criminal Information, United States v.
Sam P. Wallace Co., Inc., No. 83-cr-34 (D.P.R. Feb. 23, 1983), available
at http://www.justice.gov/criminal/fraud/fcpa/cases/sam-wallacecompany/1983-02-23-sam-wallace-company-information.pdf;
see also
Criminal Information, United States v. Goodyear Int’l Corp., No. 89-
cr-156 (D.D.C. May 11, 1989) (Iraqi Trading Company identified as
“instrumentality of the Government of the Republic of Iraq”), available
at http://www.justice.gov/criminal/fraud/fcpa/cases/goodyear/1989-
109
05-11-goodyear-information.pdf.
123
See Complaint, SEC v. ABB, supra note 48; Criminal Information at
3, United States v. ABB Inc., No. 10-cr-664 (S.D. Tex. Sept. 29, 2010),
ECF No. 1 [hereinafter United States v. ABB], available at http://
www.justice.gov/criminal/fraud/fcpa/cases/abb/09-20-10abbinc-info.
pdf; Constitución Política de los Estados Unidos Mexicanos [C.P.], as
amended, art. 27, Diario Oficial de la Federación [DO], 5 de Febrero de
1917 (Mex.); Ley Del Servicio Publico de Energia Electrica, as amended,
art. 1-3, 10, Diario Oficial de la Federación [DO], 22 de Diciembre de
1975 (Mex.).
124
See Indictment at 2, United States v. Esquenazi, supra note 44, ECF No.
3; Affidavit of Mr. Louis Gary Lissade at 1-9, id., ECF No. 417-2.
125
Criminal Information at 30-31, United States v. Alcatel-Lucent France,
supra note 56, ECF No. 10.
126
Id.
127
See International Anti-Bribery and Fair Competition Act of 1998,
Pub. L. 105-366 § 2, 112 Stat. 3302, 3303, 3305, 3308 (1998).
128
Section 30A(F)(1)(B) of the Exchange Act, 15 U.S.C. § 78dd-1(f )(1)
(B); 15 U.S.C. §§ 78dd-2(h)(2)(B), 78dd-3(f )(2)(B).
129
Third parties and intermediaries themselves are also liable for FCPA
violations. Section 30A(a) of the Exchange Act, 15 U.S.C. § 78dd-1(a);
15 U.S.C. §§ 78dd-2(a), and 78dd-3(a).
130
Section 30A(a)(3) of the Exchange Act, 15 U.S.C. § 78dd-1(a)(3); 15
U.S.C. §§ 78dd-2(a)(3), 78dd-3(a)(3).
131
See, e.g., Complaint, SEC v. Johnson & Johnson, No. 11-cv-686
(D.D.C. Apr. 8, 2011) [hereinafter SEC v. Johnson & Johnson] (bribes
paid through Greek and Romanian agents)), available at http://www.sec.
gov/litigation/complaints/2011/comp21922.pdf; Criminal Information,
United States v. DePuy, Inc., No. 11-cr-99 (D.D.C. Apr. 8, 2011), ECF
No. 1 [hereinafter United States v. DePuy] (bribes paid through Greek
agents), available at http://www.justice.gov/criminal/fraud/fcpa/cases/
depuy-inc/04-08-11depuy-info.pdf; Complaint, SEC v. ABB, supra note
48 (bribes paid through Mexican agents); Criminal Information, United
States v. ABB, supra note 123 (same); Criminal Information, United
States v. Int’l Harvester Co., No. 82-cr-244 (S.D. Tex. Nov. 17, 1982)
(bribes paid through Mexican agent), available at http://www.justice.
gov/criminal/fraud/fcpa/cases/international-harvester/1982-11-17-
international-harvester-information.pdf.
132
See Criminal Information, United States v. Marubeni Corp., No. 12-
cr-22 (S.D. Tex. Jan. 17, 2012), ECF No. 1 [hereinafter United States v.
Marubeni], available at http://www.justice.gov/criminal/fraud/fcpa/
cases/marubeni/2012-01-17-marubeni-information.pdf; Criminal
Information, United States v. JGC Corp., supra note 60, ECF No. 1;
Criminal Information, United States v. Snamprogetti, supra note 60, ECF
No. 1; Complaint, SEC v. ENI, S.p.A. and Snamprogetti Netherlands
B.V., No. 10-cv-2414 (S.D. Tex. July 7, 2010), ECF No. 1, available at
http://www.sec.gov/litigation/complaints/2010/comp-pr2010-119.pdf;
Criminal Information, United States v. Technip S.A., No. 10-cr-439 (S.D.
Tex. June 28, 2010), ECF No. 1 [hereinafter United States v. Technip],
available at http://www.justice.gov/criminal/fraud/fcpa/cases/technipsa/06-28-10-technip-%20information.pdf;
Complaint, SEC v. Technip,
No. 10-cv-2289 (S.D. Tex. June 28, 2010), ECF No. 1 [hereinafter SEC v.
Technip], available at http://www.sec.gov/litigation/complaints/2010/
comp-pr2010-110.pdf; Indictment, United States v. Tesler, supra note
50; Complaint, SEC v. Halliburton and KBR, supra note 90; Criminal
Information, United States v. KBR, supra note 90; Criminal Information,
United States v. Stanley, No. 08-cr-597 (S.D. Tex. Sept. 3, 2008), ECF No.
1, available at http://justice.gov/criminal/fraud/fcpa/cases/stanleya/08-
29-08stanley-info.pdf.
133
See Criminal Information, United States v. AGA Medical Corp., No.
08-cr-172, ECF No. 1 (D. Minn. June 3, 2008), available at http://www.
justice.gov/criminal/fraud/fcpa/cases/agamedcorp/06-03-08aga-info.
pdf.
134
Complaint, SEC v. Innospec, supra note 79; Criminal Information,
United States v. Innospec, supra note 79; Superseding Criminal
Information, United States v. Naaman, supra note 50, ECF No. 15,
available at http://www.justice.gov/criminal/fraud/fcpa/cases/
naamano/06-24-10naaman-supsersed-info.pdf; Complaint, SEC v.
Turner, supra note 50.
135
See sources cited supra note 68.
136
See sources cited supra note 68.
137
Section 30A(a)(3) of the Exchange Act, 15 U.S.C. § 78dd-1(a)(3); 15
U.S.C. §§ 78dd-2(a)(3), 78dd-3(a)(3).
138
See Section 30A(f )(2)(A) of the Exchange Act, 15 U.S.C. § 78dd-1(f )
(2)(A); 15 U.S.C. §§ 78dd-2(h)(3)(A), 78dd-3(f )(3)(A).
139
See Section 30A(f )(2)(B) of the Exchange Act, 15 U.S.C. § 78dd-1(f )
(2)(B); 15 U.S.C. §§ 78dd-2(h)(3)(B), 78dd-3(f )(3)(B). The “knowing”
standard was intended to cover “both prohibited actions that are taken
with ‘actual knowledge’ of intended results as well as other actions
that, while falling short of what the law terms ‘positive knowledge,’
nevertheless evidence a conscious disregard or deliberate ignorance
of known circumstances that should reasonably alert one to the high
probability of violations of the Act.” H.R. Rep. No. 100-576, at 920; see
also Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-
418, § 5003, 102 Stat. 1107, 1423-24 (1988).
140
H.R. Rep. No. 100-576, at 920 (1988).
141
Section 30A(c)(1) of the Exchange Act, 15 U.S.C. § 78dd-1(c)(1); 15
U.S.C. §§ 78dd-2(c)(1), 78dd-3(c)(1).
142
H.R. Rep. No. 100-576, at 922. The conferees also noted that “[i]n
interpreting what is ‘lawful under the written laws and regulations’ . . . the
normal rules of legal construction would apply.” Id.
143
See United States v. Kozeny, 582 F. Supp. 2d 535, 537-40 (S.D.N.Y.
2008). Likewise, the court found that a provision under Azeri law that
relieved bribe payors of criminal liability if they were extorted did
not make the bribe payments legal. Azeri extortion law precludes the
prosecution of the payor of the bribes for the illegal payments, but it does
not make the payments legal. Id. at 540-41.
144
Section 30A(c)(2)(A), (B) of the Exchange Act, 15 U.S.C. § 78dd-1(c)
(2); 15 U.S.C. §§ 78dd-2(c)(2), 78dd-3(c)(2).
145
For example, the Eighth Circuit Court of Appeals found that
providing airline tickets to a government official in order to corruptly
influence that official may form the basis for a violation of the FCPA’s
anti-bribery provisions. See Liebo, 923 F. 2d at 1311-12.
146
See generally U.S. Dept. of Justice, FCPA Op. Release 11-01
( June 30, 2011) (travel, lodging, and meal expenses of two foreign
officials for two-day trip to United States to learn about services of U.S.
adoption service provider), available at http://www.justice.gov/criminal/
fraud/fcpa/opinion/2011/11-01.pdf; U.S. Dept. of Justice, FCPA
Op. Release 08-03 ( July 11, 2008) (stipends to reimburse minimal
travel expenses of local, government-affiliated journalists attending press
conference in foreign country), available at http://www.justice.gov/
criminal/fraud/fcpa/opinion/2008/0803.pdf; U.S. Dept. of Justice,
FCPA Op. Release 07-02 (Sept. 11, 2007) (domestic travel, lodging,
and meal expenses of six foreign officials for six-week educational
program), available at http://www.justice.gov/criminal/fraud/fcpa/
opinion/2007/0702.pdf; U.S. Dept. of Justice, FCPA Op. Release
07-01 ( July 24, 2007) (domestic travel, lodging, and meal expenses
of six foreign officials for four-day educational and promotional tour
of U.S. company’s operations sites), available at http://www.justice.
gov/criminal/fraud/fcpa/opinion/2007/0701.pdf; U.S. Dept. of
Justice, FCPA Op. Release 04-04 (Sept. 3, 2004) (travel, lodging,
and modest per diem expenses of five foreign officials to participate
in nine-day study tour of mutual insurance companies), available at
http://www.justice.gov/criminal/fraud/fcpa/opinion/2004/0404.
pdf; U.S. Dept. of Justice, FCPA Op. Release 04-03 ( June 14,
2004) (travel, lodging, meal, and insurance expenses for twelve foreign
officials and one translator on ten-day trip to three U.S. cities to meet
with U.S. public sector officials), available at http://www.justice.gov/
criminal/fraud/fcpa/opinion/2004/0403.pdf; U.S. Dept. of Justice,
FCPA Op. Release 04-01 ( Jan. 6, 2004) (seminar expenses, including
receptions, meals, transportation and lodging costs, for one-and-a-half
day comparative law seminar on labor and employment law in foreign
country), available at http://www.justice.gov/criminal/fraud/fcpa/
APPENDIX
Endnotes
110
opinion/2004/0401.pdf; U.S. Dept. of Justice, FCPA Op. Release
96-01 (Nov. 25, 1996) (travel, lodging, and meal expenses of regional
government representatives to attend training courses in United
States), available at http://www.justice.gov/criminal/fraud/fcpa/
opinion/1996/9601.pdf; U.S. Dept. of Justice, FCPA Op. Release
92-01 (Feb. 1992) (training expenses so that foreign officials could
effectively perform duties related to execution and performance of jointventure
agreement, including seminar fees, airfare, lodging, meals, and
ground transportation), available at http://www.justice.gov/criminal/
fraud/fcpa/review/1992/r9201.pdf.
147
U.S. Dept. of Justice, FCPA Op. Release 11-01 ( June 30, 2011);
U.S. Dept. of Justice, FCPA Op. Release 07-02 (Sept. 11, 2007);
U.S. Dept. of Justice, FCPA Op. Release 07-01 ( July 24, 2007);
U.S. Dept. of Justice, FCPA Op. Release 04-04 (Sept. 3, 2004); U.S.
Dept. of Justice, FCPA Op. Release 04-03 ( June 14, 2004); U.S.
Dept. of Justice, FCPA Op. Release 04-01 ( Jan. 6, 2004).
148
U.S. Dept. of Justice, FCPA Op. Release 96-01 (Nov. 25, 1996).
149
U.S. Dept. of Justice, FCPA Op. Release 11-01 ( June 30, 2011);
U.S. Dept. of Justice, FCPA Op. Release 07-02 (Sept. 11, 2007);
U.S. Dept. of Justice, FCPA Op. Release 07-01 ( July 24, 2007);
U.S. Dept. of Justice, FCPA Op. Release 04-04 (Sept. 3, 2004); U.S.
Dept. of Justice, FCPA Op. Release 04-01 ( Jan. 6, 2004) .
150
U.S. Dept. of Justice, FCPA Op. Release 04-01 ( Jan. 6, 2004).
151
U.S. Dept. of Justice, FCPA Op. Release 08-03 ( July 11, 2008).
152
U.S. Dept. of Justice, FCPA Op. Release 11-01 ( June 30, 2011);
U.S. Dept. of Justice, FCPA Op. Release 92-01 (Feb. 1992).
153
U.S. Dept. of Justice, FCPA Op. Release 08-03 ( July 11, 2008).
154
Id.
155
Id.; U.S. Dept. of Justice, FCPA Op. Release 04-03 ( June 14,
2004); U.S. Dept. of Justice, FCPA Op. Release 04-01 ( Jan. 6,
2004); U.S. Dept. of Justice, FCPA Op. Release 07-01 ( July 24,
2007).
156
U.S. Dept. of Justice, FCPA Op. Release 11-01 ( June 30, 2011);
U.S. Dept. of Justice, FCPA Op. Release 07-02 (Sept. 11, 2007);
U.S. Dept. of Justice, FCPA Op. Release 07-01 ( July 24, 2007);
U.S. Dept. of Justice, FCPA Op. Release 04-04 (Sept. 3, 2004); U.S.
Dept. of Justice, FCPA Op. Release 04-03 ( June 14, 2004); U.S.
Dept. of Justice, FCPA Op. Release 04-01 ( Jan. 6, 2004).
157
U.S. Dept. of Justice, FCPA Op. Release 07-01 ( July 24, 2007);
U.S. Dept. of Justice, FCPA Op. Release 08-03 ( July 11, 2008).
158
For example, DOJ has previously approved expenditures on behalf of
family members or for entertainment purposes under certain, limited
circumstances. See, e.g., U.S. Dept. of Justice, FCPA Rev. P. Release
83-02 ( July 26, 1983) (declining to take enforcement action against
company seeking to provide promotional tour for foreign official and
wife, where both had already planned a trip to the United States at their
own expense and company proposed to pay only for all reasonable and
necessary actual domestic expenses for the extension of their travel to
allow the promotional tour, which would not exceed $5,000), available at
http://www.justice.gov/criminal/fraud/fcpa/review/1983/r8302.pdf.
159
Unlike the local law and bona fide expenditures defenses, the
facilitating payments exception is not an affirmative defense to the
FCPA. Rather, payments of this kind fall outside the scope of the
FCPA’s bribery prohibition. Prior to 1988, the “facilitating payments”
exception was incorporated into the definition of “foreign official,” which
excluded from the statute’s purview officials whose duties were primarily
ministerial or clerical. See Foreign Corrupt Practices Act of 1977, Pub.
L. No. 95-213, § 104(d)(2), 91 Stat. 1494, 1498 (1977) (providing that
the term foreign official “does not include any employee of a foreign
government or any department, agency, or instrumentality thereof whose
duties are essentially ministerial or clerical”). The original exception thus
focused on the duties of the recipient, rather than the purpose of the
payment. In practice, however, it proved difficult to determine whether
a foreign official’s duties were “ministerial or clerical.” S. Rep. No. 100-
85, at 53. Responding to criticism that the statutory language “does not
clearly reflect Congressional intent and the boundaries of the prohibited
conduct,” Congress revised the FCPA to define the exception in terms of
the purpose of the payment. H. Rep. No. 100-40, pt. 2, at 77. In doing so,
Congress reiterated that while its policy to exclude facilitating payments
reflected practical considerations of enforcement, “such payments should
not be condoned.” Id. The enacted language reflects this narrow purpose.
160
In exempting facilitating payments, Congress sought to distinguish
them as “payments which merely move a particular matter toward an
eventual act or decision or which do not involve any discretionary action,”
giving the examples of “a gratuity paid to a customs official to speed the
processing of a customs document” or “payments made to secure permits,
licenses, or the expeditious performance of similar duties of an essentially
ministerial or clerical nature which must of necessity be performed in any
event.” H.R. Rep. No. 95-640, at 8.
161
Section 30A(f )(3)(B) of the Exchange Act, 15 U.S.C. § 78dd-1(f )(3)
(B); 15 U.S.C. §§ 78dd-2(h)(4)(B), 78dd-3(f )(4)(B).
162
In a 2004 decision, the Fifth Circuit emphasized this precise point,
commenting on the limited nature of the facilitating payments exception:
A brief review of the types of routine governmental
actions enumerated by Congress shows how limited
Congress wanted to make the grease exceptions.
Routine governmental action, for instance, includes
“obtaining permits, licenses, or other official
documents to qualify a person to do business in
a foreign country,” and “scheduling inspections
associated with contract performance or inspections
related to transit of goods across country.”
Therefore, routine governmental action does not
include the issuance of every official document or
every inspection, but only (1) documentation that
qualifies a party to do business and (2) scheduling an
inspection—very narrow categories of largely nondiscretionary,
ministerial activities performed by
mid- or low-level foreign functionaries.
United States v. Kay; 359 F.3d 738, 750-51 (5th Cir. 2004) (internal
footnote omitted) (emphasis in original).
163
Non-Pros. Agreement, In re Helmerich & Payne, Inc. ( July 29, 2009)
[hereinafter In re Helmerich & Payne], available at http://www.justice.
gov/criminal/fraud/fcpa/cases/helmerich-payne/06-29-09helmerichagree.pdf;
Admin. Proceeding Order, In the Matter of Helmerich &
Payne, Inc., Exchange Act Release No. 60400 ( July 30, 2009) [hereinafter
In the Matter of Helmerich & Payne], available at http://www.sec.gov/
litigation/admin/2009/34-60400.pdf.
164
Criminal Information, Vetco Gray Controls Inc., et al., No. 07-
cr-4 No. (S.D. Tex. Jan. 5, 2007), ECF Nos. 1-2, available at http://
www.justice.gov/criminal/fraud/fcpa/cases/vetco-controls/02-06-
07vetcogray-info.pdf.
165
Complaint, SEC v. Noble Corp., No. 10-cv-4336 (S.D. Tex. Nov.
4, 2010), ECF No. 1, available at http://www.sec.gov/litigation/
complaints/2010/comp21728.pdf; Non-Pros. Agreement, In re Noble
Corp. (Nov. 4, 2010), available at http://www.justice.gov/criminal/
fraud/fcpa/cases/noble-corp/11-04-10noble-corp-npa.pdf; see also
sources cited supra note 68.
166
Working Group on Bribery, 2009 Recommendation of the Council for
Further Combating Bribery of Foreign Public Officials in International
Business Transactions, at § VI (recommending countries should
periodically review their policies and approach to facilitation payments
and should encourage companies to prohibit or discourage facilitation
payments “in view of the corrosive effect of small facilitation payments,
particularly on sustainable economic development and the rule of law”);
Working Group on Bribery, United States: Phase 3, at 24 (Oct. 15,
2010), available at http://www.oecd.org/dataoecd/10/49/46213841.
pdf (commending United States for steps taken in line with 2009
recommendation to encourage companies to prohibit or discourage
facilitation payments).
167
Facilitating payments are illegal under the U.K. Bribery Act 2010,
which came into force on July 1, 2011, and were also illegal under
prior U.K. legislation. See Bribery Act 2010, c.23 (Eng.), available
at http://www.legislation.gov.uk/ukpga/2010/23/contents; see also
U.K. Ministry of Justice, The Bribery Act 2010: Guidance About
Procedures Which Relevant Commercial Organisations Can Put into Place
to Prevent Persons Associated with Them from Bribing (Section 9 of the
Bribery Act 2010), at 18 (2011), available at http://www.justice.gov.uk/
guidance/docs/bribery-act-2010-guidance.pdf.
168
See, e.g., Non-Pros. Agreement, In re Helmerich & Payne, supra note
163; Admin. Proceeding Order, In the Matter of Helmerich & Payne,
supra note 163.
169
In order to establish duress or coercion, a defendant must demonstrate
that the defendant was under unlawful, present, immediate, and
111
impending threat of death or serious bodily injury; that the defendant did
not negligently or recklessly create a situation where he would be forced
to engage in criminal conduct (e.g., had been making payments as part
of an ongoing bribery scheme); that the defendant had no reasonable
legal alternative to violating the law; and that there was a direct causal
relationship between the criminal action and the avoidance of the
threatened harm. See Eleventh Circuit Pattern Jury Instr., Special Instr.
No. 16 (2003); see also Fifth Circuit Pattern Jury Instr. No. 1.36 (2001);
Sixth Circuit Pattern Jury Instr. No. 6.05 (2010); Seventh Circuit Pattern
Jury Instr. No. 6.08 (1998); Ninth Circuit Pattern Jury Instr. No. 6.5
(2010); 1A Kevin F. O’Malley, Jay E. Grenig, Hon. William C. Lee,
Federal Jury Practice and Instructions § 19.02 (6th ed. 2008 & Supp.
2012).
170
S. Rep. No. 95-114, at 11.
171
Id. at 10.
172
Id. at 11.
173
United States v. Kozeny, 582 F. Supp. 2d 535, 540 n.31 (S.D.N.Y.
2008).
174
Kozeny, 582 F. Supp. 2d at 540 (citing S. Rep. No. 95-114, at 10-11).
175
Id.
176
These payments, however, must be accurately reflected in the
company’s books and records so that the company and its management
are aware of the payments and can assure that the payments were properly
made under the circumstances. For example, in one instance, a Kazakh
immigration prosecutor threatened to fine, jail, or deport employees
of a U.S. company’s subsidiary. Believing the threats to be genuine, the
employees in Kazakhstan sought guidance from senior management
of the U.S. subsidiary and were authorized to make the payments. The
employees then paid the government official a total of $45,000 using
personal funds. The subsidiary reimbursed the employees, but it falsely
recorded the reimbursements as “salary advances” or “visa fines.” The
parent company, which eventually discovered these payments, as well
as other improperly booked cash payments made to a Kazakhstani
consultant to obtain visas, was charged with civil violations of the
accounting provisions. Admin. Proceeding Order, In the Matter of
NATCO Group Inc., Exchange Act Release No. 61325 ( Jan. 11, 2010),
available at http://www.sec.gov/litigation/admin/2010/34-61325.pdf
(imposing cease-and-desist order and $65,000 civil monetary penalty).
177
See Jury Instructions at 21, United States v. Aguilar, No. 10-cr-1031
(C.D. Cal. May 16, 2011), ECF No. 511.
178
See, e.g., Pacific Can Co. v. Hewes, 95 F.2d 42, 46 (9th Cir. 1938)
(“Where one corporation is controlled by another, the former acts
not for itself but as directed by the latter, the same as an agent, and the
principal is liable for the acts of its agent within the scope of the agent’s
authority.”); United States v. NYNEX Corp., 788 F. Supp. 16, 18 n.3
(D.D.C. 1992) (holding that “[a] corporation can of course be held
criminally liable for the acts of its agents,” including “the conduct of its
subsidiaries.”).
179
Pacific Can Co., 95 F.2d at 46; NYNEX Corp., 788 F. Supp. at 18 n.3.
180
See, e.g., Standard Oil Co. v. United States, 307 F.2d 120, 127 (5th Cir.
1962).
181
Admin. Proceeding Order, In the Matter of United Industrial Corp.,
Exchange Act Release No. 60005 (May 29, 2009), available at http://
www.sec.gov/litigation/admin/2009/34-60005.pdf; see also Lit. Release
No. 21063, SEC v. Worzel (May 29, 2009), available at http://www.sec.
gov/litigation/litreleases/2009/lr21063.htm.
182
See, e.g., Philip Urofksy, What You Don’t Know Can Hurt You: Successor
Liability Resulting From Inadequate FCPA Due Diligence in M&A
Transactions, 1763 PLI/Corp. 631, 637 (2009) (“As a legal matter, when
one corporation acquires another, it assumes any existing liabilities of
that corporation, including liability for unlawful payments, regardless of
whether it knows of them.”). Whether or not successor liability applies to
a particular corporate transaction depends on the facts involved and state,
federal, and, potentially, foreign law.
183
See, e.g., Carolyn Lindsey, More Than You Bargained for: Successor
Liability Under the U.S. Foreign Corrupt Practices Act, 35 Ohio N.U.
L. Rev. 959, 966 (2009) (“Allowing a company to escape its debts and
liabilities by merging with another entity is considered to lead to an
unjust result.”).
184
See, e.g., Melrose Distillers, Inc. v. United States, 359 U.S. 271, 274
(1959) (affirming criminal successor liability for antitrust violations);
United States v. Alamo Bank of Texas, 880 F.2d 828, 830 (5th Cir. 1989)
(affirming criminal successor liability for Bank Secrecy Act violations);
United States v. Polizzi, 500 F.2d 856, 907 (9th Cir. 1974) (affirming
criminal successor liability for conspiracy and Travel Act violations);
United States v. Shields Rubber Corp., 732 F. Supp. 569, 571-72 (W.D.
Pa. 1989) (permitting criminal successor liability for customs violations);
see also United States v. Mobile Materials, Inc., 776 F.2d 1476, 1477 (10th
Cir. 1985) (allowing criminal post-dissolution liability for antitrust, mail
fraud, and false statement violations);.
185
Complaint, SEC v. The Titan Corp., No. 05-cv-411 (D.D.C. Mar. 1,
2005) (discovery of FCPA violations during pre-acquisition due diligence
protected potential acquiring company and led to termination of merger
agreement), available at http://www.sec.gov/litigation/complaints/
comp19107.pdf; Criminal Information, United States v. Titan Corp.,
No. 05-cr-314 (S.D. Cal. Mar. 1, 2005) (same) [hereinafter United States
v. Titan Corp.], available at http://www.justice.gov/criminal/fraud/fcpa/
cases/titan-corp/03-01-05titan-info.pdf.
186
For a discussion of declinations, see Chapter 7.
187
See Complaint, SEC v. El Paso Corp., No. 07-cv-899 (S.D.N.Y. Feb. 7,
2007), ECF No. 1 [hereinafter SEC v. El Paso Corp.] (charging company
with books and records and internal controls charges for improper
payments to Iraq under U.N. Oil-for-Food Programme), available at
http://www.sec.gov/litigation/complaints/2007/comp19991.pdf.
188
Complaint, SEC v. Alliance One Int’l, Inc., No. 10-cv-1319 (D.D.C.
Aug. 6, 2010), ECF No. 1, available at http://www.sec.gov/litigation/
complaints/2010/comp21618-alliance-one.pdf; Non-Pros. Agreement,
In re Alliance One Int’l, Inc. (Aug. 6, 2010), available at http://www.
justice.gov/criminal/fraud/fcpa/cases/alliance-one/08-06-10allianceone-npa.pdf;
Criminal Information, United States v. Alliance One Int’l
AG, No. 10-cr-17 (W.D. Va. Aug. 6, 2010), ECF No. 3, available at
http://www.justice.gov/criminal/fraud/fcpa/cases/alliance-one/08-06-
10alliance-one-info.pdf; Criminal Information, United States v. Alliance
One Tobacco Osh, LLC, No. 10-cr-16 (W.D. Va. Aug. 6, 2010), ECF
No. 3, available at http://www.justice.gov/criminal/fraud/fcpa/cases/
alliance-one/08-06-10alliance-one-tobaccoinfo.pdf.
189
See Criminal Information, United States v. Syncor Taiwan, Inc., No.
02-cr-1244 (C.D. Cal. Dec. 5, 2002), ECF No. 1, available at http://
www.justice.gov/criminal/fraud/fcpa/cases/syncor-taiwan/12-05-
02syncor-taiwan-info.pdf; Plea Agreement, United States v. Syncor
Taiwan, Inc., No. 02-cr-1244 (C.D. Cal. Dec. 9, 2002), ECF No. 14,
available at http://www.justice.gov/criminal/fraud/fcpa/cases/syncortaiwan/12-03-02syncor-taiwan-plea-agree.pdf.
190
See Complaint, SEC v. Syncor Int’l Corp., No. 02-cv-2421 (D.D.C.
Dec. 10, 2002), ECF No. 1, available at http://www.sec.gov/litigation/
complaints/comp17887.htm; SEC v. Syncor International Corp., SEC
Lit. Rel. 17997, (Dec. 10, 2002), available at http://www.sec.gov/
litigation/litreleases/lr17887.htm.
191
See Complaint, SEC v. York Int’l Corp., supra note 115; Criminal
Information, United States v. York Int’l Corp., supra note 115.
192
See Criminal Information, United States v. Latin Node, Inc., No.
09-cr-20239 (S.D. Fla. Mar. 23, 2009), ECF No. 1, available at http://
www.justice.gov/criminal/fraud/fcpa/cases/litton-applied/03-23-
09latinnode-info.pdf; eLandia Int’l Inc., Annual Report (Form 10-K),
at 20 (Apr. 2, 2009), available at http://www.sec.gov/Archives/edgar/
data/1352819/000119312509070961/d10k.htm.
193
See Criminal Information, United States v. Salvoch, No. 10-cr-20893
(S.D. Fla. Dec. 17, 2010), ECF No. 3, available at http://www.justice.
gov/criminal/fraud/fcpa/cases/salvoch/12-17-10salvoch-info.pdf;
Criminal Information, United States v. Vasquez, No. 10-cr-20894 (S.D.
Fla. Dec. 17, 2010), ECF No. 3, available at http://www.justice.gov/
criminal/fraud/fcpa/cases/vasquezjp/12-17-10vasquez-juan-info.pdf;
Indictment, United States v. Granados, et al., No. 10-cr-20881, (S.D.
APPENDIX
Endnotes
112
Fla. Dec. 14, 2010), ECF No. 3, available at http://www.justice.gov/
criminal/fraud/fcpa/cases/granados-jorge/12-21-10granados-indict.pdf.
194
See Deferred Pros. Agreement, United States v. Snamprogetti, supra
note 60, ECF No. 3, available at http://www.justice.gov/criminal/fraud/
fcpa/cases/snamprogetti/07-07-10snamprogetti-dpa.pdf.
195
Compare Criminal Information, United States v. Snamprogetti, supra
note 60, with Deferred Pros. Agreement, United States v. Snamprogetti,
supra note 60, ECF No. 3.
196
See Press Release, General Electric Co., General Electric Agrees to
Acquire InVision (Mar. 15, 2004), available at http://www.ge.com/files/
usa/company/investor/downloads/sharpeye_press_release.pdf; Press
Release, U.S. Dept. of Justice, InVision Tech. Inc. Enters into Agreement
with the United States (Dec. 6, 2004), available at http://www.justice.
gov/opa/pr/2004/December/04_crm_780.htm; Company News; G.E.
Gets InVision, a Maker of Bomb Detectors, N.Y. Times, Dec. 7, 2004, at
C4.
197
Non-Pros. Agreement, In re InVision (Dec. 3, 2004), available at
http://www.justice.gov/criminal/fraud/fcpa/cases/invision-tech/12-03-
04invisiontech-agree.pdf; Non-Pros. Agreement, In re General Elec. Co.,
(Dec. 3, 2004), available at http://www.justice.gov/criminal/fraud/fcpa/
cases/invision-tech/12-03-04invisiontech-agree-ge.pdf; Complaint, SEC
v. GE InVision, Inc., f/k/a InVision Technologies, Inc., No. 05-cv-660,
(N.D. Cal. Feb. 14, 2005), ECF No. 1, available at http://www.sec.gov/
litigation/complaints/comp19078.pdf.
198
See U.S. Dept. of Justice, FCPA Op. Release 08-02 ( June 13,
2008), available at http://www.justice.gov/criminal/fraud/fcpa/
opinion/2008/0802.pdf; see also Press Release, U.S. Dept. of Justice,
Pfizer H.C.P. Corp. Agrees to Pay $15 Million Penalty to Resolve Foreign
Bribery Investigation (Aug. 7, 2012) (“In the 18 months following its
acquisition of Wyeth, Pfizer Inc., in consultation with the department,
conducted a due diligence and investigative review of the Wyeth business
operations and integrated Pfizer Inc.’s internal controls system into
the former Wyeth business entities. The department considered these
extensive efforts and the SEC resolution in its determination not to
pursue a criminal resolution for the pre-acquisition improper conduct of
Wyeth subsidiaries.”), available at http://www.justice.gov/opa/pr/2012/
August/12-crm-980.html.
199
18 U.S.C. § 2.
200
In enacting the FCPA in 1977, Congress explicitly noted that “[t]he
concepts of aiding and abetting and joint participation would apply to a
violation under this bill in the same manner in which those concepts have
always applied in both SEC civil actions and in implied private actions
brought under the securities laws generally.” H.R. Rep. No. 95-640, at 8.
201
Pinkerton held that a conspirator may be found guilty of a substantive
offense committed by a co-conspirator in furtherance of the conspiracy
if the co-conspirator’s acts were reasonably foreseeable. See Pinkerton v.
United States, 328 U.S. 640, 647-48 (1946).
202
See United States v. MacAllister, 160 F.3d 1304, 1307 (11th Cir.
1998); United States v. Winter, 509 F.2d 975, 982 (5th Cir. 1975).
203
See Criminal Information, United States v. Marubeni, supra note
132; Criminal Information, United States v. JGC Corp., supra note 60;
Criminal Information, United States v. Snamprogetti, supra note 60; see
also Criminal Information, United States v. Technip, supra note 132.
204
Section 20(e) of the Exchange Act, “Prosecution of Persons Who
Aid and Abet Violations,” explicitly provides that, for purposes of a
civil action seeking injunctive relief or a civil penalty, “any person that
knowingly or recklessly provides substantial assistance to another person
in violation of a provision of this chapter, or of any rule or regulation
issued under this chapter, shall be deemed to be in violation of such
provision to the same extent as the person to whom such assistance is
provided.” Section 20(e) of the Exchange Act, 15 U.S.C. § 78t(e).
205
Under Section 21C(a) of the Exchange Act, the SEC may impose a
cease-and-desist order through the SEC’s administrative proceedings
upon any person who is violating, has violated, or is about to violate any
provision of the Exchange Act or any rule or regulation thereunder, and
upon any other person that is, was, or would be a cause of the violation,
due to an act or omission the person knew or should have known would
contribute to such violation. Section 21C(a) of the Exchange Act,15
U.S.C. § 78u-3(a).
206
See Complaint, SEC v. Panalpina, Inc., supra note 68.
207
18 U.S.C. § 3282(a) provides: “Except as otherwise expressly provided
by law, no person shall be prosecuted, tried, or punished for any offense,
not capital, unless the indictment is found or the information is instituted
within five years next after such offense shall have been committed.”
208
See Grunewald v. United States, 353 U.S. 391, 396-97 (1957)
(holding government must prove conspiracy still existed and at least
one overt act was committed within the statute of limitations); Fiswick
v. United States, 329 U.S. 211, 216 (1946) (“The statute of limitations,
unless suspended, runs from the last overt act during the existence of
the conspiracy. The overt acts averred and proved may thus mark the
duration, as well as the scope, of the conspiracy.”) (citation omitted); see
generally Julie N. Sarnoff, Federal Criminal Conspiracy, 48 Am. Crim. L.
Rev. 663, 676 (Spring 2011).
209
18 U.S.C. § 3292.
210
28 U.S.C. § 2462.
211
S. Rep. No. 95-114, at 3 (noting that, in the past, “corporate bribery
has been concealed by the falsification of corporate books and records,”
that the accounting provisions “remove [] this avenue of coverup,” and
that “[t]aken together, the accounting requirements and criminal [antibribery]
prohibitions . . . should effectively deter corporate bribery of
foreign government officials”).
212
S. Rep. No. 95-114, at 7.
213
Section 13(b)(2)(A) of the Exchange Act, 15 U.S.C. § 78m(b)(2)(A).
214
Section 13(b)(2)(B) of the Exchange Act, 15 U.S.C. § 78m(b)(2)(B).
215
The accounting provisions contain a narrow exemption related to
national security and the protection of classified information. Under
this “national security” provision, “no duty or liability [under Section
13(b)(2) of the Exchange Act] shall be imposed upon any person acting
in cooperation with the head of any federal department or agency
responsible for such matters if such act in cooperation with such head of
a department or agency was done upon the specific, written directive of
the head of such department or agency pursuant to Presidential authority
to issue such directives.” Section 13(b)(3) of the Exchange Act, 15 U.S.C.
§ 78m(b)(3). As Congress made clear, however, the exception is narrowly
tailored and intended to prevent the disclosure of classified information.
H.R. Rep. 94-831, at 11, available at http://www.justice.gov/criminal/
fraud/fcpa/history/1977/corruptrpt-94-831.pdf.
216
Section 13(b)(2)(A) of the Exchange Act, 15 U.S.C. § 78m(b)(2)(A).
217
H.R. Rep. No. 94-831, at 10.
218
Id.
219
Section 13(b)(7) of the Exchange Act, 15 U.S.C. § 78m(b)(7).
220
H.R. Rep. No. 100-576, at 917 (1988), available athttp://www.justice.
gov/criminal/fraud/fcpa/history/1988/tradeact-100-418.pdf. Congress
rejected the addition of proposed cost-benefit language to the definition
“in response to concerns that such a statutory provision might be abused
and weaken the accounting provisions at a time of increasing concern
about audit failures and financial fraud and resultant recommendations
by experts for stronger accounting practices and audit standards.” Id.
221
See, e.g., Complaint, SEC v. Biomet, Inc., No. 12-cv-454 (D.D.C. Mar.
26, 2012), ECF No. 1 [hereinafter SEC v. Biomet], available at http://
www.sec.gov/litigation/complaints/2012/comp22306.pdf; Criminal
Information, United States v. Biomet, Inc., No. 12-cr-80 (D.D.C. Mar.
26, 2012) [hereinafter United States v. Biomet], available at http://www.
justice.gov/criminal/fraud/fcpa/cases/biomet/2012-03-26-biometinformation.pdf;
Complaint, SEC v. Smith & Nephew Inc., No. 12-cv-
187 (D.D.C. Feb. 6, 2012), ECF No. 1, available at http://www.sec.gov/
litigation/complaints/2012/comp22252.pdf; Criminal Information,
United States v. Smith & Nephew plc., No. 12-cr-30 (D.D.C. Feb. 6,
2012), ECF No. 1, available at http://www.justice.gov/criminal/fraud/
fcpa/cases/smith-nephew/2012-02-06-s-n-information.pdf; Complaint,
SEC v. Johnson & Johnson, supra note 131; Criminal Information,
United States v. DePuy, supra note 131; Complaint, SEC v. Maxwell
Technologies Inc., No. 11-cv-258 (D.D.C. Jan. 31, 2011), ECF No. 1
[hereinafter SEC v. Maxwell Technologies], available at http://www.sec.
gov/litigation/complaints/2011/comp21832.pdf; Criminal Information,
United States v. Maxwell Technologies Inc., No. 11-cr-329 (S.D. Cal.
Jan. 31, 2011), ECF No. 1, available at http://www.justice.gov/criminal/
fraud/fcpa/cases/maxwell/01-31-11maxwell-tech-info.pdf; Complaint,
SEC v. Transocean, Inc., No. 10-cv-1891 (D.D.C. Nov. 4, 2010), ECF
No. 1, available at http://www.sec.gov/litigation/complaints/2010/
comp21725.pdf; Criminal Information, United States v. Transocean,
Inc., No. 10-cr-768 (S.D. Tex. Nov. 4, 2010), ECF No. 1, available at
http://www.justice.gov/criminal/fraud/fcpa/cases/transocean-inc/11-
04-10transocean-info.pdf.
113
222
S. Rep. No. 95-114, at 7.
223
Section 13(b)(2)(B) of the Exchange Act, 15 U.S.C. § 78m(b)(2)(B).
224
Section 13(b)(7) of the Exchange Act, 15 U.S.C. § 78m(b)(7).
225
See Complaint, SEC v. Siemens AG, supra note 48; Criminal
Information, United States v. Siemens AG, supra note 48.
226
Complaint, SEC v. Siemens AG, supra note 48; Criminal Information,
United States v. Siemens AG, supra note 48; Press Release, U.S. Dept.
of Justice, Siemens AG and Three Subsidiaries Plead Guilty to Foreign
Corrupt Practices Act Violations and Agree to Pay $450 Million in
Combined Criminal Fines (Dec. 15, 2008), available at http://www.
justice.gov/opa/pr/2008/December/08-crm-1105.html.
227
See, e.g., Complaint, SEC v. Biomet, supra note 221 (bribes paid to
government healthcare providers in which phony invoices were used
to justify payments and bribes were falsely recorded as “consulting
fees” or “commissions” in company’s books and records); Criminal
Information, United States v. Biomet, supra note 221 (same); SEC v.
Alcatel-Lucent, supra note 48 (bribes paid to foreign officials to secure
telecommunications contracts where company lacked proper internal
controls and permitted books and records to falsified); United States v.
Alcatel-Lucent, S.A., supra note 48 (same).
228
Complaint, SEC v. Daimler AG, supra note 48; Criminal Information,
United States v. Daimler AG, supra note 48.
229
Id.
230
Id.
231
Id.
232
Id.
233
Id.
234
See, e.g., Complaint, SEC v. Tyco Int’l, supra note 9; Complaint, SEC v.
Willbros, No. 08-cv-1494 (S.D. Tex. May 14, 2008), ECF No. 1, available
at http://www.sec.gov/litigation/complaints/2008/comp20571.pdf.
235
See, e.g., Complaint, SEC v. Siemens AG, supra note 48; Complaint,
SEC v. York Int’l Corp., supra note 115; Complaint, SEC v. Textron, supra
note 115; Criminal Information, United States v. Control Components,
Inc., No. 09-cr-162 (C.D. Cal. July 22, 2009), ECF No. 1 [hereinafter
United States v. Control Components], available at http://www.justice.
gov/criminal/fraud/fcpa/cases/control-inc/07-22-09cci-info.pdf;
Criminal Information, United States v. SSI Int’l Far East, Ltd., No. 06-cr-
398, ECF No. 1 (D. Or. Oct. 10, 2006) [hereinafter United States v. SSI
Int’l], available at http://www.justice.gov/criminal/fraud/fcpa/cases/
ssi-intl/10-10-06ssi-information.pdf.
236
See, e.g., Complaint, SEC v. El Paso Corp., supra note 187; Complaint,
SEC v. Innospec, supra note 79; Complaint, SEC v. Chevron Corp., 07-
cv-10299 (S.D.N.Y. Nov. 14, 2007), ECF No. 1, available at http://www.
sec.gov/litigation/complaints/2007/comp20363.pdf.
237
Plea Agreement, United States v. Stanley, supra note 8; Plea Agreement,
United States v. Sapsizian, supra note 8.
238
See Complaint, SEC v. Maxwell Technologies, supra note 221.
239
See Complaint, SEC v. Willbros Group, supra note 9.
240
15 U.S.C. § 7201, et seq.
241
Exchange Act Rule 13a-15, 17 C.F.R. § 240.13a-15; Exchange Act
Rule 15d-15, 17 C.F.R. § 240.15d-15; Item 308 of Regulation S-K, 17
C.F.R. § 229.308; Item 15, Form 20-F, available at http://www.sec.gov/
about/forms/form20-f.pdf; General Instruction (B), Form 40-F (for
foreign private issuers), available at http://www.sec.gov/about/forms/
form40-f.pdf.
242
See U.S. Sec. and Exchange Comm., Commission Guidance
Regarding Management’s Report on Internal Control
over Financial Reporting Under Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, Release No. 33-8810 ( June
27, 2007), available at http://www.sec.gov/rules/interp/2007/33-8810.
pdf.
243
Id.
244
Foreign Corrupt Practices Act of 1977, Pub. L. No. 95-213, § 102, 91
Stat. 1494 (1977).
245
See supra note 48; SEC v. Technip, supra note 132, (French company);
United States v. Technip, supra note 132, (same); see also Admin.
Proceeding Order, In re Diageo plc, Exchange Act Release No. 64978
(SEC July 27, 2011) (UK company), available at http://www.sec.gov/
litigation/admin/2011/34-64978.pdf; Admin. Proceeding Order, In
re Statoil, ASA, Exchange Act Release No. 54599 (SEC May 29, 2009)
(Norwegian company), available at http://www.sec.gov/litigation/
admin/2006/34-54599.pdf; Criminal Information, United States v.
Statoil, ASA, No. 06-cr-960 (S.D.N.Y. Oct. 13, 2006) (same), available at
http://www.justice.gov/criminal/fraud/fcpa/cases/statoil-asa-inc/10-13-
09statoil-information.pdf.
246
Although private companies are not covered by the books and records
and internal controls provisions of the FCPA and do not fall within
SEC’s jurisdiction, such companies generally are required by federal and
state tax laws and state corporation laws to maintain accurate books and
records sufficient to properly calculate taxes owed. Further, most large
private companies maintain their books and records to facilitate the
preparation of financial statements in conformity with GAAP to comply
with financial institutions’ lending requirements.
247
See SEC v. RAE Sys. Inc., supra note 92; In re RAE Sys. Inc., supra note
92.
248
See Section 13(b)(6) of the Exchange Act, 15 U.S.C. § 78m(b) (6),
which provides that where an issuer “holds 50 per centum or less of the
voting power with respect to a domestic or foreign firm,” the issuer must
“proceed in good faith to use its influence, to the extent reasonable under
the issuer’s circumstances, to cause such domestic or foreign firm to devise
and maintain a system of internal accounting controls consistent with
[Section 13(b)(2)].”
249
See 15 U.S.C. § 78m(b)(6). Congress added the language in subsection
78m(b)(6) to the FCPA in 1988, recognizing that “it is
unrealistic to expect a minority owner to exert a disproportionate degree
of influence over the accounting practices of a subsidiary.” H.R. Rep.
No. 100-576, at 917. The Conference Report noted that, with respect
to minority owners, “the amount of influence which an issuer may
exercise necessarily varies from case to case. While the relative degree of
ownership is obviously one factor, other factors may also be important in
determining whether an issuer has demonstrated good-faith efforts to use
its influence.” Id.; see also S. Rep. No. 100-85, at 50.
250
Section 20(e) of the Exchange Act, titled “Prosecution of Persons
Who Aid and Abet Violations,” explicitly provides that for purposes of
a civil action seeking injunctive relief or a civil penalty, “any person that
knowingly or recklessly provides substantial assistance to another person
in violation of a provision of this title, or of any rule or regulation issued
under this title, shall be deemed to be in violation of such provision to
the same extent as the person to whom such assistance is provided.” See
Section 20(e) of the Exchange Act, 15 U.S.C. § 78t(e).
251
See Complaint at 11-12, SEC v. Elkin, supra note 50, ECF 1.
252
SEC v. Elkin, supra note 50, ECF 6-9 (final judgments).
253
See, e.g., Complaint, SEC v. Nature’s Sunshine Products, Inc., et al., No.
09-cv-672 (D. Utah, July 31, 2009), ECF No. 2, available at http://www.
sec.gov/litigation/litreleases/2009/lr21162.htm.
254
See Admin. Proceeding Order, In re Watts Water Technologies,
Inc. and Leesen Chang, Exchange Act Release No. 65555 (SEC
Oct. 13, 2011), available at http://www.sec.gov/litigation/
admin/2011/34-65555.pdf.
255
Id. at 2, 4, 6-7.
256
Exchange Act Rule 13b2-1, 17 C.F.R. § 240.13b2-1.
257
15 U.S.C. § 78m(b)(5).
258
Section 3(a)(9) of the Exchange Act, 15 U.S.C. § 78c(a)(9).
259
Exchange Act Rule 13b2-2, 17 C.F.R. § 240.13b2-2
260
Complaint, SEC v. Jennings, No. 11-cv-1444 (D.D.C. Jan. 24,
2011), ECF No. 1, available at http://www.sec.gov/litigation/
complaints/2011/comp21822.pdf.
261
Complaint, id., ECF No. 1; Final Judgment, id., ECF No. 3.
262
Serious Fraud Office, Innospec Ltd: Former CEO admits bribery to
falsify product tests ( July 30, 2012), available at http://www.sfo.gov.
uk/press-room/latest-press-releases/press-releases-2012/innospec-ltd--
former-ceo-admits-bribery-to-falsify-product-tests.aspx.
263
15 U.S.C. § 78m(b)(4)-(5). Congress adopted this language in 1988 in
APPENDIX
Endnotes
114
order to make clear that, consistent with enforcement policy at the time,
criminal penalties would not be imposed “for inadvertent or insignificant
errors in books and records, or inadvertent violations of accounting
controls.” See S. Rep. No. 100-85, at 49; H.R. Rep. No. 100-576, at
916 (“The Conferees intend to codify current Securities and Exchange
Commission (SEC) enforcement policy that penalties not be imposed for
insignificant or technical infractions or inadvertent conduct.”).
264
15 U.S.C. § 78ff(a).
265
See United States v. Alcatel-Lucent, S.A., supra note 48; see also United
States v. Alcatel-Lucent France, supra note 56.
266
See Deferred Prosecution Agreement, United States v. Alcatel-Lucent,
S.A., supra note 48, ECF No. 10, available at http://www.justice.gov/
criminal/fraud/fcpa/cases/alcatel-etal/02-22-11alcatel-dpa.pdf.
267
See Plea Agreement, United States v. Siemens AG, supra note 48, ECF
No. 14, available at http://www.justice.gov/criminal/fraud/fcpa/cases/
siemens/12-15-08siemensakt-plea.pdf.
268
See Minute Entry of Guilty Plea, United States v. Peterson, supra note
8, ECF 13; see also Press Release, U.S. Dept. of Justice, Former Morgan
Stanley Managing Director Pleads Guilty for Role in Evading Internal
Controls Required by FCPA (Apr. 23, 2012), available at http://www.
justice.gov/opa/pr/2012/April/12-crm-534.html.
269
See Criminal Information, United States v. Baker Hughes Svcs.
Int’l, No. 07-cr-129 (S.D. Tex. Apr. 11, 2007), ECF No. 1, available at
http://www.justice.gov/criminal/fraud/fcpa/cases/baker-hughs/04-11-
07bakerhughesintl-info.pdf.
270
See United States v. Panalpina, Inc., supra note 68.
271
Id.
272
See FASB Statement of Financial Accounting Concepts No. 2, ¶¶
63-80.
273
PCAOB Auditing Standard No. 12 and PCAOB AU Section 325.
274
See Section 10A of the Exchange Act, 15U.S.C. § 78j-1.
275
18 U.S.C. § 1952.
276
See, e.g., United States v. Nexus Technologies, supra note 53; Criminal
Information, United States v. Robert Richard King, et al., No. 01-cr-190
(W.D. Mo. June 27, 2001), available at http://www.justice.gov/criminal/
fraud/fcpa/cases/kingr-etal/05-03-02king-robert-indict.pdf; Superseding
Indictment, United States v. Mead, supra note 44; Criminal Information,
United States v. Saybolt North America Inc., et al., No. 98-cr-10266 (D.
Mass. Aug. 18, 1998), available at http://www.justice.gov/criminal/
fraud/fcpa/cases/saybolt/08-10-98saybolt-info.pdf.
277
See Second Superseding Indictment, United States v. Kozeny, No. 05-
cr-518 (S.D.N.Y. May 26, 2009), ECF No. 203, available at http://www.
justice.gov/criminal/fraud/fcpa/cases/kozenyv/05-26-09bourke2ndsupersed-indict.pdf;
Judgment, United States v. Bourke, No. 05-cr-518
(S.D.N.Y. Nov. 12, 2009), ECF No. 253, available at http://www.justice.
gov/criminal/fraud/fcpa/cases/kozenyv/11-12-09bourke-judgment.pdf.
278
Plea Agreement, United States v. Control Components, supra note
235, ECF No. 7; see also Order, United States v. Carson, supra note 119,
ECF No. 440 (denying motion to dismiss counts alleging Travel Act
violations), available at http://www.justice.gov/criminal/fraud/fcpa/
cases/carsons/2011-09-20-carson-minutes-denying-motion-to-dismiss.
pdf.
279
See, e.g., Criminal Information, United States v. Esquenazi, supra note
44; Criminal Information, United States v. Green, supra note 44; Criminal
Information, United States v. General Elec. Co., No. 92-cr-87 (S.D. Ohio
July 22, 1992), available at http://www.justice.gov/criminal/fraud/fcpa/
cases/general-electric/1992-07-22-general-electric-information.pdf.
280
Foreign officials may “not be charged with violating the FCPA itself,
since the [FCPA] does not criminalize the receipt of a bribe by a foreign
official.” United States v. Blondek, 741 F.Supp. 116, 117 (N.D. Tex.
1990), aff ’d United States v. Castle, 925 F.2d 831 (5th Cir. 1991) (“We
hold that foreign officials may not be prosecuted under 18 U.S.C. §
371 for conspiring to violate the FCPA.”). Foreign officials, however,
can be charged with violating the FCPA when the foreign official acts
as an intermediary of a bribe payment. See, e.g., Information, United
States v. Basu, No. 02-cr-475 (D.D.C. Nov. 26, 2002) (World Bank
employee charged with wire fraud and FCPA violations for facilitating
bribe payments to another World Bank official and Kenyan government
official), available at http://www.justice.gov/criminal/fraud/fcpa/cases/
basu/11-26-02basu-info.pdf; Information, United States v. Sengupta, No.
02-cr-40 (D.D.C. Jan. 30, 2002), available at http://www.justice.gov/
criminal/fraud/fcpa/cases/sengupta/01-30-02sengupta-info.pdf.
281
See, e.g., Judgments, United States v. Esquenazi, supra note 44, ECF
Nos. 182, 816, 824 (judgments against foreign official defendants).
282
Criminal Information, United States v. SSI Int’l, supra note 235
(alleging violations of 18 U.S.C. §§ 1343, 1346); Plea Agreement, United
States v. SSI Int’l, supra note 235, (Oct. 10, 2006), available at http://
www.justice.gov/criminal/fraud/fcpa/cases/control-inc/07-24-09cciplea-agree.pdf.
283
See Ex-Im Bank, Form of Exporter’s Certificate, EBD-M-56 ( Jan.
2007), available at http://www.exim.gov/pub/ins/pdf/ebd-m-56.pdf.
284
See 18 U.S.C. § 1001.
285
22 C.F.R. §§ 130.2, 130.9.
286
For example, in United States v. BAE Systems plc, BAE pleaded guilty
to conspiring to defraud the United States by impairing and impeding its
lawful functions, to making false statements about its FCPA compliance
program, and to violating the AECA and ITAR. BAE paid a $400
million fine and agreed to an independent corporate monitor to ensure
compliance with applicable anti-corruption and export control laws.
Criminal Information and Plea Agreement, United States v. BAE Sys.
plc, No. 10-cr-35 (D.D.C. Mar. 1, 2010), ECF Nos.1, 8, available at
http://www.justice.gov/criminal/fraud/fcpa/cases/bae-system/02-01-
10baesystems-info.pdf and http://www.justice.gov/criminal/fraud/fcpa/
cases/bae-system/03-01-10baesystems-plea-agree.pdf. In an action based
on the same underlying facts as the criminal guilty plea, BAE entered
a civil settlement with the Directorate of Defense Trade Controls for
violations of AECA and ITAR, including over 2500 ITAR violations
that included a failure to report the payment of fees or commissions
associated with defense transactions and failure to maintain records
involving ITAR-controlled transactions. BAE paid $79 million in
penalties, and the State Department imposed a “policy of denial” for
export licenses on three BAE subsidiaries involved in the wrongful
conduct. Consent Agreement between BAE Sys. plc and Defense Trade
Controls at 17-20, Bureau of Political-Military Affairs, U.S. Dept. of State
(May 16, 2011), available at http://www.pmddtc.state.gov/compliance/
consent_agreements/pdf/BAES_CA.pdf; Proposed Charging Letter, In
re Investigation of BAE Systems plc Regarding Violations of the Arms
Export Control Act and the International Traffic in Arms Regulations,
U.S. Dept. of State (May 2011), available at http://www.pmddtc.state.
gov/compliance/consent_agreements/pdf/BAES_PCL.pdf.
287
26 U.S.C. § 162(c)(1); see also Plea Agreement, United States v. Smith,
No. 07-cr-69 (C.D. Cal. Sept. 3, 2009), ECF No. 89, available at http://
www.justice.gov/criminal/fraud/fcpa/cases/smithl/09-03-09smithl-pleaagree.pdf;
Criminal Information, United States v. Titan Corp., supra note
185.
288
See USAM § 9-27.000.
289
See USAM § 9-27.420 (setting forth considerations to be weighed
when determining whether it would be appropriate to enter into plea
agreement).
290
See USAM § 9-28.000 et seq.
291
See USAM § 9-28.710 (discussing attorney-client and work product
protections).
292
See http://www.sec.gov/divisions/enforce/enforcementmanual.pdf.
293
See USAM§ 9-28.300.A; see also USAM § 9-28.700.B (explaining
benefits of cooperation for both government and corporation).
294
See USAM § 9-28.900 (discussing restitution and remediation). The
commentary further provides that prosecutors should consider and weigh
whether the corporation appropriately disciplined wrongdoers and a
corporation’s efforts to reform, including its quick recognition of the
flaws in the program and its efforts to improve the program. Id.
295
See USAM §§ 9-27.230, 9-27.420.
296
U.S. Sentencing Guidelines § 8B2.1(b)(7) (2011).
297
Id. § 8C2.5(f )(2) (2011).
298
U.S. Sec. and Exchange Comm., Report of Investigation
Pursuant to Section 21(a) of the Securities Exchange Act
of 1934 and Commission Statement on the Relationship
of Cooperation to Agency Enforcement Decisions, SEC
Rel. Nos. 34-44969 and AAER-1470 (Oct. 23, 2001) [hereinafter
Seaboard Report] available at http://www.sec.gov/litigation/
investreport/34-44969.htm.
299
U.S. Sec. and Exchange Comm., Policy Statement
Concerning Cooperation by Individuals in its
Investigations and Related Enforcements Actions, 17
C.F.R. § 202.12 ( Jan. 10, 2010), available at http://www.sec.gov/rules/
115
policy/2010/34-61340.pdf.
300
See U.S. Sentencing Guidelines at § 8B2.1(a)(2).
301
U.S. Sentencing Guidelines § 8B2.1(b).
302
See generally Debbie Troklus, et al., Compliance 101: How
to build and maintain an effective compliance and ethics
program, Society of Corp. Compliance and Ethics (2008)
3-9 [hereinafter Compliance 101] (listing reasons to implement
compliance program, including protecting company’s reputation,
creating trust between management and employees, preventing false
statements to customers, creating efficiencies and streamlining processes,
detecting employee and contractor fraud and abuse, ensuring highquality
products and services, and providing “early warning” system of
inappropriate actions); Transparency Int’l, Business Principles
for Countering Bribery: Small and Medium Enterprise
(SME) Edition 5 (2008) (citing benefits of anti-bribery program
like protecting reputation, creating record of integrity enhances
opportunities to acquire government business, protecting company
assets otherwise squandered on bribes); Mark Pieth, Harmonising
Anti-Corruption Compliance: The OECD Good Practice
Guidance 45-46 (2011) [hereinafter Harmonising Anti-
Corruption Compliance] (citing need for compliance program
to prevent and detect in-house risks, such as workplace security or
conflicts of interest, and external risks, like anti-trust violations, embargo
circumvention, environmental hazards, and money laundering).
303
Debarment authorities, such as the Department of Defense or
the General Services Administration, may also consider a company’s
compliance program when deciding whether to debar or suspend
a contractor. Specifically, the relevant regulations provide that the
debarment authority should consider “[w]hether the contractor had
effective standards of conduct and internal control systems in place at
the time of the activity which constitutes cause for debarment or had
adopted such procedures prior to any Government investigation of the
activity cited as a cause for debarment,” and “[w]hether the contractor
has instituted or agreed to institute new or revised review and control
procedures and ethics training programs.” 48 C.F.R. § 9.406-1(a).
304
Seaboard Report, supra note 298; U.S. Sec. and Exchange
Comm., Report of Investigation Pursuant to Section 21(a)
of the Securities Exchange Act of 1934 and Commission
Statement on the Relationship of Cooperation to Agency
Enforcement Decisions, SEC Rel. No. 44969 (Oct. 23, 2001),
available at http://www.sec.gov/litigation/investreport/34-44969.htm.
305
USAM § 9-28.300. When evaluating the pervasiveness of wrongdoing
within the corporation, prosecutors are advised that while it may be
appropriate to charge a corporation for minor misconduct where the
wrongdoing was pervasive, “it may not be appropriate to impose liability
upon a corporation, particularly one with a robust compliance program in
place, under a strict respondeat superior theory for the single isolated act
of a rogue employee.” Id. § 9-28.500.A (emphasis added). Prosecutors
should also consider a company’s compliance program when examining
any remedial actions taken, including efforts to implement an effective
compliance program or to improve an existing one. As the commentary
explains, “although the inadequacy of a corporate compliance program is
a factor to consider when deciding whether to charge a corporation, that
corporation’s quick recognition of the flaws in the program and its efforts
to improve the program are also factors to consider as to appropriate
disposition of a case.” Id. § 9-28.900.B. Finally, the Principles of Federal
Prosecution of Business Organizations provides that prosecutors should
consider the existence and effectiveness of the corporation’s pre-existing
compliance program in determining how to treat a corporate target. Id.
§ 9-28.800.
306
See USAM § 9-28.800.B; see also U.S. Sentencing Guidelines §
8B2.1(a) (2011) (“The failure to prevent or detect the instant offense
does not necessarily mean that the program is not generally effective in
preventing and detecting criminal conduct.”).
307
See Press Release, U.S. Dept. of Justice, Former Morgan Stanley
Managing Director Pleads Guilty for Role in Evading Internal Controls
Required by FCPA (Apr. 25, 2012) (declining to bring criminal case
against corporate employer that “had constructed and maintained a
system of internal controls, which provided reasonable assurances that its
employees were not bribing government officials”), available at http://
www.justice.gov/opa/pr/2012/April/12-crm-534.html; Press Release,
U.S. Sec. and Exchange Comm., SEC Charges Former Morgan Stanley
Executive with FCPA Violations and Investment Adviser Fraud, No.
2012-78 (Apr. 25, 2012) (indicating corporate employer was not charged
in the matter and had “cooperated with the SEC’s inquiry and conducted
a thorough internal investigation to determine the scope of the improper
payments and other misconduct involved”), available at http://www.sec.
gov/news/press/2012/2012-78.htm.
308
See USAM § 9-28.800.B.
309
See, e.g., Int’l Chamber of Commerce, ICC Rules on
Combating Corruption (2011) [hereinafter ICC Rules on
Combating Corruption], available at http://www.iccwbo.
org/uploadedFiles/ICC/policy/business_in_society/Statements/
ICC_Rules_on_Combating_Corruption_2011edition.pdf;
Transparency Int’l, Business Principles for Countering
Bribery (2d ed. 2009) [hereinafter Business Principles for
Countering Bribery], available at http://www.transparency.
org/global_priorities/private_sector/business_principles/; United
Kingdom Ministry of Justice, The Bribery Act of 2010,
Guidance about procedures which relevant commercial
organisations can put into place to prevent persons
associated with them from bribing (2010), available at http://
www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.
pdf; World Bank Group, Integrity Compliance Guidelines
(2011) [hereinafter Integrity Compliance Guidelines],
available at http://siteresources.worldbank.org/INTDOII/Resources/
Integrity_Compliance_Guidelines.pdf; Asia-Pacific Economic
Cooperation, APEC Anti-corruption Code of Conduct
for Business (2007) [hereinafter APEC Anti-corruption Code],
available at http://www.apec.org/Groups/SOM-Steering-Committeeon-Economic-and-Technical-Cooperation/Task-Groups/~/media/
Files/Groups/ACT/07_act_codebrochure.ashx; Int’l Chamber of
Commerce, Transparency Int’l, United Nations Global
Compact, and World Economic Forum, Resisting Extortion
and Solicitation in International Transactions: A
Company Tool for Employee Training (2011), available at
http://www3.weforum.org/docs/WEF_PACI_RESIST_Report_2011.
pdf; Int’l Chamber of Commerce, et al., Clean Business
Is Good Business, available at http://www3.weforum.org/docs/
WEF_PACI_BusinessCaseFightingCorruption_2011.pdf; World
Economic Forum, Partnering Against Corruption –
Principles for Countering Bribery (2009) [hereinafter
Partnering Against Corruption], available at http://www3.
weforum.org/docs/WEF_PACI_Principles_2009.pdf; Working
Group on Bribery, OECD, Good Practice Guidance on
Internal Controls, Ethics, and Compliance 2010, [hereinafter
OECD Good Practice Guidance] available at http://www.oecd.
org/dataoecd/5/51/44884389.pdf; U.N. Global Compact, The Ten
Principles [hereinafter The Ten Principles] available at http://
www.unglobalcompact.org/aboutTheGC/TheTenPrinciples/index.html.
310
This is also reflected in the Sentencing Guidelines, which recognizes
that no single, formulaic set of requirements should be imposed, but
instead focuses on a number of factors like applicable industry practice
or the standards called for by any applicable governmental regulation,
the size of the organization, and whether the organization has engaged
in similar misconduct in the past. See U.S. Sentencing Guidelines §
8B2.1 & app. note 2 (2011).
311
This was underscored by then-SEC Commissioner Cynthia Glassman
in 2003 in a speech on the SEC’s implementation of the Sarbanes-Oxley
Act: “[T]he ultimate effectiveness of the new corporate governance rules
will be determined by the ‘tone at the top.’ Adopting a code of ethics
means little if the company’s chief executive officer or its directors make
clear, by conduct or otherwise, that the code’s provisions do not apply
APPENDIX
Endnotes
116
to them. . . . Corporate officers and directors hold the ultimate power
and responsibility for restoring public trust by conducting themselves
in a manner that is worthy of the trust that is placed in them.” Cynthia
Glassman, SEC Implementation of Sarbanes-Oxley: The New Corporate
Governance, Remarks at National Economists Club (April 7, 2003),
available at http://www.sec.gov/news/speech/spch040703cag.htm .
312
Indeed, research has found that “[e]thical culture is the single biggest
factor determining the amount of misconduct that will take place in a
business.” Ethics Resource Center, 2009 National Business
Ethics Survey: Ethics in the Recession (2009), at 41. Metrics
of ethical culture include ethical leadership (tone at the top), supervisor
reinforcement of ethical behavior (middle management reinforcement),
and peer commitment (supporting one another in doing the right
thing). Ethics Resource Center, 2011 National Business
Ethics Survey: Workplace Ethics in Transition (2012) at 19.
Strong ethical cultures and strong ethics and compliance programs are
related, as data show that a well-implemented program helps lead to a
strong ethical culture. Id. at 34. “Understanding the nature of any gap
between the desired culture and the actual culture is a critical first step in
determining the nature of any ethics-based risks inside the organization.”
David Gebler, The Role of Culture at 1.7, in Society of Corporate
Compliance and Ethics, The Complete Compliance and
Ethics Manual (2011). To create an ethical culture, attention must be
paid to norms at all levels of an organization, including the “tone at the
top,” “mood in the middle,” and “buzz at the bottom.” Id. 1.9-1.10.
313
See, e.g., U.S. Sentencing Guidelines § 8B2.1(2)(B)-(C) (2011).
314
Id.
315
Id.
316
Id.
317
See, e.g., Ethics and Compliance Officer Association
Foundation, The Ethics and Compliance Handbook: A
Practical Guide From Leading Organizations (2008) at 13-26
[hereinafter The Ethics and Compliance Handbook].
318
See U.S. Sentencing Guidelines § 8B2.1(b)(4) (2011).
319
See U.S. Sentencing Guidelines § 8B2.1(b)(6) (2011) (“The
organization’s compliance and ethics program shall be promoted
and enforced consistently throughout the organization through (A)
appropriate incentives to perform in accordance with the compliance and
ethics program; and (B) appropriate disciplinary measures for engaging
in criminal conduct and for failing to take reasonable steps to prevent or
detect criminal conduct.”).
320
See, e.g., Joseph E. Murphy, Society of Corp. Compliance and
Ethics, Using Incentives in Your Compliance and Ethics
Program (2011) at 1; The Ethics and Compliance Handbook,
supra note 317, at 111-23.
321
Stephen M. Cutler, Director, Division of Enforcement, SEC, Tone at
the Top: Getting It Right, Second Annual General Counsel Roundtable
(Dec. 3, 2004), available at http://www.sec.gov/news/speech/
spch120304smc.htm.
322
See, e.g., ICC Rules on Combating Corruption, supra note 309,
at 8.
323
See, e.g. U.S. Sentencing Guidelines § 8B2.1(b)(5)(C);
Compliance 101, supra note 302, at 30-33.
324
Corporate Board Member/FTI Consulting 2009 Legal Study, Buckle
Up. Boards and General Counsel May Face a Bumpy Ride in 2009, at 5
(“Interestingly, while 67% of general counsel say their company is subject
to compliance under the FCPA, 64% of those say there is room for
improvement in their FCPA training and compliance programs.”).
325
See U.S. Sentencing Guidelines § 8B2.1(b)(5)(B) (“The
organization shall take reasonable steps . . . to evaluate periodically the
effectiveness of the organization’s compliance and ethics program.”).
326
See, e.g., Compliance 101, supra note 302, at 60-61; The Ethics
and Compliance Handbook, supra note 317, at 155-60; Business
Principles for Countering Bribery, supra note 309, at 14.
327
See, e.g., Michael M. Mannix and David S. Black., Compliance Issues
in M&A: Performing Diligence on the Target’s Ethics and Compliance
Program at 5.71-5.81, in Society of Corporate Compliance
and Ethics, The Complete Compliance and Ethics Manual
(2011).
328
Complaint, SEC v. Syncor International Corp., supra note 190;
Criminal Information, United States v. Syncor Taiwan, Inc., supra note
189.
329
U.S. Dept. of Justice, FCPA Op. Release 08-02 ( June 13, 2008),
available at http://justice.gov/criminal/fraud/fcpa/opinion/2008/0802.
pdf.
330
Complaint, SEC v. Rae Sys., Inc., supra note 92; Non-Pros. Agreement,
In re Rae Sys. Inc., supra note 92.
331
U.S. Dept. of Commerce, Business Ethics: A Manual for
Managing a Responsible Business Enterprise in Emerging
Market Economies (2004), available at http://www.ita.doc.gov/
goodgovernance/adobe/bem_manual.pdf.
332
U.S. Dept. of State, Fighting Global Corruption: Business
Risk Management (2d ed. 2001), available at http://www.ogc.doc.
gov/pdfs/Fighting_Global_Corruption.pdf.
333
See Harmonising Anti-Corruption Compliance, supra note
302, at 46 (“Anti-corruption compliance is becoming more and more
harmonised worldwide.”).
334
OECD Good Practice Guidance, supra note 309.
335
APEC Anti-corruption Code, supra note 309.
336
ICC Rules on Combating Corruption, supra note 309.
337
Business Principles for Countering Bribery, supra note 309.
338
The Ten Principles, supra note 309.
339
Integrity Compliance Guidelines, supra note 309.
340
Partnering Against Corruption, supra note 309.
341
15 U.S.C. §§ 78dd-2(g)(1)(A), 78dd-3(e)(1)(A), 78ff(c)(1)(A).
342
15 U.S.C. §§ 78dd-2(g)(2)(A), 78dd-3(e)(2)(A), 78ff(c)(2)(A).
343
15 U.S.C. § 78ff(a).
344
15 U.S.C. § 78ff(a).
345
18 U.S.C. § 3571(d); see Southern Union v. United States, 132 S. Ct.
2344, 2350-51 & n.4 (2012).
346
15 U.S.C. §§ 78dd-2(g)(3), 78dd-3(e)(3), 78ff(c)(3).
347
The U.S. Sentencing Guidelines are promulgated by the U.S.
Sentencing Commission:
The United States Sentencing Commission
(“Commission”) is an independent agency in the
judicial branch composed of seven voting and two
non-voting ex-officio members. Its principal purpose
is to establish sentencing policies and practices for
the federal criminal justice system that will assure the
ends of justice by promulgating detailed guidelines
prescribing the appropriate sentences for offenders
convicted of federal crimes. The Guidelines and
policy statements promulgated by the Commission
are issued pursuant to Section 994(a) of Title 28,
United States Code.
U.S. Sentencing Guidelines § 1A1.1 (2011).
348
Id. at ch. 3-5.
349
Id. § 2C1.1.
350
Id. § 2C1.1(b).
351
Id. § 3B1.1.
352
Id. at ch. 4, § 5A.
353
Id. § 2B1.1(b)(10)(B), 2B1.1(b)(18)(A).
354
Id. § 8C2.4 (a).
355
Id. § 8C2.5.
356
Id. § 8C2.5(f ), 8C2.5(g).
357
DOJ has exercised this civil authority in limited circumstances in
the last thirty years. See, e.g., United States & SEC v. KPMG Siddharta
Siddharta & Harsono, et al., No. 01-cv-3105 (S.D. Tex. 2001) (entry
of injunction barring company from future FCPA violations based on
allegations that company paid bribes to Indonesian tax official in order
to reduce the company’s tax assessment); United States v. Metcalf &
Eddy, Inc., No. 99-cv-12566 (D. Mass. 1999) (entry of injunction barring
company from future FCPA violations and requiring maintenance of
compliance program based on allegations that it paid excessive marketing
and promotional expenses such as airfare, travel expenses, and per
diem to an Egyptian official and his family); United States v. American
Totalisator Co. Inc., No. 93-cv-161 (D. Md. 1993) (entry of injunction
barring company from future FCPA violations based on allegations that
it paid money to its Greek agent with knowledge that all or some of
the money paid would be offered, given, or promised to Greek foreign
officials in connection with sale of company’s system and spare parts);
United States v. Eagle Bus Manufacturing, Inc., No. 91-cv-171 (S.D. Tex.
1991) (entry of injunction barring company from future FCPA violations
based on allegations that employees of the company participated in
117
bribery scheme to pay foreign officials of Saskatchewan’s state-owned
transportation company $50,000 CAD in connection with sale of buses);
United States v. Carver, et al., No. 79-cv-1768 (S.D. Fla. 1979) (entry
of injunction barring company from future FCPA violations based on
allegations that Carver and Holley, officers and shareholders of Holcar
Oil Corp., paid $1.5 million to Qatar foreign official to secure an oil
drilling concession agreement); United States v. Kenny, et al., No. 79-cv-
2038 (D.D.C. 1979) (in conjunction with criminal proceeding, entry of
injunction barring company from future FCPA violations for providing
illegal financial assistance to political party to secure renewal of stamp
distribution agreement).
358
15 U.S.C. §§ 78dd-2(g)(1)(B), 78dd-3(e)(1)(B), 78ff(c)(1)(B); see also
17 C.F.R. § 201.1004 (providing adjustments for inflation).
359
15 U.S.C. §§ 78dd-2(g)(2)(B), 78dd-3(e)(2)(B), 78ff(c)(2)(B); see also
17 C.F.R. § 201.1004 (providing adjustments for inflation).
360
15 U.S.C. §§ 78dd-2(g)(3), 78dd-3(e)(3), 78ff(c)(3); see also 17 C.F.R.
§ 201.1004 (providing adjustments for inflation).
361
Section 21(B)(b) of the Exchange Act, 15 U.S.C. § 78u(d)(3); see also
17 C.F.R. § 201.1004 (providing adjustments for inflation).
362
See Securities Enforcement Remedies and Penny Stock Reform Act
of 1990, Pub. L. No. 101-429, 104 Stat. 931 §§ 202, 301, 401, and 402
(codified in scattered sections of Title 15 of the United States Code).
363
48 C.F.R. §§ 9.406-2, 9.407-2.
364
48 C.F.R. § 9.402(b).
365
See 48 C.F.R. §§ 9.406-1, 9.407-1(b)(2). Section 9.406-1 sets forth the
following non-exhaustive list of factors:
(1) Whether the contractor had effective standards
of conduct and internal control systems in place at
the time of the activity which constitutes cause for
debarment or had adopted such procedures prior to
any Government investigation of the activity cited as
a cause for debarment.
(2) Whether the contractor brought the activity
cited as a cause for debarment to the attention of the
appropriate Government agency in a timely manner.
(3) Whether the contractor has fully investigated
the circumstances surrounding the cause for
debarment and, if so, made the result of the
investigation available to the debarring official.
(4) Whether the contractor cooperated fully with
Government agencies during the investigation and
any court or administrative action.
(5) Whether the contractor has paid or has agreed
to pay all criminal, civil, and administrative liability
for the improper activity, including any investigative
or administrative costs incurred by the Government,
and has made or agreed to make full restitution.
(6) Whether the contractor has taken appropriate
disciplinary action against the individuals
responsible for the activity which constitutes cause
for debarment.
(7) Whether the contractor has implemented or
agreed to implement remedial measures, including
any identified by the Government.
(8) Whether the contractor has instituted or agreed
to institute new or revised review and control
procedures and ethics training programs.
(9) Whether the contractor has had adequate
time to eliminate the circumstances within the
contractor’s organization that led to the cause for
debarment.
(10) Whether the contractor’s management
recognizes and understands the seriousness of the
misconduct giving rise to the cause for debarment
and has implemented programs to prevent
recurrence.
366
48 C.F.R. § 9.406-1(a).
367
Exec. Order No. 12,549, 51 Fed. Reg. 6,370 (Feb. 18, 1986); Exec.
Order No. 12,689, 54 Fed. Reg. 34131 (Aug. 18, 1989).
368
48 C.F.R. § 9.407-2(b).
369
USAM § 9-28.1300 (2008).
370
See, e.g., African Development Bank Group, Integrity
and Anti-Corruption Progress Report 2009-2010 7, 14
(“As the premier financial development institution in Africa, the
AfDB is determined to root out misconduct, fraud and corruption
within its own ranks as well as in the implementation of the projects
it finances. In order to do so, the Bank created an anti-corruption and
fraud investigation division in November 2005 as its sole investigative
body. The unit became operational in June 2006 and commenced
investigations in January 2007. . . . Investigations conducted by the
IACD [Integrity and Anti-Corruption Department] are not criminal
proceedings; they are administrative in nature. Sanctions range from
personnel disciplinary actions, such as separation, to loan cancellation
and debarment for contractors, which can be temporary or permanent.”),
available at http://www.afdb.org/fileadmin/uploads/afdb/Documents/
Publications/Integrity%20and%20Anti-Corruption.pdf; The World
Bank Group, Procurement: Sanctions Committee (“The World Bank’s
debarment process was first formulated in July, 1996, and the Sanctions
Committee was established in November 1998 to review allegations and
recommend sanctions to the President. Written procedures were issued
in August 2001 and are posted on the Bank’s website, along with the
sanction actions.”), available at http://web.worldbank.org/WBSITE/
EXTERNAL/PROJECTS/PROCUREMENT/0,,contentMDK:5000
2288~pagePK:84271~piPK:84287~theSitePK:84266,00.html.
371
See African Development Bank Group, Asian Development Bank,
European Bank for Reconstruction and Development, Inter-American
Development Bank Group and World Bank Group, Agreement
for Mutual Enforcement of Debarment Decisions (Apr. 9, 2010),
available at http://siteresources.worldbank.org/NEWS/Resources/
AgreementForMutualEnforcementofDebarmentDecisions.pdf.
372
Id.; see also The World Bank Group, Cross-Debarment Accord Steps Up
Fight Against Corruption (Apr. 9, 2010) (“‘With today’s cross-debarment
agreement among development banks, a clear message on anticorruption
is being delivered: Steal and cheat from one, get punished by all,’ said
World Bank Group President Robert B. Zoellick.”), available at http://
web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:2
2535805~pagePK:64257043~piPK:437376~theSitePK:4607,00.html.
373
22 C.F.R. §§ 126.7(a)(3)-(4), 120.27(a)(6).
374
Authority under the AECA is delegated to the DDTC. See 22 C.F.R.
§ 120.1(a).
375
22 U.S.C. § 2778(g)(1)(A)(vi), (g)(3)(B).
376
22 C.F.R. § 127.7(c).
377
See supra note 286.
378
See Gary G. Grindler, Acting Dep. Att’y Gen., U.S. Dept. of
Justice, Mem. to the Heads of Department Components and United
States Attorneys on Additional Guidance on the Use of Monitors in
Deferred Prosecution Agreements and Non-Prosecution (May 25,
2010), available at http://www.justice.gov/dag/dag-memo-guidancemonitors.pdf;
Lanny A. Breuer, Assist. Att’y Gen., Dep’t of Justice,
Mem. to All Criminal Division Personnel on Selection of Monitors in
Criminal Division Matters ( June 24, 2009), available at http://www.
justice.gov/criminal/fraud/fcpa/docs/response3-supp-appx-3.pdf; see
also Craig S. Morford, Acting Dep. Att’y Gen., U.S. Dept. of Justice,
Mem. to the Heads of Department Components and United States
Attorneys on Selection and Use of Monitors in Deferred Prosecution
Agreements and Non-Prosecution Agreements with Corporations
(Mar. 7, 2008), available at http://www.justice.gov/dag/morforduseofmonitorsmemo-03072008.pdf.
379
Historically, DOJ had, on occasion, agreed to DPAs with companies
that were not filed with the court. That is no longer the practice of DOJ.
380
USAM § 9-27.230.
381
USAM § 9-27.230.B.
382
DOJ has recently declined matters where some or all of the following
APPENDIX
Endnotes
118
circumstances were present: (1) a corporation voluntarily and fully
disclosed the potential misconduct; (2) corporate principles voluntarily
engaged in interviews with DOJ and provided truthful and complete
information about their conduct; (3) a parent company conducted
extensive pre-acquisition due diligence of potentially liable subsidiaries
and engaged in significant remediation efforts post-acquisition; (4) a
company provided information about its extensive compliance policies,
procedures, and internal controls; (5) a company agreed to a civil
resolution with the Securities and Exchange Commission while also
demonstrating that criminal declination was appropriate; (6) only a single
employee was involved in the improper payments; and (7) the improper
payments involved minimal funds compared to overall business revenues.
383
See Criminal Information, United States v. Peterson, supra note 8,
Press Release, U.S. Dept. of Justice, Former Morgan Stanley Managing
Director Pleads Guilty for Role in Evading Internal Controls Required
by FCPA (Apr. 25, 2012), available at http://www.justice.gov/opa/
pr/2012/April/12-crm-534.html (“After considering all the available
facts and circumstances, including that Morgan Stanley constructed and
maintained a system of internal controls, which provided reasonable
assurances that its employees were not bribing government officials, the
Department of Justice declined to bring any enforcement action against
Morgan Stanley related to Peterson’s conduct. The company voluntarily
disclosed this matter and has cooperated throughout the department’s
investigation.”); see also Press Release, U.S. Sec. and Exchange Comm.,
SEC Charges Former Morgan Stanley Executive with FCPA Violations
and Investment Adviser Fraud (Apr. 25, 2012), available at http://www.
sec.gov/news/press/2012/2012-78.htm (“Morgan Stanley, which is not
charged in the matter, cooperated with the SEC’s inquiry and conducted
a thorough internal investigation to determine the scope of the improper
payments and other misconduct involved.”).
384
SEC Rules of Practice, 17 C.F.R. § 201.102(e).
385
Deferred Pros. Agreement, In the Matter of Tenaris, S.A. (May 17,
2011), available at http://www.sec.gov/news/press/2011/2011-112-dpa.
pdf; see also Press Release, U.S. Sec. and Exchange Comm., Tenaris to Pay
$5.4 Million in SEC’s First-Ever Deferred Prosecution Agreement (May
17, 2011), available at http://www.sec.gov/news/press/2011/2011-112.
htm.
386
See Non-Pros. Agreement, In re Tenaris, S.A. (May 17, 2011), available
at http://www.justice.gov/criminal/fraud/fcpa/cases/tenaris-sa/2011-
03-14-tenaris.pdf.
387
See U.S. Sec. and Exchange Comm., Enforcement Manual
§ 6.2.3. (March 9, 2012), available at http://www.sec-gov/divisions/
enforce/enforcementmanual.pdf.
388
See id. § 6.2.4.
389
See id. § 2.6.
390
18 U.S.C. § 1514A(c).
391
18 U.S.C. § 1513(e).
392
15 U.S.C. § 78u-6(a)(3). The new provision defines “original
information” to mean information that:
(A) is derived from the independent knowledge
or analysis of a whistleblower; (B) is not known
to the Commission from any other source, unless
the whistleblower is the original source of the
information; and (C) is not exclusively derived from
an allegation made in a judicial or administrative
hearing, in a governmental report, hearing, audit,
or investigation, or from the news media, unless the
whistleblower is a source of the information.
393
15 U.S.C. § 78u-6; see also Dodd-Frank Wall Street Reform and
Consumer Protection Act, Pub. L. No. 111-203, § 922, 124 Stat. 1376,
1841-49 (2010).
394
For detailed information about the program, including eligibility
requirements and certain limitations that apply, see Section 922 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act, available
at http://www.sec.gov/about/offices/owb/dodd-frank-sec-922.pdf,
and the final rules on eligibility, Exchange Act Rule 21F-8, 17 C.F.R. §
240.21F-8.
395
For example, the rules: (1) make a whistleblower eligible for an award
if the whistleblower reports original information internally, and the
company informs the SEC about the violations; (2) give whistleblowers
120 days to report information to the SEC after first reporting
internally and still be treated as if he or she had reported to the SEC
at the earlier reporting date , thus preserving their “place in line” for
a possible whistleblower award from the SEC; and (3) provide that a
whistleblower’s voluntary participation in an entity’s internal compliance
and reporting systems is a factor that can increase the amount of an
award, and that a whistleblower’s interference with internal compliance
and reporting system is a factor that can decrease the amount of an award.
See Exchange Act Rule 21F, 17 C.F.R. § 240.21F.
396
See Exchange Act Rule 21F-7(b), 17 C.F.R. § 240.21F-7(b).
397
For example, SEC staff will not disclose a whistleblower’s identity in
response to requests under the Freedom of Information Act. However,
there are limits on SEC’s ability to shield a whistleblower’s identity,
and in certain circumstances SEC must disclose it to outside entities.
For example, in an administrative or court proceeding, SEC may be
required to produce documents or other information that would
reveal the whistleblower’s identity. In addition, as part of ongoing
SEC investigatory responsibilities, SEC staff may use information
provided by a whistleblower during the course of the investigation. In
appropriate circumstances, SEC may also provide information, subject
to confidentiality requirements, to other governmental or regulatory
entities. Exchange Act Rule 21F-7(a), 17 C.F.R. 240.21F-7(a).
398
Although SEC does not have an opinion procedure release process,
it has declared its decision to follow the guidance announced through
DOJ’s FCPA Opinion Release Procedure. U.S. Sec. and Exchange
Comm., SEC Release No. 34-17099 (Aug. 29, 1980), available at http://
www.sec.gov/news/digest/1980/dig082980.pdf. SEC Release No. 34-
17099 stated that, to encourage issuers to take advantage of the DOJ’s
FCPA Review Procedure, as a matter of prosecutorial discretion, SEC
would “not take enforcement action alleging violations of Section 30A
in any case where an issuer has sought and obtained an FCPA Review
letter from the Department, prior to May 31, 1981, stating that the
Department will not take enforcement action under Section 30A with
respect to the transaction involved.” Id. The release further noted that it
would revisit this policy once the DOJ had evaluated the results of the
FCPA Review Procedure after its first year of operation. A second release
stated that the SEC would continue to adhere to the policy announced
in Release No. 34-17099. U.S. Sec. and Exchange Comm., SEC Release
No. 34-18255 (Nov. 13, 1981), available at http://www.sec.gov/news/
digest/1981/dig111381.pdf.
399
Both DOJ’s opinion procedure releases (from 1993 to present) and
review procedure releases (from 1980-1992) are available at http://www.
justice.gov/criminal/fraud/fcpa/opinion.
400
The full regulations relating to DOJ’s opinion procedure are available
at http://www.justice.gov/criminal/fraud/fcpa/docs/frgncrpt.pdf.
401
28 C.F.R. § 80.1.
402
28 C.F.R. § 80.3.
403
28 C.F.R. § 80.12 (“Neither the submission of a request for an
FCPA Opinion, its pendency, nor the issuance of an FCPA Opinion,
shall in any way alter the responsibility of an issuer to comply with the
accounting requirements of 15 U.S.C. 78m(b)(2) and (3).”).
404
28 C.F.R. § 80.4.
405
28 C.F.R. § 80.5.
406
28 C.F.R. § 80.6.
407
28 C.F.R. § 80.14(a). This non-disclosure policy applies regardless of
whether DOJ responds to the request or the party withdraws the request
before receiving a response. Id.
408
28 C.F.R. § 80.6.
409
28 C.F.R. § 80.2.
410
In connection with any request for an FCPA opinion, DOJ may
conduct whatever independent investigation it believes appropriate. 28
C.F.R. § 80.7.
411
28 C.F.R. § 80.15. Once a request is withdrawn, it has no effect.
However, DOJ reserves the right to retain a copy of any FCPA
opinion request, documents, and information submitted during the
opinion release procedure for any governmental purpose, subject to the
restrictions on disclosures in 28 C.F.R. § 80.14.
412
28 C.F.R. § 80.8.
413
28 C.F.R. § 80.7. “Such additional information, if furnished orally,
must be confirmed in writing promptly. The same person who signed
the initial request must sign the written, supplemental information and
must again certify it to be a true, correct and complete disclosure of the
requested information.” Id.
414
28 C.F.R. § 80.9 (“No oral clearance, release or other statement
119
purporting to limit the enforcement discretion of the Department of
Justice may be given. The requesting issuer or domestic concern may rely
only upon a written FCPA opinion letter signed by the Attorney General
or his designee.”).
415
28 C.F.R. § 80.8. FCPA opinions do not bind or obligate any agency
other than DOJ. They also do not affect the requesting party’s obligations
to any other agency or under any statutory or regulatory provision other
than those specifically cited in the particular FCPA opinion. 28 C.F.R. §
80.11. If the conduct for which an FCPA opinion is requested is subject
to approval by any other agency, such FCPA opinion may not be taken
to indicate DOJ’s views on any legal or factual issues before that other
agency. 28 C.F.R. § 80.13.
416
28 C.F.R. § 80.10. DOJ can rebut this presumption by a
preponderance of the evidence. A court determining whether the
presumption has been rebutted weighs all relevant factors, including
whether the submitted information was accurate and complete and the
activity was within the scope of conduct specified in the request. Id. As of
September 2012, DOJ has never pursued an enforcement action against a
party for conduct that formed the basis of an FCPA opinion stating that
the prospective conduct would violate DOJ’s present enforcement policy.
417
As a general matter, DOJ normally anonymizes much of the
information in its publicly released opinions and includes the general
nature and circumstances of the proposed conduct. DOJ does not release
the identity of any foreign sales agents or other types of identifying
information. 28 C.F.R. § 80.14(b). However, DOJ may release the
identity of the requesting party, the foreign country in which the
proposed conduct is to take place, and any actions DOJ took in response
to the FCPA opinion request. Id. If a party believes that an opinion
contains proprietary information, it may request that DOJ remove or
anonymize those portions of the opinion before it is publicly released. 28
C.F.R. § 80.14(c).
418
28 C.F.R. § 80.16.
APPENDIX
Endnotes
120
FCPA Unit
Fraud Section, Criminal Division
U.S. Department of Justice
1400 New York Avenue, N.W.
Washington, DC 20005
http://www.justice.gov/criminal/fraud/fcpa/
FCPA Unit
Enforcement Division
U.S. Securities & Exchange Commission
100 F Street, NE
Washington, DC 20549
http://www.sec.gov/spotlight/fcpa.shtml