Conducting international business comes with its set of challenges, one of which is to ensure you don’t go into the crosshairs of the Federal Corrupt Practices Act (FCPA).
The FCPA was adopted in the 1970s and amended in the 1990s to block businesses and intermediaries from offering bribes to foreign officials to facilitate business relationships. Companies and individuals are subject to oversight under the FCPA.
The purpose of the act was to level the playing field for all businesses, and those who run afoul of the law are subject to heavy fines and possible prison time.
The SKJ Law Firm has handled various types of federal defense cases and is here today to cover what the FCPA is and what it means to businesses in Texas as well as across the country.
Background on the Foreign Corrupt Practices Act
As international trade grew through the mid-20th century, businesses and regulators became aware that some U.S. companies were paying bribes to foreign officials to open trade doors.
This led to the passage of the FCPA in 1977, which prevented U.S. companies and some foreign companies on the U.S. securities exchanges from engaging in such practices.
The expectation of bribes remained rampant in many foreign countries, however, leaving U.S. corporations at a disadvantage in international markets.
Discussions over these inequalities led to the creation by the U.S. and 33 other countries of the Organization of Economic Cooperation and Development, which set out to block the practice of bribery in international trade. The FCPA was amended in 1998 to reflect aspects of these agreements.
How Does the FCPA Work?
The FCPA features two components intended to block the offer of bribes to foreign officials, political parties, and political candidates:
- Criminalization of bribery: The act makes it illegal for any company or its representatives (including staff, officials, and paid consultants) to offer money, loans, gifts, or anything of value to foreign officials, political parties, or candidates for office to secure or maintain business.
- Accounting standards: Businesses also must maintain accurate accounts of all payments made in international business dealings to ensure bribes are not disguised in other payments.
A provision was added in the 1998 amendments that expanded the rules beyond U.S. companies and foreign companies that trade in the U.S. to include any individual, American or foreign, who promises or passes a bribe on U.S. soil.
Consequences for Breaching the FCPA
The FCPA includes two levels of punishment for those who unknowingly violate the law and those who willfully violate it:
- Businesses: Businesses found in violation can be fined up to $2 million for each violation. If they willfully violate the act, that fine can climb as high as $25 million per violation.
- Individuals: Individuals who violate the act can be fined up to $100,000 per violation and sentenced to up to five years in federal prison, while those who willfully violate the act can face fines of up to $5 million per violation and a prison sentence of up to 20 years.
Federal Defense Attorneys in Texas
Even businesses that may not be aware of the FCPA will face consequences when they think they are just playing the game to break into an international market. Prosecutors will aggressively pursue any company or individual they suspect of paying bribes to foreign agents to open foreign trade routes.
You should consult an attorney experienced in FCPA cases when you become aware that federal regulators are looking into your company’s international trade practices.
The SKJ Law Firm offers experience in federal enforcement of the FCPA and can assist your company.
Contact us through our website or call us today at 713-228-8500.
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