FCPAméricas Blog

Connecting the Dots: Latin America Examples of Common FCPA Anti-Bribery Violations

Author: Matteson Ellis

FCPAméricas has seen a spike in readership from Latin America suggesting that regional businesspeople and companies are increasingly seeking to understand the FCPA.

Since we believe that having relatable examples is useful for new readers and for practitioners tasked with spreading the message to different audiences, this post seeks to ground discussions of common FCPA risks in real-world examples of enforcement in Latin America. Given that there are two essential components to the law, the Anti-Bribery Provisions and the Accounting Provisions, we offer common examples of each in a series of two posts. This post focuses on Anti-Bribery violations. Another post focuses on accounting violations.

ANTI-BRIBERY PROVISIONS. The anti-bribery provisions make it illegal for foreign persons acting in the United States or U.S. companies or individuals acting anywhere in the world to give or promise to give anything of value to a foreign official, directly or indirectly, to obtain or retain business or gain an unfair advantage.

Government Contracts: Payments to win a government contract or avoid a contract’s termination. The BizJet case involving Mexico is a good example.

Public Procurements: Payments to disqualify a lower bidder, gain access to confidential information, or change the required technical specifications of a tender. FCPAméricas has discussed this type of corruption in greater detail here. For an example of enforcement, see the Siemens Venezuela case.

Customs: Payments to avoid or lower duties or clear goods without proper registration. FCPAméricas has discussed how customs activity presents one of the highest corruption risk areas in Latin America. Though an action based on accounting violations, the underlying payments in Ball Argentina were customs-related.

Gifts: Single instances of extravagant gift giving of things like sports cars, fur coats, or laptop computers, or widespread gifts of smaller items like gift cards. There are numerous cases based on gift giving violations – one from Latin America is Orthofix, which paid gifts in Mexico.

Travel: Paying for officials to travel first-class with their spouses for an all-expenses-paid, week-long trip to a tourist destination. The Aon case involving Costa Rica can give some good insight.

Taxes: Payments to avoid taxes or reduce tax liabilities. The Kay and Murphy case in Haiti provides examples of how bribes can influence tax treatment. The case is also discussed here.

Permitting, Licensing, and Registrations: Payments to obtain a permit to operate a plant when the plant does not conform to safety regulations or to construct a building without an environmental study. In Latin America, regulatory regimes can be particularly complex, creating much room for corruption risk. The allegations about Wal-Mart de Mexico are an example of this type of risk.

Lawsuits: Payments to influence the adjudication of lawsuits or enforcement actions. In the 2012 Latin America Corruption Survey, Venezuela, Paraguay, Ecuador, and Bolivia showed particularly high levels of perceived corruption in the Judicial Branch. For an enforcement example, see Siemens Argentina.

Charitable Contributions: Donations to charities headed by government officials in return for business benefits. We include this risk because compliance officers should be alert for it, though no FCPA prosecutions of this scheme have occurred in Latin America. For an example from outside the region, see Eli Lilly’s activity in Poland.

The FCPAméricas blog is not intended to provide legal advice to its readers. The blog entries and posts include only the thoughts, ideas, and impressions of its authors and contributors, and should be considered general information only about the Americas, anti-corruption laws including the U.S. Foreign Corrupt Practices Act, issues related to anti-corruption compliance, and any other matters addressed. Nothing in this publication should be interpreted to constitute legal advice or services of any kind. Furthermore, information found on this blog should not be used as the basis for decisions or actions that may affect your business; instead, companies and businesspeople should seek legal counsel from qualified lawyers regarding anti-corruption laws or any other legal issue. The Editor and the contributors to this blog shall not be responsible for any losses incurred by a reader or a company as a result of information provided in this publication. For more information, please contact Info@MattesonEllisLaw.com.

The author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author.

© 2013 Matteson Ellis Law, PLLC

Matt Ellis

Post authored by Matt Ellis, FCPAméricas Founder & Editor

Categories: Anti-Corruption Compliance, Charitable Donations, Due Diligence, Enforcement, FCPA, Gifts and Entertainment, LA Corruption Survey, Procurement, Third Parties, Wal-Mart

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