FCPAméricas Blog
A Five-Part Answer to the Question “Isn’t the FCPA Bad for U.S. Business?”
1.31.2012
This weekend I attended a bachelor party near Yuma, Arizona. We canoed 40 miles down the Colorado River, the section of the river south of the Grand Canyon that separates California from Arizona. The group consisted of several young guys working in a variety of industries. One was back from two tours in Iraq. We asked each other about our work. They were unfamiliar with the U.S. Foreign Corrupt Practices Act (FCPA). When I explained the law, many of them reacted the same way: “Isn’t the FCPA bad for U.S. business?”
FCPA practitioners often get this question from those outside of our immediate professional circles. Here is the five-part response I gave.
1. Yes, In Part. It is pretty obvious that the FCPA can be a disadvantage for a U.S. company operating in a country where corruption is commonplace. The FCPA prohibits the company from engaging in certain business activities that might otherwise give it an advantage. When U.S. companies are permitted to pay bribes to win business, they can compete by giving more to foreign officials than their competitors do.
2. Leveling the Playing Field. The U.S. Government attempts to address this imbalance by enforcing the FCPA against foreign entities as well as U.S. entities... Read more
If FCPA Enforcement Says It, Believe It
1.26.2012
FCPA enforcers take a lot of heat. The U.S. Chamber of Commerce is not exactly their friend. Commentators like Tom Fox rightly call for more information on declinations. But there is one thing with which you cannot argue. When FCPA enforcement says it, you should believe it.
I recently came across my notes from the November 2007 American Conference Institute’s National Conference on the FCPA. The opening speakers were Mark Mendelsohn, then-Deputy Chief of the Fraud Section in the DOJ’s Criminal Division, and Fredric Firestone, then-Associate Director in the SEC’s Division of Enforcement. That was an important year – it was when FCPA enforcement began to surge. That was the year that Mr. Mendelsohn declared, “2007 is by any measure a landmark year in the fight against foreign bribery.”
Reviewing my notes, it became clear that the similarities between enforcement’s statements in 2007 and their statements today are striking (FCPAméricas overviewed current statements from enforcement at the recent 2011 ACI National Conference). Conside... Read more
Risky Business: The Unexpectedly Broad Application of the FCPA’s Business Purpose Element
1.24.2012
Today’s blog post is also cross-posted on the Click4Compliance Blog.
Companies and individuals subject to the U.S. Foreign Corrupt Practices Act (FCPA) often misunderstand the scope of subject activity. They assume that bribes are illegal only if they relate to a company’s core business.
As a result, they might focus anti-corruption compliance efforts in areas like public procurement (see an earlier post on the FCPAméricas Blog about corruption in procurements). But they might not think it necessary to do so in other areas of their business, like managing tax liabilities or setting up business registrations in new markets. By ignoring these areas, they expose themselves to important risk.
Broad Interpretation. The “business purpose” element of the FCPA is interpreted broadly. Any payment that benefits the operations of the payor’s business can satisfy this element. Payments to reduce tax liabilities in Indonesia (KPMG-SSH and Harsono... Read more
