A Resource Guide to the US Foreign Corrupt Practices Act

130 Pages·2012·3.11 MB·English

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
Tis guide is intended to provide information for businesses and individuals regarding the U.S. Foreign Corrupt Practices
Act (FCPA). Te guide has been prepared by the staf 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 specifc 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 specifc prospective conduct are encouraged to use the U.S.
Department of Justice’s opinion procedure discussed in Chapter 9 of this guide.
Tis 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. Te Foreign
Corrupt Practices Act (FCPA) is a critically important statute for combating corruption around the globe. Corruption has
corrosive efects on democratic institutions, undermining public accountability and diverting public resources from impor-
tant 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 com-
petitive 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).
Te Guide is the product of extensive eforts by experts at DOJ and SEC, and has benefted 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 frst transactions abroad to multi-national corporations with subsidiaries around the world. 
Te Guide addresses a wide variety of topics, including who and what is covered by the FCPA’s anti-bribery and accounting
provisions; the defnition of a “foreign ofcial”; what constitute proper and improper gifs, travel and entertainment expenses;
the nature of facilitating payments; how successor liability applies in the mergers and acquisitions context; the hallmarks of
an efective corporate compliance program; and the diferent 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 require-
ments while also providing insight into DOJ and SEC enforcement practices through hypotheticals, examples of enforce-
ment actions and anonymized declinations, and summaries of applicable case law and DOJ opinion releases.
Te 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 staf 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 Robert S. Khuzami
Assistant Attorney General Director of Enforcement
Criminal Division Securities and Exchange Commission
Department of Justice
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 1 0
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 Offcial? 19
Department, Agency, or Instrumentality of a Foreign Government 20
Public International Organizations 21
How Are Payments to Third Parties Treated? 21
What Affrmative 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 Affliates 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 4 8
Travel Act 48
Money Laundering 48
Mail and Wire Fraud 49
Certifcation and Reporting Violations 49
Tax Violations 49
Chapter 5: GUIDING PRINCIPLES OF ENFORCEMENT 5 2
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
Confdential 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 6 8
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 8 2
Chapter 9: DOJ OPINION PROCEDURE 8 6
Chapter 10: CONCLUSION 9 0
APPENDIX: THE FOREIGN CORRUPT PRACTICES ACT 9 2
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 offcials 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 frms engage in such practices as a substitute for healthy com-
1
petition for foreign business.
—United States Senate, 1977