Foreign Corrupt Practices Act (FCPA)

Whistleblower Guidelines: Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act (FCPA) was established by U.S. Congress in 1977. It criminalizes certain practices regarding overseas dealings, specifically bribing or paying foreign corporations and officials to attain, retain or advance business relations. The law also caters for international companies that operate in the United States, safeguarding fair commerce across borders. Of course, whenever lines are established there will always be those testing the limits of those boundaries.

What is covered?

The FCPA combats fraudulent dealings from two angles:

Anti-bribery provisions

Providing any form of bribe or kickback to foreign officials is illegal. Compensation does not have to be monetary, the incentive can simply be “valuable” to the person receiving it. And it does not have to actually be delivered, it can be a promise to pay or authorization given to arrange the bribe. What is important is that whatever type of inducement offered was done with the knowledge that the official will be influenced to act or fail to act in a particular manner.

Accounting provisions

Companies are required to maintain proper controls and book-keeping records. Often times they will try to hide the source and trail of funds used to finance the bribe by inaccurately reporting on their transactions. It is illegal to manipulate internal records and systems irrespective of whether the deed is done in the U.S. or out of the country.

Who is considered a Foreign Official?

Under the FCPA, a foreign official is defined as “…any officer or employee of a foreign government or any department, agency, or instrumentality thereof…”. Employees, from the highest ranks to the lowest tiers, are deemed representatives and instruments of state-owned or state controlled entities. Further, these entities can include diverse segments of government such as Defense Contractors, Real Estate organizations and Medical care facilities.

Whistleblower Eligibility, Protections and Rewards

A person need not be a U.S. citizen to provide information about prohibited business practices or unlawful schemes in violation of the FCPA. Though, it should be noted that the laws of the U.S. government as well as the laws of the foreign company’s nation can become intricately tied into each other when a case arises.

The FCPA is primarily enforced by the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice and as such, rewards and protection rights fall under the SEC Whistleblower Program.

Whistleblowers are assured protection from any sort of unfair treatment or retaliation by an employer and are extended the same qui tam provisions found in the False Claims Act, thereby allowing them a percentage of 10% to 30% of the total amount recovered from a successful claim.

Conclusion

It is not uncommon for organizations to wine and dine prospective clients, putting their best efforts and best versions of themselves on display. But creating a favorable environment in which to grease the wheels of business rolling is not the same as buying the wheels outright. Companies, both foreign and domestic, are held to high standards of accounting and practices so as to ensure the continuance of ethical trade and industry.

Click here to read about foreign bribes cases.

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