The Foreign Corrupt Practices Act (FCPA) is alive and thriving. The FCPA has become a monster (in keeping with our Halloween theme) of an obstacle for companies seeking to secure business from foreign governments. The FCPA penalizes companies and individuals for bribing foreign officials. The Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) enforce the FCPA with increasingly devastating effect. Not only are these agencies vigorously prosecuting violators, they are also extracting huge settlements, often in the tens of millions of dollars and beyond. The SEC and DOJ are rumored to have well over one hundred active FCPA cases open at any one time.
The scariest part about the FCPA is that is everything just mentioned is not the scariest part. The scariest part is that Congress just placed a bounty on violators. As part of the recent overhaul of our nation’s financial sector, Congress enacted a law to reward people who report FCPA violators to enforcement authorities. Whistleblowers can get up to 30% of fines that the SEC (and possibly the DOJ) collect over $1 million. Competitors and disgruntled employees are about get very rich very quickly.
There is one hopeful development for would-be violators. The DOJ just released FCPA Advisory Opinion 10-3. It appears that the DOJ may be interpreting “foreign official” (an element under the FCPA) to allow some companies to possibly escape liability by taking certain precautions, including requesting an advisory opinion from the DOJ, following a recusal policy if suspect transactions surface, and alerting all parties of your preventative and remedial steps. The DOJ is not bound (or so it claims) to follow and apply current advisory opinions to future cases. Thus, the agency may not be so forgiving in future cases. Still, it may be worth your time to read FCPA Advisory Opinion 10-3 and follow the steps contained therein.
Principal and a founding member of GRVR Attorneys.