Foreign Corrupt Practices Act (FCPA)
Maryland International Tax Attorney Explains the FCPA
Companies in the Maryland region and across the U.S. conducting business in foreign markets must take appropriate steps to comply with requirements under the Foreign Corrupt Practices Act (FCPA). Congress enacted the FCPA statute in 1977 in an effort to combat corruptive businesses practices around the globe. More specifically, the FCPA prohibits payments of bribes to foreign government officials to assist in gaining or maintaining business. These anti-bribery provisions apply to all U.S. persons and certain foreign issuers of securities, as well as foreign entities and persons who through their own actions or through the actions of their agents cause an act in furtherance of a corrupt payment to occur within U.S. territory.
In addition to the anti-bribery provisions, the FCPA also requires companies that are publicly traded in the U.S. to develop and maintain accurate books and records and to implement an adequate system of internal accounting controls. These accounting and record-keeping provisions also make it unlawful for companies to knowingly falsify their books and records or to knowingly circumvent or fail to develop and maintain a system of internal accounting controls.
Violations of the FCPA
The U.S. Department of Justice and the U.S. Securities Exchange Commission share joint responsibility for enforcing the anti-bribery and accounting provisions of the FCPA. The DOJ and the SEC also collaborate with many other federal agencies and law enforcement partners to uncover, investigate and prosecute FCPA violations.
The government can impose both civil and criminal sanctions for violating the FCPA. While these sanctions will vary depending upon the specific offense, both companies and individuals can face harsh fines and penalties. For instance, when an anti-bribery violation takes place, the company can be subject to a criminal penalty of up to $2 million and a civil penalty of up to $16,000 for each violation. Additionally, company officers, directors, stockholders and agents can face criminal fines of up to $250,000 and possible imprisonment of up to five years. These individuals can also be subject to a civil penalty of up to $16,000 per violation.
For each violation of the FCPA accounting provisions, corporations and business entities can be subject to a criminal penalty of up to $25 million and individuals can be fined up to $5 million and imprisoned for up to 20 years for each offense. The government may also impose a civil penalty not to exceed the greater of (a) the value of the monetary gain as a result of the violations or (b) a specified dollar limitation based on the seriousness of the violation. These dollar limitations range from $7,500 to $150,000 for individuals and $75,000 to $725,000 for corporations and business entities.
Beyond the specific sanctions set forth in the FCPA, violators may be subject to a federal law known as the “Alternative Fines Act.” The Alternative Fines Act can increase the criminal fine up to twice the benefit the person sought to gain from the illegal payments. Moreover, businesses and individuals that have violated the FCPA can face additional repercussions, such as being banned from conducting business with the U.S. federal government.
A person accused of violating the anti-bribery violations of the FCPA can defend their actions by demonstrating that the payment made to a government official was lawful in accordance with the laws of the foreign country in which the payment was made. Additionally, a person may assert that the payment was a reasonable expenditure directly related to promotional activities.
If you have questions about the anti-bribery or accounting provisions of the Foreign Corrupt Practices Act or have been accused of a violation, Thorn Law Group can help. Contact Kevin E. Thorn, Managing Partner by emailing email@example.com or calling our Maryland offices at 240-235-5096.