The purpose of the FCPA is easy to understand: to make it illegal for people or entities to pay bribes to government officials in other countries to obtain or keep business. As the United States Department of Justice points out, the law has applied to all citizens of the country and institutions issuing foreign securities since its inception in 1977.
Later revisions to the FCPA have broadened its effect. The law also applies to foreign companies and individuals “who cause, directly or through agents, an act in support of corrupt payments occurring within the territory of the United States.”
The law lawyer such as Sequoia Legal for example may also cover companies whose securities are listed in the United States.
How Did The FCPA Act Come About?
The FCPA was born in the 1970s, at an important moment in the history of the United States.
At the time, the SEC (Securities and Exchange Commission) detected that paying bribes to foreign authorities was common among local companies. During its investigations, the agency discovered that more than 400 companies in the United States admitted to paying more than US$300 million to officials.
The payments included bribing high-ranking members of various governments to obtain actions favorable to their businesses. So-called facilitation payments were also detected, which are made to public agents to speed up the progress of a process.
This payment differs from a common bribe, as the deed would already have been done anyway; it was just accelerated.
The Equities website lists two notable cases. An example is Lockheed, which paid politicians from several countries to give preference to its products. Chiquita Brands, involved in the so-called Bananagate, also gained notoriety with the payment of bribes to the president of Honduras to obtain favorable policies.
The Discovery Of Corruption Scandals Of This Level Forced The Creation Of The FCPA In 1977.
The first amendment to the FCPA took effect 11 years later, in 1988. The law began to consider knowledge of the offense and “good faith,” in addition to distinguishing between bribes and gifts permitted under the foreign country’s laws.
That same year, the FCPA expanded its scope to include foreign persons, and reached a scope beyond the borders of the United States.
What Are The Fcpa Obligations?
The fundamental purpose of the FCPA with lawyer like fcpa lawyer is to prevent a United States person from making payments to foreign officials to receive benefits for obtaining or maintaining business. As previously reported, since 1988, the law also covers foreign companies that support this type of irregular trading.
The definitions of who a foreign official is are quite broad, and it is not necessary to hold a political position to comply with the legislation.
Anyone who works for a company or organization managed by a government or can be considered a foreign official. In other words, a doctor who works at a state hospital can be classified as an officer under the FCPA rules.
Foreign officials from international organizations like the United Nations may also be considered.
The law, however, distinguishes bribery from facilitation payments, which are intended only to expedite processes that would have already taken place anyway. The practice may be illegal in some countries, but FCPA sanctions do not cover it.
The text highlights the intention to corrupt more than the amounts involved. This means that any value item can be classified as a bribe, depending on the context. The legislation also mandates that companies must keep their books of account by the provisions of the FCPA.
A company’s accounting must fairly and transparently reflect the transactions carried out by the company. Therefore, it is also important to maintain internal accounting control systems.
How Does The FCPA Act Relate To The Code Of Conduct?
A company’s Code of Conduct is key to combating corruption and a great ally of compliance programs.
It is no coincidence that the Resource Guide to the FCPA, a document from the United States Department of Justice, makes clear the importance of a company’s Code of Conduct being presented in a concise, transparent, and accessible manner to all employees and those doing business on behalf of a company.
This document is relevant because it serves as the basis for analyzing compliance programs carried out by the DOJ and the SEC. Therefore, companies must keep the code updated. The two American regulatory bodies also assess the existence of policies and procedures that delimit compliance and internal control responsibilities.
Objective and functional systems can prevent and detect FCPA violations before they happen, thus avoiding disruptions.