WHAT IS THE FCPA

Article by John Peterson, Managing Attorney, FBR.

The Foreign Corrupt Practices Act (FCPA) is a U.S. law that prohibits bribery of foreign (non-U.S.) government employees. The Securities and Exchange Commission (SEC) enforces the FCPA and has an active whistleblower program intended to incentivize people to report legal violations by offering a 10% to 30% bounty on the fines collected. If you think you have information on an FCPA violation, we suggest that you speak to an attorney immediately, as you may be entitled to a reward for reporting it. 

Identifying FCPA violations can be tricky, but FBR’s attorneys can help you understand what the FCPA is and what it prohibits. If you are trying to figure out if something is an FCPA violation and you don’t have any experience in the legal field, here are three simple signals for non-lawyers that might indicate an FCPA violation:

1. A Foreign Government Employee Is Involved

The FCPA prohibits bribery of (non-U.S.) government employees. A government employee can be anyone that works for a foreign government. This can include people of any profession; doctors, engineers, accountants, clerks, or politicians. It also includes people employed indirectly by the government, such as those employed by a company owned by the government or an organization controlled by the government. 

If you are wondering what is considered by the FCPA to be a government employee, the following are some examples: 

• A doctor working in a hospital owned by the government 
• A clerk issuing planning permits or licenses 
• A teacher working in a school run by the government
• A contractor working for a state-owned oil company.
  
  

In order for the SEC to investigate a company, the company involved in the corruption must be under the SEC’s jurisdiction. One of the best ways to determine this is if the company is traded on the New York Stock Exchange (NYSE) or NASDAQ. Subsidiaries of a company traded on either exchange also fall under the jurisdiction of the SEC, and international conglomerates may have dozens of subsidiaries. Learning which companies must follow the FCPA’s provisions is key to understanding what is the FCPA and what it prohibits. Companies under SEC jurisdiction tend to be large, multinational corporations, often with thousands of employees and millions of dollars in annual revenue. The larger the company, the more likely that it is under the SEC’s jurisdiction.

2. Something Of Value Is Given or Promised

The FCPA prohibits giving or promising “anything of value” to a government employee. The term “anything of value” is very broad and includes cash, holidays, meals or entertainment for the government employee or their family. It can also include more obscure benefits like promising to give jobs, internships, or charitable donations to the employee or their family. 

Curious as to what is the FCPA’s definition of something ‘of value’? The following are some examples of items that can be considered something of value to a government employee: 

• Promising to give an internship to someone in their family
• Giving a donation to a charity they support
• Using a distributor or contractor they have a connection with
• Paying for travel to places where people usually vacation
• Promising to fix a road in an area they live in.
  
  

3. Something Is Expected In Return 

A third indicator of an FCPA violation is that the person giving something to the government employee expects to get something in return. This is sometimes called a “quid pro quo” (“this for that”). When learning what is the FCPA and what it does prohibit, it is important to recognize that both parties involved in an FCPA violation are benefitting in some way. Usually the person giving something to the government employee expects to get a business advantage in return, and the government employee expects to receive a personal benefit from the gift. 

In one notable FCPA case we previously profiled, a company was trying to win a government contract. During the negotiations, the company promised to give a job to one of the government employees they were negotiating with. That case led to a large fine for the company and $28 million reward for the whistleblower who reported it. 

The SEC is most interested in investigating leads related to bribery and corruption, which fall under what is called the FCPA. Bribery and corruption tend to have large fines, which means a whistleblower with vital information could earn a reward by reporting these crimes. However, any crime against the FCPA makes for an excellent lead, and the attorneys at FBR welcome you to discuss this further with them during a free, anonymous consultation. 

Moreover, we understand that it’s likely a whistleblower with pertinent information on an FCPA violation may not be a United Kingdom citizen. FBR’s clients can live anywhere in the world, and do not need to be citizens of any particular country. Although FBR’s attorneys are licensed by the IMF and ICC, we have experience working on SEC and FCPA cases across five continents. For any legal questions on what is the FCPA and what does it prohibit, contact FBR.

If you think you have information on an FCPA violation, you should speak with an attorney immediately, as you may be entitled to a million-dollar reward for reporting it. The first person to report the violation gets the award, so it’s important to move quickly before someone else takes your award.