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Foreign Corrupt Practices Act

Congress enacted the Foreign Corrupt Practices Act (the "FCPA") in 1977 to stop illicit payments to foreign public officials by United States businesses and individuals. The FCPA is found in 15 U.S.C. §§ 78m(b), (d)(1), (g)-(h), 78dd-2, 78ff (1997), amended by the International Anti-Bribery and Fair Competition Act of 1998, 15 U.S.C. §§ 78dd-1 to 78dd-3, 78ff. The FCPA makes it illegal to bribe foreign government officials to obtain or retain business, or to direct business to another person. 15 U.S.C. § 78dd-2(a).

In 1998, Congress amended the FCPA to implement the Organization of Economic Cooperation and Development ("OECD") Convention on Combating Bribery of Foreign Public Officials in International Business Transactions ("OECD Convention"). The amendments expanded FCPA coverage to "any person" (defined as any American citizen, national or resident, or American corporation). Under FCPA, any United States person or entity violating the Act outside the United States is subject to prosecution, regardless of whether any means of interstate commerce were used.

So, what have the courts said about the FCPA?

A. A federal district court judge from the Southern District of New York ruled that a defendant and his company had to respond to a grand jury subpoena for documents relating to the defendant's dealings with a foreign country. The judge issued the order to turn over the documents even though the foreign country had issued clear rulings of its own that the documents belonged to the country, that the defendant would be breaking the foreign country's law if he turned them over, and that the documents were protected via "executive privilege." In re Grand Jury Subpoena dated August 9, 2000, 218 F. Supp. 2d 544 (S.D.N.Y. 2002).

B. The Fifth Circuit ruled that the defendants could be guilty of violating the FCPA even though the payments in question, alleged bribes to Haitian officials to understate the customs duties and sale taxes on rice the defendants imported to Haiti, did not have an apparent nexus to "obtaining or maintaining business," an express requirement of the FCPA. United States v. Kay, 359 F.3d 738 (5th Cir. 2004).

C. Defendant's convictions for violating the FCPA and conspiracy to violate the FCPA affirmed when defendant agreed to bribes (called "kiss payments," "tolls," and "closing costs") to Costa Rican officials. The "kiss payments" were meant to secure the officials support for land concessions necessary to complete a development project in Costa Rica for which defendant was an investor. United States v. King, 351 F.3d 859 (8th Cir. 2003).

Potential punishments:
Punishment for violating the FCPA can amount to a multi-million dollar fine for corporations. Depending on the circumstances, individuals could face up to five years imprisonment and/or up to a $100,000 fine. It should be noted that parole has been abolished in the federal system.

When one is charged under this statute, the AUSA will seek an indictment from a Federal Grand Jury and may include charges for Import Crimes, Export Crimes, Trading With the Enemy, Industrial Espionage, Transnational Money Laundering, or NBC Weapons, and is likely to couple those charges with lesser included offenses such as False Statements or Obstruction of Justice where applicable. Should the government decide not to immediately seek indictment, one may be held under the Material Witness statute or, if related to any ongoing war (including the War on Terrorism) may be held through Combatant Detention.