We see it every day – Florida companies doing business in both the U.S. and Latin America. Our close neighbors to the south offer domestic companies huge new markets and clear avenues to income growth. But many domestic companies believe that successfully penetrating those markets requires strategic alliances with government officials and gift-giving. The Foreign Corrupt Practices Act (“FCPA”) clearly makes pay-offs and bribes illegal. However, other seemingly innocuous activities including alliances with government officials and gift-giving, may also pose risk under the FCPA.
The FCPA prohibits the willful use of the mail or other means of interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a government official to (a) influence the government official in his or her official capacity, (b) induce the government official to do or omit to do an act in violation of his or her lawful duty, or (c) to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person. Under the FCPA, the term “government official” is given the broadest interpretation to include employees of domestic and foreign government agencies, public international organizations, and anyone acting in an official capacity on behalf of these entities.
Any U.S. company with its principal place of business in the United States is subject to the FCPA, no matter where it is operating in the world. This means that a U.S. company engaging in business in Latin America can be subject to the FCPA. Violations of the FCPA are aggressively prosecuted by the Department of Justice, with penalties ranging from monetary fines to individual prosecution resulting in incarceration.
Obviously, bribing a government official with a sack of cash is the somewhat stereotypical idea of an FCPA violation. But the law is more nuanced and has been applied in many other circumstances, including instances that might commonly pass for travel and entertainment expenses.
U.S. companies must be mindful of the FCPA’s requirements when dealing with domestic and foreign government agencies and officials. Before engaging in cross-border transactions or undertaking business operations in Latin America, U.S. companies should undertake a meaningful FCPA risk analysis that includes:
Thoroughly assessing their FCPA risks; Creating policies and procedures for addressing that risk; Creating and providing employee training in the established risk avoidance procedures and confirm the training is effective; Designing and establishing working procedures for reporting potential violations; Designing an incentive program for compliance; and Outlining responses in the event of a potential violation.
A meaningful risk analysis and establishing and enforcing company policies and procedures based on the FCPA risk analysis can limit the potential liability under FCPA.