On January 19, 2010, the U.S. Department of Justice (DOJ) announced that 22 executives and employees of companies in the military and law enforcement products industry had been indicted for engaging in schemes to bribe the minister of defense for a country in Africa in order to obtain business, in violation of the U.S. Foreign Corrupt Practices Act (FCPA). The indictments are the product of an FBI undercover operation focused on bribery in the military and law enforcement products industry, with no actual involvement from any minister of defense. The defendants allegedly agreed to pay a 20 percent commission to a sales agent, who in fact was an undercover FBI agent, believing that the commission would be passed on to the minister of defense in order to win a portion of a $15 million contract to outfit the country’s presidential guard. [1]

The FCPA prohibits U.S. companies (and certain foreign companies), their officers or employees, as well as third party representatives or persons acting on their behalf, from corruptly giving or offering to give anything of value to any foreign government official for the purpose of influencing such individual in his or her official capacity or causing such official to influence the foreign government in order to obtain or retain business. While the DOJ has demonstrated a continued commitment to aggressively pursuing companies that violate the FCPA, in recent years, individuals have been increasingly targeted for criminal prosecution. In several recent cases, corporate executives and employees have received significant jail time and stiff criminal penalties for FCPA violations. [2]

The indictments announced on January 19 mark the largest single FCPA investigation and prosecution of individuals ever, demonstrating the continued, heightened focus on prosecution of individuals for FCPA violations. Assistant Attorney General Lanny A. Breuer noted that “{t}his ongoing investigation is the first large-scale use of undercover law enforcement techniques to uncover FCPA violations and the largest action ever undertaken by the Justice Department against individuals for FCPA violations.” Lanny warned that “{f}rom now on, would-be FCPA violators should stop and ponder whether the person they are trying to bribe might really be a federal agent.” [3]

The indictments allege that the defendants conspired to violate and engaged in substantive violations of the FCPA and conspired to engage in money laundering. The defendants face a maximum prison sentence of five years for each FCPA count and a maximum sentence of 20 years for the money laundering charge. Further, the DOJ is seeking criminal forfeiture of the defendants’ ill gotten gains from the bribery scheme.

Given the recent trend toward prosecution of individuals for FCPA violations, which appears to be escalating, and the potential for severe criminal penalties, corporate executives and employees must be increasingly alert to FCPA compliance matters. One would expect that this case will be the first of many in 2010 that focus on individual liability under the FCPA and related laws and regulations, including anti-money laundering statutes and export controls.