FOREIGN CORRUPT PRACTICES ACT investigations are multiplying.
The Foreign Corrupt Practices Act makes it a crime for any US company, citizen or resident to offer anything of value to a foreign government or an employee of an international public organization in an effort to win or retain business or secure any improper advantage. The statute also applies to foreign companies that raise capital in the US securities markets.
The Department of Justice has 150 active FCPA investigations, according to Charles Duross, deputy chief of the FCPA unit at Justice. The Securities and Exchange Commission, which administers a separate part of the FCPA that requires accurate reporting of payments in company accounts, has 100 active investigations, according to Kara Brockmeyer, chief of the FCPA unit at the SEC.
The largest penalty imposed to date is $398.2 million that French oil company Total S.A. agreed to pay both government agencies in May. Duross and Brockmeyer made their comments at an FCPA conference in Washington in November.
About 60% to 70% of the SEC’s FCPA actions involve third-party intermediaries — payments to agents who then pass money to government officials. Brockmeyer said “red flags” to be alert for are vaguely-worded services contracts, payments to agents who are not legitimately in the business or where the amounts significantly exceed what others charge for the same services.
She said gifts of travel and entertainment to government officials also remain a problem.