On November 14, 2012, the Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) released the much anticipated guidance on the Foreign Corrupt Practices Act (“FCPA”) entitled A Resource Guide to the U.S. Foreign Corrupt Practices Act (“Guide”). The Guide was created at least in part to respond to the OECD criticism that U.S. anti-corruption efforts could be improved by providing a consolidated presentation of public information on the application of the FCPA and enhancing awareness by small and medium-sized companies about the prevention and detection of foreign bribery. As stated in introduction to the Guide, “It endeavors to provide helpful information to enterprises of all shapes and sizes—from small businesses doing their first transactions abroad to multi-national corporations with subsidiaries around the world.” For those not well-versed in the law, it provides a valuable resource and includes helpful hypotheticals, case studies and examples of enforcement actions and anonymized declinations. Importantly, it provides guidance about the key elements of an effective compliance program. As Lanny Breuer, the head of DOJ’s Criminal Division, said, “The guide is an important illustration of [DOJ and the SEC’s] transparency and a useful reference for companies and individuals who wish to act responsibly and in compliance with the law.” Now that DOJ and the SEC have spoken, the burden is on companies that do business abroad to address the risk of corruption.
Some of the important aspects of the Guide include:
- It explains the elements of a violation, including who is a foreign official.
- It states the hallmarks of an effective compliance program and how such a program helps mitigate penalties.
- It explains the vulnerabilities associated with the use of foreign agents, etc.
- It describes what is and is not a facilitating payment.
- It provides guidance on gifts, entertainment and travel expenses, and what is proper and improper.
- It addresses how successor liability applies in the mergers and acquisitions context.