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This article, published in Compliance & Ethics Professional, appears here with permission from the Society of Corporate Compliance & Ethics. Call SCCE at +1 952 933 4977 or 888 277 4977 with reprint requests.
by Robin Singh, MSc-Law, MSc-IT, LPEC, CFE
U
S companies enforced the Foreign FCPA keywords
Corrupt Practices Act (FCPA) To understand the FCPA of 1977, we must
of 1977 as an action against understand how it defines certain key terms.
revelations of widespread incidents of
bribery by foreign officials attempting to Facilitation payments: In United States, a
win business. The Act has an impact on grease payment or a facilitating payment
all US companies that are doing refers to a payment made to a foreign party
business outside the United States official, foreign official, or a political party for
of America. US companies can performance of routine government actions
Compliance & Ethics ProfessionalAugust 2016
be held liable for acts of their to expedite or speed up performance of those
joint venture partners, foreign duties that are non-discretionary in nature.
subsidiaries, and all other parties
that are deemed to be acting in the Foreign official: The term foreign official
Singh capacity of their agents. A foreign refers to leaders of foreign governments,
company that has its presence such as a Prime Minister, president,
in the United States and all those foreign and other heads of state. The term also
entities and non-residents that either use includes employees of different agencies
or act upon U.S. wires or mails when in the and departments in the offices of foreign
United States also fall under the scope of governments (e.g., customs officials, tax
the Act. officials). A foreign official is thus an officer or
not physically present in the U.S. limitations defined by the Act as opposed to
the FCPA that clearly defines the same.
The UK Bribery Act keywords
The UK Bribery Act of 2010 was enforced What is the difference between a bribe
on July 1, 2011. The Act applies to incidents andagift?
of bribery happening in both private and In countries like Japan and the Middle East,
public sectors, and applies to not only any it is quite customary for a participant to carry
act of bribery that is committed in the along small gifts for the other attendees in
United Kingdom, but also in countries the meeting. So should this also be regarded
where there is adequate connection with the as a bribe under the Act? If the answer is no,
UnitedKingdom. then what is the difference between a gift and
What are the key defenses in Private-to-private Does not cover bribery on a
Covered
bribery private level
case of FCPA and UKBA?
FCPA Active and
Covers both active and
Covers active bribery (i.e., passive bribery (i.e.,
In the case of FCPA, there are two passive bribery /
giving of bribe) the taking or giving of
Scope
available affirmative defenses. a bribe)
The first defense is paying
Creates a strict liability
anything of value and lawful The philosophy is that the
corporate offence for
company is responsible for
as per the written regulations Failure to prevent the acts of employees and
failure to prevent
bribery. They look if
and laws in the country of the bribery agents, so the organization
a company has good
needs to have proactive
foreign resident. The second compliance program/
controls in place
procedures in place
defense is related to payment
made with respect to anything No written requirement
of value that was a bona fide Person offering the bribe did for a corrupt or
so with a corrupt intent. I improper intent in
and reasonable expenditure, such Intent
believe intent would always relation to the bribery
as expenses related to lodging exist while bribing. of a foreign public
official, is implied.
and travel that is incurred on
behalf or by a foreign official and A company subject to
Section 7 of the Act
US jurisdiction can be
is directly associated with either Liability held liable for acts of its
creates a strict liability
for failure to prevent
the explanation, demonstration, employees, agents, and
such acts.
subsidiaries
or promotion of products and/or
services or for performance or Facilitation Exemption for facilitation
No exemption
execution of a contract along payments payments
with a foreign agency and
Promotional Promotional expenses act as
government. No defense
expenses a defense
In the 2012 case of SEC v.
Jackson,7 the trial court inferred
Compliance & Ethics ProfessionalAugust 2016
that the SEC must incur the load of negating 1. SEC v. Straub, et al. Southern District of New York, February 8, 2013.
Available at http://bit.ly/sec-v-straub
thefacilitating payments exception. 2. Time for Commencing Proceedings. See http://bit.ly/uscode-cornell
3. Transparency International. Available at http://bit.ly/trans-cpi
4. United States v. Viktor Kozeny and Frederick Bourke, Jr. Southern
District of New York, 667 F.3d 122 (2d Cir. 2011), Available at
UK Bribery Act http://bit.ly/us-v-viktor
5. U.S. Department of Justice: The Fraud Sections Foreign Corrupt
An act of paying anything of value is not Practices Act Enforcement Plan and Guidance. April 5, 2016.
Available at http://bit.ly/usdod-fraud
considered to be a violation against the UK 6. McDonnell v. United States. October 2015. Syllabus available at
http://bit.ly/mcdonnell-v-us
Bribery Act if it is permissible under the written 7. SEC v. Mark A. Jackson and James J. Ruehlen. Enforcement release
No. 3564, July 7, 2014. Available at http://bit.ly/sec-v-mark
laws of that foreign country where the act
has occurred. Other factors highlighting key
Robin Singh (robinsingh002@yahoo.com) is a Compliance and Fraud
differences against FCPA have been highlighted Examiner in the Health Services division of the Abu Dhabi (United Arab
in Table3. Emirates) government. @drobinsingh http://bit.ly/li-RobinSingh