A Resource Guide to the U.S. Foreign Corrupt Practices Act, Second

A Resource Guide to the U.S. Foreign Corrupt Practices Act

Second Edition

By the Criminal Division of the U.S. Department of Justice and

the Enforcement Division of the U.S. Securities and Exchange Commission

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

This guide is intended to provide information for businesses and individuals regarding the U.S. Foreign Corrupt Practices

Act (FCPA). The guide has been prepared by the sta of the Criminal Division of the U.S. Department of Justice and the Enforcement

Division of the U.S. Securities and Exchange Commission. This guidance reects the views of the Division of Enforcement, but it

is not a statement by the Commission and the Commission has neither approved nor disapproved its content. It is non-binding,

informal, and summary in nature, and the information contained herein does not constitute rules or regulations. As such, it is not

intended to, does not, and may not be relied upon to create any rights, substantive or procedural, that are enforceable at law by

any party, in any criminal, civil, or administrative matter. It is not intended to substitute for the advice of legal counsel on specic

issues related to the FCPA. It does not in any way limit the enforcement intentions or litigating positions of the U.S. Department of

Justice, the U.S. Securities and Exchange Commission, or any other U.S. government agency.

Companies or individuals seeking an opinion concerning specic prospective conduct are encouraged to use the U.S.

Department of Justice’s opinion procedure discussed in Chapter 9 of this guide.

This guide is United States Government property. It is available to the public free of charge online at https://www.justice.

gov/criminal-fraud/fcpa-resource-guide and https://www.sec.gov/spotlight/fcpa/fcpa-resource-guide.pdf.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

A RESOURCE GUIDE TO THE

U.S. FOREIGN CORRUPT PRACTICES ACT

SECOND EDITION

By the Criminal Division of the U.S. Department of Justice and

the Enforcement Division of the U.S. Securities and Exchange Commission

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

FOREWORD

We are pleased to announce the publication of the Second Edition of A Resource Guide to the U.S.

Foreign Corrupt Practices Act. The Guide was originally published by the Department of Justice (DOJ) and the

Securities and Exchange Commission (SEC) in November 2012 to provide companies, practitioners, and

the public with detailed information about the statutory requirements of the Foreign Corrupt Practices

Act (FCPA) while also providing insight into DOJ and SEC enforcement practices through hypotheticals,

examples of enforcement actions and anonymized declinations, and summaries of applicable case law

and DOJ opinion releases. Then and now, the Guide represents one of the most thorough compilations

of information about any criminal statute, and remains relevant to this day.

Although many aspects of the Guide continue to hold true today, the last eight years have also

brought new cases, new law, and new policies. The Second Edition of the Guide reects these updates,

including new case law on the denition of the term “foreign ocial” under the FCPA, the jurisdictional

reach of the FCPA, and the FCPA’s foreign written laws armative defense. It addresses certain legal

standards, including the mens rea requirement and statute of limitations for criminal violations of the

accounting provisions. It reects updated data, statistics, and case examples. And it summarizes new

policies applicable to the FCPA that have been announced in the DOJ’s and SEC’s continuing eorts to

provide increased transparency, including the DOJ’s FCPA Corporate Enforcement Policy, Selection of

Monitors in Criminal Division Matters, Coordination of Corporate Resolution Penalties (or Anti-Piling On

Policy), and the Criminal Division’s Evaluation of Corporate Compliance Programs.

Foreign bribery is a scourge that must be eradicated. It undermines the rule of law, empowers

authoritarian rulers, distorts free and fair markets, disadvantages honest and ethical companies, and

threatens national security and sustainable development. This updated Guide is meant not only to

summarize the product of the dedicated and hardworking individuals who combat foreign bribery as

part of their work for the U.S. government, but also to help companies, practitioners, and the public—

many of whom nd themselves on the front lines of this ght—prevent corruption in the rst instance.

We hope that the Guide will continue to be an invaluable resource in those eorts.

Brian A. Benczkowski

Assistant Attorney General

Criminal Division

Department of Justice

Stephanie Avakian & Steven Peikin

Co-Directors

Division of Enforcement

Securities and Exchange Commission

July 2020

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

CONTENTS

Chapter 1: INTRODUCTION

The Costs of Corruption

Historical Background

National Landscape: Interagency Eorts

Department of Justice

Securities and Exchange Commission

Law Enforcement Partners

Departments of Commerce and State

International Landscape: Global Anti-Corruption Eorts

OECD Working Group on Bribery and the Anti-Bribery Convention

U.N. Convention Against Corruption

Other Anti-Corruption Conventions

Chapter 2: THE FCPA: ANTI-BRIBERY PROVISIONS

Who Is Covered by the Anti-Bribery Provisions?

Issuers—15 U.S.C. § 78dd-1

Domestic Concerns—15 U.S.C. § 78dd-2

Territorial Jurisdiction—15 U.S.C. § 78dd-3

What Jurisdictional Conduct Triggers the Anti-Bribery Provisions?

What Is Covered?

What Does “Corruptly” Mean?

What Does “Willfully” Mean and When Does It Apply?

What Does “Anything of Value” Mean?

Cash

Gifts, Travel, Entertainment, and Other Things of Value

Charitable Contributions

Who Is a Foreign Ocial?

Department, Agency, or Instrumentality of a Foreign Government

Public International Organizations

How Are Payments to Third Parties Treated?

What Armative Defenses Are Available?

The Local Law Defense

Reasonable and Bona Fide Expenditures

What Are Facilitating or Expediting Payments?

Does the FCPA Apply to Cases of Extortion or Duress?

Principles of Corporate Liability for Anti-Bribery Violations

Parent-Subsidiary Liability

Successor Liability

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A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Additional Principles of Criminal Liability for Anti-Bribery Violations: Aiding and Abetting and Conspiracy

Additional Principles of Civil Liability for Anti-Bribery Violations: Aiding and Abetting and Causing

What Is the Applicable Statute of Limitations?

Statute of Limitations in Criminal Cases

Statute of Limitations in Civil Actions

Chapter 3: THE FCPA: ACCOUNTING PROVISIONS

What Is Covered by the Accounting Provisions?

Books and Records Provision

Internal Accounting Controls Provision

Potential Reporting and Anti-Fraud Violations

What Are Management’s Other Obligations?

Who Is Covered by the Accounting Provisions?

Civil Liability for Issuers, Subsidiaries, and Aliates

Civil Liability for Individuals and Other Entities

Criminal Liability for Accounting Violations

Conspiracy and Aiding and Abetting Liability

Auditor Obligations

Chapter 4: OTHER RELATED U.S. LAWS

Travel Act

Money Laundering

Mail and Wire Fraud

Certication and Reporting Violations

Tax Violations

Chapter 5: GUIDING PRINCIPLES OF ENFORCEMENT

What Does DOJ Consider When Deciding Whether to Open an Investigation or Bring Charges?

DOJ Principles of Federal Prosecution

DOJ Principles of Federal Prosecution of Business Organizations

DOJ FCPA Corporate Enforcement Policy

What Does SEC Sta Consider When Deciding Whether to Open an Investigation or Recommend Charges?

Self-Reporting, Cooperation, and Remedial Eorts

Criminal Cases

Civil Cases

Corporate Compliance Program

Hallmarks of Eective Compliance Programs

Other Guidance on Compliance and International Best Practices

Chapter 6: FCPA PENALTIES, SANCTIONS, AND REMEDIES

What Are the Potential Consequences for Violations of the FCPA?

Criminal Penalties

U.S. Sentencing Guidelines

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A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Civil Penalties

Forfeiture and Disgorgement

Coordinated Resolutions and Avoiding “Piling On”

Collateral Consequences

Debarment

Cross-Debarment by Multilateral Development Banks

Loss of Export Privileges

When Is a Compliance Monitor or Independent Consultant Appropriate?

Chapter 7: RESOLUTIONS

What Are the Dierent Types of Resolutions with DOJ?

Criminal Complaints, Informations, and Indictments

Plea Agreements

Deferred Prosecution Agreements

Non-Prosecution Agreements

Declinations

What Are the Dierent Types of Resolutions with SEC?

Civil Injunctive Actions and Remedies

Civil Administrative Actions and Remedies

Deferred Prosecution Agreements

Non-Prosecution Agreements

Termination Letters and Declinations

Chapter 8: WHISTLEBLOWER PROVISIONS AND PROTECTIONS

Chapter 9: DOJ OPINION PROCEDURE

Chapter 10: CONCLUSION

APPENDIX: THE FOREIGN CORRUPT PRACTICES ACT

APPENDIX: ENDNOTES

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A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

The payment of bribes to inuence the acts or decisions of foreign ocials,

foreign political parties or candidates for foreign political oce is unethical. It

is counter to the moral expectations and values of the American Public. But

not only is it unethical, it is bad business as well. It erodes public condence

in the integrity of the free market system. It short-circuits the marketplace

by directing business to those companies too inecient to compete in terms

of price, quality or service, or too lazy to engage in honest salesmanship, or

too intent upon unloading marginal products. In short, it rewards corruption

instead of eciency and puts pressure on ethical enterprises to lower their

standards or risk losing business. Bribery of foreign ocials by some American

companies casts a shadow on all U.S. companies.

- United States House of Representatives, 1977

Corporate bribery is bad business. In our free market system it is basic that the

sale of products should take place on the basis of price, quality, and service.

Corporate bribery is fundamentally destructive of this basic tenet. Corporate

bribery of foreign ocials takes place primarily to assist corporations in gaining

business. Thus foreign corporate bribery aects the very stability of overseas

business. Foreign corporate bribes also aect our domestic competitive climate

when domestic rms engage in such practices as a substitute for healthy

competition for foreign business.

- United States Senate, 1977

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

INTRODUCTION

Congress enacted the U.S. Foreign Corrupt Practices Act (FCPA or the Act) in 1977 in response

to revelations of widespread bribery of foreign ocials by U.S. companies. The Act was

intended to halt those corrupt practices, create a level playing eld for honest businesses,

and restore public condence in the integrity of the marketplace.

The FCPA contains both anti-bribery and

accounting provisions. The anti-bribery provisions

prohibit U.S. persons and businesses (domestic

concerns), U.S. and foreign public companies listed

on stock exchanges in the United States or that are

required to le periodic reports with the Securities

and Exchange Commission (issuers), and certain

foreign persons and businesses acting while in the

territory of the United States (territorial jurisdiction)

from making corrupt payments to foreign ocials to

obtain or retain business. The accounting provisions

require issuers to make and keep accurate books

and records and to devise and maintain an

adequate system of internal accounting controls.

The accounting provisions also prohibit individuals

and businesses from knowingly falsifying books and

records or knowingly circumventing or failing to

implement a system of internal controls.

The Department of Justice (DOJ) and the

Securities and Exchange Commission (SEC) share

FCPA enforcement authority and are committed to

ghting foreign bribery through robust enforcement.

An important component of this eort is education,

and this resource guide, prepared by DOJ and SEC

sta, aims to provide businesses and individuals

with information to help them abide by the law,

detect and prevent FCPA violations, and implement

eective compliance programs.

The Costs of Corruption

Corruption is a global problem. In the four

decades since Congress enacted the FCPA, the

extent of corporate bribery has become clearer and

its ramications in a transnational economy starker.

Corruption impedes economic growth by diverting

public resources from important priorities such as

Chapter 1

Introduction

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

health, education, and infrastructure. It undermines

democratic values and public accountability and

weakens the rule of law.

And it threatens stability

and security by facilitating criminal activity within

and across borders, such as the illegal tracking

of people, weapons, and drugs.

International

corruption also undercuts good governance and

impedes U.S. eorts to promote freedom and

democracy, end poverty, and combat crime and

terrorism across the globe.

Corruption is also bad for business. Corruption

is anti-competitive, leading to distorted prices and

disadvantaging honest businesses that do not

pay bribes. It increases the cost of doing business

globally and inates the cost of government

contracts in developing countries.

Corruption also

introduces signicant uncertainty into business

transactions: Contracts secured through bribery

may be legally unenforceable, and paying bribes on

one contract often results in corrupt ocials making

ever-increasing demands.

Bribery has destructive

eects within a business as well, undermining

employee condence in a company’s management

and fostering a permissive atmosphere for other

kinds of corporate misconduct, such as employee

self-dealing, embezzlement,

nancial fraud,

and

anti-competitive behavior.

Bribery thus raises the

risks of doing business, putting a company’s bottom

line and reputation in jeopardy. Companies that pay

bribes to win business ultimately undermine their

own long-term interests and the best interests of

their investors.

Historical Background

Congress enacted the FCPA in 1977 after

revelations of widespread global corruption in

the wake of the Watergate political scandal. SEC

discovered that more than 400 U.S. companies

had paid hundreds of millions of dollars in bribes

to foreign government ocials to secure business

overseas.

SEC reported that companies were

using secret “slush funds” to make illegal campaign

contributions in the United States and corrupt

payments to foreign ocials abroad and were

falsifying their corporate nancial records to conceal

the payments.

Congress viewed passage of the FCPA as

critical to stopping corporate bribery, which had

tarnished the image of U.S. businesses, impaired

public condence in the nancial integrity of U.S.

companies, and hampered the ecient functioning

of the markets.

No problem does more to alienate

citizens from their political leaders and

institutions, and to undermine political

stability and economic development,

than endemic corruption among the

government, political party leaders,

judges, and bureaucrats.

- USAID Anti-Corruption Strategy

As Congress recognized when it passed the

FCPA, corruption imposes enormous costs both at

home and abroad, leading to market ineciencies

and instability, sub-standard products, and an unfair

playing eld for honest businesses.

By enacting

a strong foreign bribery statute, Congress sought

to minimize these destructive eects and help

companies resist corrupt demands, while addressing

the destructive foreign policy ramications of

transnational bribery.

The Act also prohibited o-

the-books accounting through provisions designed

to “strengthen the accuracy of the corporate books

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

and records and the reliability of the audit process

which constitute the foundations of our system of

corporate disclosure.”

In 1988, Congress amended the FCPA to add

two armative defenses: (1) the local law defense;

and (2) the reasonable and bona de promotional

expense defense.

Congress also requested that

the President negotiate an international treaty

with members of the Organisation for Economic

Co-operation and Development (OECD) to prohibit

bribery in international business transactions by

many of the United States’ major trading partners.

Subsequent negotiations at the OECD culminated

in the Convention on Combating Bribery of Foreign

Ocials in International Business Transactions

(Anti-Bribery Convention), which, among other

things, required parties to make it a crime to bribe

foreign ocials.

In 1998, the FCPA was amended to conform to

the requirements of the Anti-Bribery Convention.

These amendments expanded the FCPA’s scope to:

(1) include payments made to secure “any improper

advantage”; (2) reach certain foreign persons who

commit an act in furtherance of a foreign bribe while

in the United States; (3) cover public international

organizations in the denition of “foreign ocial”;

(4) add an alternative basis for jurisdiction based

on nationality; and (5) apply criminal penalties to

foreign nationals employed by or acting as agents

of U.S. companies.

The Anti-Bribery Convention

came into force on February 15, 1999, with the

United States as a founding party.

National Landscape: Interagency

Eorts

DOJ and SEC share enforcement authority for

the FCPA’s anti-bribery and accounting provisions.

They also work with many other federal agencies

and law enforcement partners to investigate and

prosecute FCPA violations, reduce bribery demands

through good governance programs and other

measures, and promote a fair playing eld for U.S.

companies doing business abroad.

Department of Justice

DOJ has criminal FCPA enforcement

authority over “issuers” (i.e., public companies)

and their ocers, directors, employees, agents,

or stockholders acting on the issuer’s behalf.

DOJ also has both criminal and civil enforcement

responsibility for the FCPA’s anti-bribery provisions

over “domestic concerns”—which include (a) U.S.

citizens, nationals, and residents and (b) U.S.

businesses and their ocers, directors, employees,

agents, or stockholders acting on the domestic

concern’s behalf—and certain foreign persons

and businesses that act in furtherance of an FCPA

violation while in the territory of the United States.

Within DOJ, the Fraud Section of the Criminal

Division has primary responsibility for all FCPA

matters.

The FCPA Unit within the Fraud Section

handles all FCPA matters for DOJ, and regularly

works jointly with U.S. Attorneys’ Oces around

the country.

DOJ maintains a website dedicated to the

FCPA and its enforcement at http://www.justice.

gov/criminal/fraud/fcpa/. The website provides

translations of the FCPA in numerous languages,

relevant legislative history, and selected documents

from FCPA-related prosecutions and resolutions

since 1977, including charging documents, plea

agreements, deferred prosecution agreements,

non-prosecution agreements, press releases, and

other relevant pleadings and court decisions. The

website also provides copies of opinions issued in

response to requests by companies and individuals

under DOJ’s FCPA opinion procedure.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

The procedures for submitting a request for an

opinion can be found at http://www.justice.gov/

criminal/fraud/fcpa/docs/frgncrpt.pdf and are

discussed further in Chapter 9. Individuals and

companies wishing to disclose information about

potential FCPA violations are encouraged to

contact the FCPA Unit at the telephone number or

email address below.

DOJ Contact Information

FCPA Unit Chief, Fraud Section,

Criminal Division

Bond Building

1400 New York Ave, N.W.

Washington, DC 20005

Telephone: (202) 514-2000

Facsimile: (202) 514-7021

Email: [email protected]

Securities and Exchange Commission

SEC is responsible for civil enforcement of

the FCPA over issuers and their ocers, directors,

employees, agents, or stockholders acting on the

issuer’s behalf. SEC’s Division of Enforcement has

responsibility for investigating and prosecuting

FCPA violations. In 2010, SEC’s Enforcement

Division created a specialized FCPA Unit, with

attorneys in Washington, D.C. and in regional

oces around the country, to focus specically on

FCPA enforcement.

The Unit investigates potential FCPA

violations; facilitates coordination with DOJ’s

FCPA program and with other federal and

international law enforcement partners; uses

its expert knowledge of the law to promote

consistent enforcement of the FCPA; analyzes tips,

complaints, and referrals regarding allegations

of foreign bribery; and conducts public outreach

to raise awareness of anti-corruption eorts and

good corporate governance programs.

The FCPA Unit maintains a “Spotlight

on FCPA” section on SEC’s website at

http://www.sec.gov/spotlight/fcpa.shtml. The

website, which is updated regularly, provides

general information about the Act and links

to all SEC enforcement actions involving the

FCPA, including both federal court actions and

administrative proceedings, and contains other

useful information.

Individuals and companies with information

about possible FCPA violations by issuers may

report them to the Enforcement Division via SEC’s

online Tips, Complaints and Referral system,

https://www.sec.gov/tcr. They may also submit

information to SEC’s Oce of the Whistleblower

through the same online system or by contacting

the Oce of the Whistleblower at (202) 551-4790.

Additionally, investors with questions about the

FCPA can call the Oce of Investor Education and

Advocacy at (800) SEC-0330. For more information

about SEC’s Whistleblower Program, under which

certain eligible whistleblowers may be entitled to

a monetary award if their information leads to

certain SEC actions, see Chapter 8.

SEC Contact Information

FCPA Unit Chief, Division of

Enforcement, U.S. Securities

and Exchange Commission

100 F Street, N.E.

Washington, DC 20549

Online Tips, Complaints, and Referrals

website: https://www.sec.gov/tcr

Oce of Investor Education and

Advocacy: (800) SEC-0330

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Law Enforcement Partners

DOJ’s FCPA Unit regularly works with the

Federal Bureau of Investigation (FBI) to investigate

potential FCPA violations. The FBI’s International

Corruption Unit has primary responsibility for

international corruption and fraud investigations

and coordinates the FBI’s national FCPA

enforcement program. The FBI also has dedicated

FCPA squads of FBI special agents that are

responsible for investigating many, and providing

support for all, of the FBI’s FCPA investigations. In

addition, Homeland Security Investigations, the

Internal Revenue Service – Criminal Investigations,

and the Postal Inspection Service regularly

investigate potential FCPA violations. A number

of other agencies are also involved in the ght

against international corruption, including the

Board of Governors of the Federal Reserve System,

the Commodity Futures Trading Commission, and

the Department of Treasury’s Oce of Foreign

Assets Control and Financial Crimes Enforcement

Network.

Departments of Commerce and State

Besides enforcement eorts by DOJ and

SEC, the U.S. government is also working to

address corruption abroad and level the playing

eld for U.S. businesses through the eorts of

the Departments of Commerce and State. Both

agencies advance anti-corruption and good

governance initiatives globally and regularly assist

U.S. companies doing business overseas in several

important ways. Both agencies encourage U.S.

businesses to seek the assistance of U.S embassies

when they are confronted with bribe solicitations

or other corruption-related issues overseas.

The Department of Commerce oers a

number of important resources for businesses,

including the International Trade Administration’s

United States and Foreign Commercial Service

(Commercial Service). The Commercial Service

has export and industry specialists located in over

100 U.S. cities and 70 countries who are available

to provide counseling and other assistance to U.S.

businesses, particularly small and medium-sized

companies, regarding exporting their products

and services. The Commercial Service maintains a

website with online resources to help companies

perform due diligence on markets and partners,

at: https://www.trade.gov/perform-due-diligence.

For example, Country Commercial Guides provide

market conditions, opportunities, regulations,

and business customs for more than 70 major

markets, prepared by ITA trade professionals at

U.S. embassies worldwide.

Commercial Service

specialists can also help a U.S. company conduct

background checks when choosing business

partners or agents overseas. The International

Company Prole Program, for instance, can be part

of a U.S. company’s evaluation of potential overseas

business partners.

U.S. companies may contact

the Commercial Service through its website, https://

www.trade.gov/let-our-experts-help-0 or directly at

its domestic and foreign oces.

Additionally, the Department of Commerce’s

Oce of the General Counsel maintains a website,

https://ogc.commerce.gov/collection/oce-chief-

counsel-international-commerce that contains

anti-corruption resources and a list of international

conventions and initiatives. The Oce of Trade

Agreements Negotiations and Compliance in the

Department of Commerce’s International Trade

Administration also hosts a website with anti-

bribery resources, https://tcc.export.gov/Bribery/

index.asp. This website contains a link to an

online form through which U.S. companies can

report allegations of foreign bribery by foreign

competitors in international business transactions.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

More information on resolving trade barriers can

be found at: https://www.trade.gov/resolve-foreign-

trade-barrier.

The Departments of Commerce and State also

provide advocacy support, when determined to be

in the national interest, for U.S. companies bidding

for foreign government contracts. The Department

of Commerce’s Advocacy Center, for example,

supports U.S. businesses competing against foreign

companies for international contracts, such as by

arranging for the delivery of an advocacy message

by U.S. government ocials or assisting with

unanticipated problems such as suspected bribery

by a competitor.

The Department of State’s Bureau of Economic

and Business Aairs (specically, its Oce of

Commercial and Business Aairs) similarly assists

U.S. rms doing business overseas by providing

advocacy on behalf of U.S. businesses and

identifying risk areas for U.S. businesses; more

information is available on its website, https://www.

state.gov/bureaus-offices/under-secretary-for-

economic-growth-energy-and-the-environment/

bureau-of-economic-and-business-affairs/office-

of-commercial-and-business-aairs/. Also, the

Department of State’s economic ocers serving

overseas provide commercial advocacy and

support for U.S. companies at the many overseas

diplomatic posts where the Commercial Service is

not represented.

The Department of State promotes U.S.

government interests in addressing corruption

internationally through country-to-country diplomatic

engagement; development of and follow-through on

international commitments relating to corruption;

promotion of high-level political engagement (e.g.,

the G20 Anticorruption Action Plan); public outreach

in foreign countries; and support for building the

capacity of foreign partners to combat corruption.

In scal year 2019, the U.S. government provided

more than $112 million for anti-corruption and

related good governance assistance abroad.

The Department of State’s Bureau of

International Narcotics and Law Enforcement

Aairs (INL) manages U.S. participation in many

multilateral anti-corruption political and legal

initiatives at the global and regional level. INL also

funds and coordinates signicant eorts to assist

countries with combating corruption through legal

reform, training, and other capacity-building eorts.

Inquiries about the U.S. government’s general anti-

corruption eorts and implementation of global

and regional anti-corruption initiatives may be

directed to INL on its website, https://www.state.

gov/combating-corruption-and-promoting-good-

governance/, or by email to: anti-corruption@state.

gov. In addition, the U.S. Agency for International

Development (USAID) has developed several

anti-corruption programs and publications,

information about which can be found at https://

www.usaid.gov/what-we-do/democracy-human-

rights-and-governance/promoting-accountability-

transparency.

International Landscape: Global

Anti-Corruption Eorts

There has been a growing international

consensus that corruption must be combated,

and the United States and other countries are

parties to a number of international anti-corruption

conventions. Under these conventions, countries

that are parties undertake commitments to adopt

a range of preventive and criminal law measures to

combat corruption. The conventions incorporate

review processes that allow the United States to

monitor other countries to ensure that they are

meeting their international obligations. Likewise,

these processes in turn permit other parties to

monitor the United States’ anti-corruption laws

and enforcement to ensure that such enforcement

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and legal frameworks are consistent with the

United States’ treaty obligations.

U.S. ocials

regularly address the subject of corruption with

our foreign counterparts to raise awareness of

the importance of ghting corruption and urge

stronger enforcement of anti-corruption laws and

policies. As a result of the recognition by other

countries of the need to combat corruption, as

well as the signicant eorts by organizations such

as the OECD Working Group on Bribery, a number

of countries have implemented foreign bribery

laws and signicantly increased their enforcement

eorts. For example, in December 2016, France

enacted its Sapin II law, which signicantly

strengthened its existing foreign bribery legislation

and enforcement regime.

OECD Working Group on Bribery

and the Anti-Bribery Convention

The OECD was founded in 1961 to stimulate

economic progress and world trade. As noted,

the Anti-Bribery Convention requires its parties to

criminalize the bribery of foreign public ocials

in international business transactions.

As of

June 30, 2020, there were 44 parties to the Anti-

Bribery Convention. All of these parties are also

members of the OECD Working Group on Bribery

(Working Group).

The Working Group is responsible for

monitoring the implementation of the Anti-Bribery

Convention, the 2009 Recommendation of the

Council for Further Combating Bribery of

Foreign Public Ocials in International Business

Transactions, and related instruments. Its

members meet quarterly to review and monitor

implementation of the Anti-Bribery Convention

by member states around the world. Each party

undergoes periodic peer review.

This peer-

review monitoring system is conducted in four

phases. The Phase 1 review includes an in-depth

assessment of each country’s domestic laws

implementing the Convention. The Phase 2 review

examines the eectiveness of each country’s

laws and anti-bribery eorts. The nal phases are

permanent cycles of peer review (the rst cycle of

which is referred to as the Phase 3 review and the

next is the Phase 4 review) that evaluate a country’s

enforcement actions and results, as well as the

country’s eorts to address weaknesses identied

during the prior review.

All of the monitoring

reports for the parties to the Convention can be

found on the OECD website and can be a useful

resource about the foreign bribery laws of the OECD

Working Group member countries.

The reports and appendices for all of the

phases of reviews for the United States can

be found on DOJ’s and SEC’s websites.

In its

Phase 3 review of the United States, which was

completed in October 2010, the Working Group

commended U.S. eorts to ght transnational

bribery and highlighted a number of best practices

developed by the United States. The report also

noted areas where the United States’ anti-bribery

eorts could be improved, including consolidating

publicly available information on the application of

the FCPA and enhancing awareness among small

and medium-sized companies about the prevention

and detection of foreign bribery. Initial publication

of this guide was, in part, a response to these

Phase 3 recommendations and is intended to help

businesses and individuals better understand the

FCPA.

U.N. Convention Against Corruption

The United States is a state party to the United

Nations Convention Against Corruption (UNCAC),

which was adopted by the U.N. General Assembly

on October 31, 2003, and entered into force on

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December 14, 2005.

The United States ratied the

UNCAC on October 30, 2006. The UNCAC requires

parties to criminalize a wide range of corrupt acts,

including domestic and foreign bribery and related

oenses such as money laundering and obstruction

of justice. The UNCAC also establishes guidelines

for the creation of anti-corruption bodies, codes

of conduct for public ocials, transparent and

objective systems of procurement, and enhanced

accounting and auditing standards for the private

sector. A peer review mechanism assesses the

implementation of the UNCAC by parties to the

Convention, with a focus in the rst round on

criminalization and law enforcement as well as

international legal cooperation.

The United

States has been reviewed under the Pilot Review

Programme, the report of which is available on

DOJ’s website. As of June 30, 2020, 187 countries

were parties to the UNCAC.

Other Anti-Corruption Conventions

The Inter-American Convention Against

Corruption (IACAC) was the rst international

anti-corruption convention, adopted in March

1996 in Caracas, Venezuela, by members of the

Organization of American States.

The IACAC requires parties (of which the

United States is one) to criminalize both foreign and

domestic bribery. A body known as the Mechanism

for Follow-Up on the Implementation of the Inter-

American Convention Against Corruption (MESICIC)

monitors parties’ compliance with the IACAC. As of

June 30, 2020, 33 countries were parties to MESICIC.

The Council of Europe established the Group

of States Against Corruption (GRECO) in 1999 to

monitor countries’ compliance with the Council of

Europe’s anti-corruption standards, including the

Council of Europe’s Criminal Law Convention on

Corruption.

These standards include prohibitions

on the solicitation and receipt of bribes, as well

as foreign bribery. As of June 30, 2020, GRECO

member states, which need not be members of the

Council of Europe, include 49 European countries

and the United States.

The United States has been reviewed under

both MESICIC and GRECO, and the reports

generated by those reviews are available on DOJ’s

website.

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THE FCPA:

ANTI-BRIBERY PROVISIONS

The FCPA addresses the problem of international corruption in two ways: (1) the anti-

bribery provisions, which are discussed below, prohibit individuals and businesses from

bribing foreign government ocials in order to obtain or retain business; and (2) the

accounting provisions, which are discussed in Chapter 3, impose certain record keeping

and internal control requirements on issuers, and prohibit individuals and companies from

knowingly falsifying an issuer’s books and records or circumventing or failing to implement

an issuer’s system of internal controls. Violations of the FCPA can lead to civil and criminal

penalties, sanctions, and remedies, including nes, disgorgement, and/or imprisonment.

In general, the FCPA prohibits oering to

pay, paying, promising to pay, or authorizing the

payment of money or anything of value to a foreign

ocial in order to inuence any act or decision of

the foreign ocial in his or her ocial capacity or

to secure any other improper advantage in order to

obtain or retain business.

Who Is Covered by the Anti-Bribery

Provisions?

The FCPA’s anti-bribery provisions apply

broadly to three categories of persons and entities:

(1) “issuers” and their ocers, directors, employees,

agents, and stockholders acting on behalf of an

issuer; (2) “domestic concerns” and their ocers,

directors, employees, agents, and stockholders

acting on behalf of a domestic concern; and (3)

certain persons and entities, other than issuers and

domestic concerns, acting while in the territory of

the United States.

Issuers—15 U.S.C. § 78dd-1

Section 30A of the Securities Exchange Act of

1934 (the Exchange Act), which can be found at

15 U.S.C. § 78dd-1, contains the anti-bribery

provision governing issuers.

A company is an

“issuer” under the FCPA if it has a class of securities

registered under Section 12 of the Exchange Act

or is required to le periodic and other reports with

SEC under Section 15(d) of the Exchange Act.

practice, this means that any company with a class

of securities listed on a national securities exchange

in the United States, or any company with a class

of securities quoted in the over-the-counter market

in the United States and required to le periodic

reports with SEC, is an issuer. A company thus need

Chapter 2

The FCPA:

Anti-Bribery Provisions

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not be a U.S. company to be an issuer. Foreign

companies with American Depository Receipts that

are listed on a U.S. exchange are also issuers.

As of December 31, 2015, 923 foreign companies

were registered with SEC.

Ocers, directors,

employees, agents, or stockholders acting on behalf

of an issuer (whether U.S. or foreign nationals) also

can be prosecuted under the FCPA.

How Can I Tell If My

Company Is an “Issuer”?

• It is listed on a national securities exchange

in the United States (either stock or American

Depository Receipts); or

• Its stock trades in the over-the-counter

market in the United States and the company is

required to le SEC reports.

• To see if your company les SEC reports, go to

SEC’s website at http://www.sec.gov/edgar/

searchedgar/webusers.htm.

Domestic Concerns—15 U.S.C. § 78dd-2

The FCPA also applies to “domestic concerns.”

A domestic concern is any individual who is a

citizen, national, or resident of the United States,

or any corporation, partnership, association, joint-

stock company, business trust, unincorporated

organization, or sole proprietorship, other than

an issuer, that is organized under the laws of the

United States or its states, territories, possessions,

or commonwealths or that has its principal place of

business in the United States.

Ocers, directors,

employees, agents, or stockholders acting on behalf

of a domestic concern, including foreign nationals

or companies, are also covered.

Territorial Jurisdiction—15 U.S.C. § 78dd-3

The FCPA also applies to certain foreign

nationals or entities that are not issuers or domestic

concerns.

Since 1998, the FCPA’s anti-bribery

provisions have applied to foreign persons and

foreign non-issuer entities that, either directly or

through an agent, engage in any act in furtherance

of a corrupt payment (or an oer, promise, or

authorization to pay) while in the territory of the

United States.

Also, ocers, directors, employees,

agents, or stockholders acting on behalf of such

persons or entities may be subject to the FCPA’s

anti-bribery provisions.

What Jurisdictional Conduct

Triggers the Anti-Bribery

Provisions?

The FCPA’s anti-bribery provisions can apply

to conduct both inside and outside the United

States. Issuers and domestic concerns—as well

as their ocers, directors, employees, agents, or

stockholders—may be prosecuted for using the U.S.

mails or any means or instrumentality of interstate

commerce in furtherance of a corrupt payment

to a foreign ocial. The Act denes “interstate

commerce” as “trade, commerce, transportation,

or communication among the several States, or

between any foreign country and any State or

between any State and any place or ship outside

thereof ….”

The term also includes the intrastate

use of any interstate means of communication, or

any other interstate instrumentality.

Thus, placing

a telephone call or sending an e-mail, text message,

or fax from, to, or through the United States involves

interstate commerce—as does sending a wire

transfer from or to a U.S. bank or otherwise using

the U.S. banking system, or traveling across state

borders or internationally to or from the United

States.

Those who are not issuers or domestic

concerns may be prosecuted under the FCPA if

they directly, or through an agent, engage in any

act in furtherance of a corrupt payment while in

the territory of the United States, regardless of

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

whether they utilize the U.S. mails or a means or

instrumentality of interstate commerce.

Thus, for

example, a foreign national who attends a meeting

in the United States that furthers a foreign bribery

scheme may be subject to prosecution.

In addition, under the “alternative jurisdiction”

provision of the FCPA enacted in 1998, U.S.

companies or persons may be subject to the anti-

bribery provisions even if they act outside the

United States.

The 1998 amendments to the FCPA

expanded the jurisdictional coverage of the Act by

establishing an alternative basis for jurisdiction, that

is, jurisdiction based on the nationality principle.

In particular, the 1998 amendments removed

the requirement that there be a use of interstate

commerce (e.g., wire, email, telephone call) for acts

in furtherance of a corrupt payment to a foreign

ocial by U.S. companies and persons occurring

wholly outside of the United States.

What Is Covered?

The FCPA applies only to payments, oers, or

promises made for the purpose of: (i) inuencing

any act or decision of a foreign ocial in his ocial

capacity, (ii) inducing a foreign ocial to do or omit

to do any act in violation of the lawful duty of such

ocial, (iii) securing any improper advantage; or (iv)

inducing a foreign ocial to use his inuence with

a foreign government or instrumentality thereof

to aect or inuence any act or decision of such

government or instrumentality.

In addition, the

payment, oer, or promise must be made in order

to assist “in obtaining or retaining business for or

with, or directing business to, any person.”

This

requirement is known as the “business purpose

test” and is broadly interpreted.

Not surprisingly, many enforcement actions

involve bribes to obtain or retain government

contracts.

The FCPA also prohibits bribes in

connection with conducting business or to gain a

business advantage.

For example, bribe payments

made to secure favorable tax treatment, to reduce

or eliminate customs duties, to obtain government

action to prevent competitors from entering a

market, or to circumvent a licensing or permit

requirement, can all satisfy the business purpose

test.

Hypothetical: FCPA Jurisdiction

Company A, a Delaware company with its principal place of business in New York, is a large energy company that

operates globally, including in a number of countries that have a high risk of corruption, such as Foreign Country. Company

A’s shares are listed on a national U.S. stock exchange. Company A enters into an agreement with a European company

(EuroCo) to submit a joint bid to the Oil Ministry to build a renery in Foreign Country. EuroCo is not an issuer.

Executives of Company A and EuroCo meet in New York to discuss how to win the bid and decide to hire a purported

third-party consultant (Intermediary) and have him use part of his “commission” to bribe high-ranking ocials within the

Oil Ministry. Intermediary meets with executives at Company A and EuroCo in New York to nalize the scheme. Eventually,

millions of dollars in bribes are funneled from the United States and Europe through Intermediary to high-ranking ocials

at the Oil Ministry, and Company A and EuroCo win the contract. A few years later, a front page article alleging that the

contract was procured through bribery appears in Foreign Country, and DOJ and SEC begin investigating whether the FCPA

was violated.

Based on these facts, which entities fall within the FCPA’s jurisdiction?

All of the entities easily fall within the FCPA’s jurisdiction. Company A is an “issuer” under the FCPA, and

Intermediary is an “agent” of Company A. EuroCo and Intermediary are also subject to the FCPA’s territorial

jurisdiction provision based on their conduct while in the United States.

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Examples of Actions Taken

to Obtain or Retain Business

• Winning a contract

• Inuencing the procurement process

• Circumventing the rules for importation of

products

• Gaining access to non-public bid tender

information

• Evading taxes or penalties

• Inuencing the adjudication of lawsuits or

enforcement actions

• Obtaining exceptions to regulations

• Avoiding contract termination

In 2004, the U.S. Court of Appeals for the

Fifth Circuit addressed the business purpose test

in United States v. Kay and held that bribes paid to

obtain favorable tax treatment—which reduced

a company’s customs duties and sales taxes on

imports—could constitute payments made to

“obtain or retain” business within the meaning of

the FCPA.

The court explained that in enacting the FCPA,

“Congress meant to prohibit a range of payments

wider than only those that directly inuence the

acquisition or retention of government contracts or

similar commercial or industrial arrangements.”

The Kay court found that “[t]he congressional

target was bribery paid to engender assistance in

improving the business opportunities of the payor

or his beneciary, irrespective of whether that

assistance be direct or indirect, and irrespective

of whether it be related to administering the law,

awarding, extending, or renewing a contract, or

executing or preserving an agreement.”

Accordingly, Kay held that payments to obtain

favorable tax treatment can, under appropriate

circumstances, violate the FCPA:

Avoiding or lowering taxes reduces operating costs

and thus increases prot margins, thereby freeing up

funds that the business is otherwise legally obligated

to expend. And this, in turn, enables it to take any

number of actions to the disadvantage of competitors.

Bribing foreign ocials to lower taxes and customs

duties certainly can provide an unfair advantage

over competitors and thereby be of assistance to the

payor in obtaining or retaining business.

* * *

[W]e hold that Congress intended for the FCPA to

apply broadly to payments intended to assist the

payor, either directly or indirectly, in obtaining or

retaining business for some person, and that bribes

paid to foreign tax ocials to secure illegally reduced

customs and tax liability constitute a type of payment

that can fall within this broad coverage.

Paying Bribes to Customs Ocials

In 2010, a global freight forwarding company

and six of its corporate customers in the oil and

gas industry resolved charges that they paid bribes

to customs ocials. The companies bribed customs

ocials in more than ten countries in exchange for

such benets as:

• evading customs duties on imported goods

• improperly expediting the importation of

goods and equipment

• extending drilling contracts and lowering

tax assessments

• obtaining false documentation related to

temporary import permits for drilling rigs

• enabling the release of drilling rigs and

other equipment from customs ocials

In many instances, the improper payments at

issue allowed the company to carry out its existing

business, which fell within the FCPA’s prohibition

on corrupt payments made for the purpose of

“retaining” business. The seven companies paid a

total of more than $235 million in civil and criminal

sanctions and disgorgement.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

In short, although the FCPA does not cover

every type of bribe paid around the world for every

purpose, it does apply broadly to bribes paid to

help obtain or retain business, which can include

payments made to secure a wide variety of unfair

business advantages.

What Does “Corruptly” Mean?

To violate the FCPA, an oer, promise, or

authorization of a payment, or a payment, to a

government ocial must be made “corruptly.”

Congress noted when adopting the FCPA, the word

“corruptly” means an intent or desire to wrongfully

inuence the recipient:

The word “corruptly” is used in order

to make clear that the oer, payment,

promise, or gift, must be intended

to induce the recipient to misuse his

ocial position; for example, wrongfully

to direct business to the payor or his

client, to obtain preferential legislation or

regulations, or to induce a foreign ocial

to fail to perform an ocial function.

Where corrupt intent is present, the FCPA

prohibits paying, oering, or promising to pay money

or anything of value (or authorizing the payment,

oer, or promise).

By focusing on intent, the FCPA

does not require that a corrupt act succeed in its

purpose.

Nor must the foreign ocial actually

solicit, accept, or receive the corrupt payment for

the bribe payor to be liable.

For example, in one

case, a New York-based commercial real estate

broker promised a middleman that he would pay a

$2.5 million dollar bribe—and in fact paid $500,000

to the middleman as an upfront payment—to a

government ocial at the sovereign wealth fund

of a Middle Eastern country in order to induce the

sovereign wealth fund to buy an $800 million dollar

oce building complex owned by the broker’s client.

However, unbeknownst to the real estate broker,

the middleman did not have any relationship with

the foreign ocial, and simply kept the $500,000

payment. Even though there was no foreign ocial

actually receiving the bribe, the defendant was

convicted of violating the FCPA.

Also, as long as the oer, promise,

authorization, or payment is made corruptly, the

actor need not know the identity of the recipient;

the attempt is sucient.

Thus, an executive who

authorizes others to pay “whoever you need to”

in a foreign government to obtain a contract has

violated the FCPA—even if no bribe is ultimately

oered or paid.

What Does “Willfully” Mean and

When Does It Apply?

In order for an individual defendant to be

criminally liable under the FCPA, he or she must

act “willfully.”

Proof of willfulness is not required

to establish corporate criminal or civil liability,

though proof of corrupt intent is.

The term “willfully” is not dened in the FCPA,

but it has generally been construed by courts

to connote an act committed voluntarily and

purposefully, and with a bad purpose, i.e., with

“knowledge that [a defendant] was doing a ‘bad’ act

under the general rules of law.”

As the Supreme

Court explained in Bryan v. United States, “[a]s a

general matter, when used in the criminal context, a

‘willful’ act is one undertaken with a ‘bad purpose.’ In

other words, in order to establish a ‘willful’ violation

of a statute, ‘the Government must prove that the

defendant acted with knowledge that his conduct

was unlawful.’”

Notably, as both the Second Circuit and Fifth

Circuit Courts of Appeals have found, the FCPA

does not require the government to prove that a

defendant was specically aware of the FCPA or

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knew that his conduct violated the FCPA.

To be

guilty, a defendant must act with a bad purpose, i.e.,

know generally that his conduct is unlawful.

What Does “Anything of Value”

Mean?

In enacting the FCPA, Congress recognized

that bribes can come in many shapes and sizes—a

broad range of unfair benets

—and so the statute

prohibits the corrupt “oer, payment, promise to

pay, or authorization of the payment of any money,

or oer, gift promise to give, or authorization of the

giving of anything of value to” a foreign ocial.

An improper benet can take many forms.

While cases often involve payments of cash

(sometimes in the guise of “consulting fees” or

“commissions” given through intermediaries),

others have involved travel expenses and expensive

gifts. Like the domestic bribery statute, the FCPA

does not contain a minimum threshold amount for

corrupt gifts or payments.

Indeed, what might be

considered a modest payment in the United States

could be a larger and much more signicant amount

in a foreign country.

Regardless of size, for a gift or other payment

to violate the statute, the payor must have corrupt

intent—that is, the intent to improperly inuence the

government ocial. The corrupt intent requirement

protects companies that engage in the ordinary

and legitimate promotion of their businesses

while targeting conduct that seeks to improperly

induce ocials into misusing their positions. Thus,

it is dicult to envision any scenario in which the

provision of cups of coee, taxi fare, or company

promotional items of nominal value would ever

evidence corrupt intent, and neither DOJ nor SEC

has ever pursued an investigation on the basis of

such conduct. Moreover, as in all areas of federal

law enforcement, DOJ and SEC exercise discretion

in deciding which cases promote law enforcement

priorities and justify investigation. Certain patterns,

however, have emerged: DOJ’s and SEC’s anti-

bribery enforcement actions have focused on small

payments and gifts only when they comprise part of

a systemic or long-standing course of conduct that

evidences a scheme to corruptly pay foreign ocials

to obtain or retain business. These assessments are

necessarily fact specic.

Cash

The most obvious form of corrupt payment is

large amounts of cash. In some instances, companies

have maintained cash funds specically earmarked

for use as bribes. One Brazilian company that

was a stockholder of a U.S. issuer developed and

operated a secret nancial structure that operated

to make and account for corrupt payments to

foreign ocials. Among other methods the

company used, it would transfer funds to Brazilian

moneychangers (doleiros) who would withdraw the

amounts in cash and deliver them to the ocials.

In another instance, a four-company joint venture

used its agent to pay $5 million in bribes to a

Nigerian political party.

The payments were

made to the agent in suitcases of cash (typically in

$1 million installments), and, in one instance,

the trunk of a car when the cash did not t into a

suitcase.

Gifts, Travel, Entertainment, and Other

Things of Value

A small gift or token of esteem or gratitude is

often an appropriate way for business people to

display respect for each other. Some hallmarks of

appropriate gift-giving are when the gift is given

openly and transparently, properly recorded in the

giver’s books and records, provided only to reect

esteem or gratitude, and permitted under local law.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Items of nominal value, such as cab fare,

reasonable meals and entertainment expenses,

or company promotional items, are unlikely to

improperly inuence an ocial, and, as a result,

are not, without more, items that have resulted in

enforcement action by DOJ or SEC. The larger or

more extravagant the gift, however, the more likely

it was given with an improper purpose. DOJ and

SEC enforcement cases thus have involved single

instances of large, extravagant gift-giving (such as

sports cars, fur coats, and other luxury items) as

well as widespread gifts of smaller items as part of a

pattern of bribes.

For example, in a recent case, a

publicly traded energy company in the Netherlands

resolved with DOJ over bribes it paid that included

extravagant gifts such as paying for foreign ocials

to travel to sporting events and providing them with

“spending money,” paying for school tuition for the

children of foreign ocials, and shipping luxury

vehicles to foreign ocials.

In another case brought by DOJ and SEC, a

defendant gave a government ocial a country

club membership fee and a generator, as well as

household maintenance expenses, payment of

cell phone bills, an automobile worth $20,000, and

limousine services. The same ocial also received

$250,000 through a third-party agent.

In addition, a number of FCPA enforcement

actions have involved the corrupt payment of

travel and entertainment expenses. Both DOJ

and SEC have brought cases where these types of

expenditures occurred in conjunction with other

conduct reecting systemic bribery or other clear

indicia of corrupt intent.

A case involving a Sweden-based

telecommunications company “issuer” illustrates

the types of improper travel and entertainment

expenses that may violate the FCPA. Beginning in

the 1990s and continuing until at least 2013, the

company paid millions of dollars to various third

parties, a portion of which was used to pay for

gifts, travel, and entertainment, including overseas

trips, for Chinese government ocials in order to

win business with state-owned telecommunications

companies. Although a portion of the trips were

purportedly for the individuals to participate in

training at the company’s facilities, in reality, no

training occurred on many of these trips and the

company had no facilities at those locations. Such

trips included, among others, a luxury cruise through

the Caribbean and trips to Las Vegas and London.

The company also mischaracterized payments for

these trips in its internal books and records.

Likewise, a New Jersey-based telecommunic-

ations company spent millions of dollars on

approximately 315 trips for Chinese government

ocials, ostensibly to inspect factories and train

the ocials in using the company’s equipment.

reality, during many of these trips, the ocials spent

little or no time visiting the company’s facilities,

but instead visited tourist destinations such as

Hawaii, Las Vegas, the Grand Canyon, Niagara Falls,

Disney World, Universal Studios, and New York

City.

Some of the trips were characterized as

“factory inspections” or “training” with government

customers, but consisted primarily or entirely of

sightseeing at locations chosen by the ocials,

typically lasting two weeks and costing between

$25,000 and $55,000 per trip. In some instances,

the company gave the government ocials $500

to $1,000 per day in spending money and paid all

lodging, transportation, food, and entertainment

expenses. The company either failed to record

these expenses or improperly recorded them as

“consulting fees” in its corporate books and records.

The company also failed to implement appropriate

internal controls to monitor the provision of travel

and other things of value to Chinese government

ocials.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Companies also may violate the FCPA if they

give payments or gifts to third parties, such as an

ocial’s family members, as an indirect way of

corruptly inuencing a foreign ocial. For example,

one defendant paid personal bills and provided

airline tickets to a cousin and close friend of the

foreign ocial whose inuence the defendant

sought in obtaining contracts.

The defendant was

convicted at trial and received a prison sentence.

100

In another example, a Hong Kong subsidiary of a

Switzerland-based bank engaged in a systematic

scheme to hire, promote, and retain the children

of Chinese ocials in order to win business with

those ocials.

101

The company ultimately disgorged

approximately $30 million and paid a $47 million

criminal ne for its FCPA violations.

Examples of Improper Travel

and Entertainment

• a $12,000 birthday trip for a government

decision maker from Mexico that included

visits to wineries and dinners

• $10,000 spent on dinners, drinks, and

entertainment for a government ocial

• a trip to Italy for eight Iraqi government

ocials that consisted primarily of

sightseeing and included $1,000 in

“pocket money” for each ocial

• a trip to Paris for a government ocial and

his wife that consisted primarily of touring

activities via a chaueur-driven vehicle

As part of an eective compliance program, a

company should have clear and easily accessible

guidelines and processes in place for gift-giving

by the company’s directors, ocers, employees,

and agents. Though not necessarily appropriate

for every business, many larger companies have

automated gift-giving clearance processes and

have set clear monetary thresholds for gifts along

with annual limitations, with limited exceptions

for gifts approved by appropriate management.

Clear guidelines and processes can be eective and

ecient means for controlling gift-giving, deterring

improper gifts, and protecting corporate assets.

The FCPA does not prohibit gift-giving. Rather,

just like its domestic bribery counterparts, the FCPA

prohibits the payments of bribes, including those

disguised as gifts.

Charitable Contributions

Companies often engage in charitable giving

as part of legitimate local outreach. The FCPA does

not prohibit charitable contributions or prevent

corporations from acting as good corporate citizens.

Companies, however, cannot use the pretense

of charitable contributions as a way to funnel bribes

to government ocials.

For example, a pharmaceutical company

used charitable donations to a small local castle

restoration charity headed by a foreign government

ocial to induce the ocial to direct business to

the company. Although the charity was a bona

de charitable organization, internal documents

at the pharmaceutical company’s subsidiary

established that the payments were not viewed as

charitable contributions but rather as “dues” the

subsidiary was required to pay for assistance from

the government ocial. The payments constituted

a signicant portion of the subsidiary’s total

promotional donations budget and were structured

to allow the subsidiary to exceed its authorized

limits. The payments also were not in compliance

with the company’s internal policies, which provided

that charitable donations generally should be made

to healthcare institutions and relate to the practice

of medicine.

102

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Hypothetical: Gifts, Travel, and Entertainment

Company A is a large U.S. engineering company with global operations in more than 50 countries, including a number

that have a high risk of corruption, such as Foreign Country. Company A’s stock is listed on a national U.S. stock exchange. In

conducting its business internationally, Company A’s ocers and employees come into regular contact with foreign ocials,

including ocials in various ministries and state-owned entities. At a trade show, Company A has a booth at which it oers

free pens, hats, t-shirts, and other similar promotional items with Company A’s logo. Company A also serves free coee,

other beverages, and snacks at the booth. Some of the visitors to the booth are foreign ocials.

Is Company A in violation of the FCPA?

No. These are legitimate, bona de expenditures made in connection with the promotion, demonstration,

or explanation of Company A’s products or services. There is nothing to suggest corrupt intent here. The FCPA

does not prevent companies from promoting their businesses in this way or providing legitimate hospitality,

including to foreign ocials. Providing promotional items with company logos or free snacks as set forth above

is an appropriate means of providing hospitality and promoting business. Such conduct has never formed the

basis for an FCPA enforcement action.

At the trade show, Company A invites a dozen current and prospective customers out for drinks, and pays the moderate

bar tab. Some of the current and prospective customers are foreign ocials under the FCPA. Is Company A in violation of

the FCPA?

No. Again, the FCPA was not designed to prohibit all forms of hospitality to foreign ocials. While the cost

here may be more substantial than the beverages, snacks, and promotional items provided at the booth, and the

invitees specically selected, there is still nothing to suggest corrupt intent.

Two years ago, Company A won a long-term contract to supply goods and services to the state-owned Electricity

Commission in Foreign Country. The Electricity Commission is 100% owned, controlled, and operated by the government

of Foreign Country, and employees of the Electricity Commission are subject to Foreign Country’s domestic bribery

laws. Some Company A executives are in Foreign Country for meetings with ocials of the Electricity Commission. The

General Manager of the Electricity Commission was recently married, and during the trip Company A executives present

a moderately priced crystal vase to the General Manager as a wedding gift and token of esteem. Is Company A in violation

of the FCPA?

No. It is appropriate to provide reasonable gifts to foreign ocials as tokens of esteem or gratitude. It is

important that such gifts be made openly and transparently, properly recorded in a company’s books and records,

and given only where appropriate under local law, customary where given, and reasonable for the occasion.

During the course of the contract described above, Company A periodically provides training to Electricity Commission

employees at its facilities in Michigan. The training is paid for by the Electricity Commission as part of the contract.

Senior ocials of the Electricity Commission inform Company A that they want to inspect the facilities and ensure that the

training is working well. Company A pays for the airfare, hotel, and transportation for the Electricity Commission senior

ocials to travel to Michigan to inspect Company A’s facilities. Because it is a lengthy international ight, Company A

agrees to pay for business class airfare, to which its own employees are entitled for lengthy ights. The foreign ocials

visit Michigan for several days, during which the senior ocials perform an appropriate inspection. Company A executives

take the ocials to a moderately priced dinner, a baseball game, and a play. Do any of these actions violate the FCPA?

(cont’d)

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

No. Neither the costs associated with training the employees nor the trip for the senior ocials to the

Company’s facilities in order to inspect them violates the FCPA. Reasonable and bona de promotional expenditures

do not violate the FCPA. Here, Company A is providing training to the Electricity Commission’s employees and

is hosting the Electricity Commission senior ocials. Their review of the execution and performance of the

contract is a legitimate business purpose. Even the provision of business class airfare is reasonable under the

circumstances, as are the meals and entertainment, which are only a small component of the business trip.

Would this analysis be dierent if Company A instead paid for the senior ocials to travel rst-class with their spouses

for an all-expenses-paid, week-long trip to Las Vegas, where Company A has no facilities?

Yes. This conduct almost certainly violates the FCPA because it evinces a corrupt intent. Here, the trip

does not appear to be designed for any legitimate business purpose, is extravagant, includes expenses for the

ocials’ spouses, and therefore appears to be designed to corruptly curry favor with the foreign government

ocials. Moreover, if the trip were booked as a legitimate business expense—such as the provision of training

at its facilities—Company A would also be in violation of the FCPA’s accounting provisions. Furthermore, this

conduct suggests deciencies in Company A’s internal controls.

Company A’s contract with the Electricity Commission is going to expire, and the Electricity Commission is oering the

next contract through its tender process. An employee of the Electricity Commission contacts Company A and oers to

provide Company A with condential, non-public bid information from Company A’s competitors if Company A will pay

for a vacation to Paris for him and his girlfriend. Employees of Company A accede to the ocial’s request, pay for the

vacation, receive the condential bid information, and yet still do not win the contract. Has Company A violated the FCPA?

Yes. Company A has provided things of value to a foreign ocial for the purpose of inducing the ocial

to misuse his oce and to gain an improper advantage. It does not matter that it was the foreign ocial who

rst suggested the illegal conduct or that Company A ultimately was not successful in winning the contract. This

conduct would also violate the FCPA’s accounting provisions if the trip were booked as a legitimate business

expense and suggests deciencies in Company A’s internal controls.

Proper due diligence and controls are critical

for charitable giving. In general, the adequacy of

measures taken to prevent misuse of charitable

donations will depend on a risk-based analysis and

the specic facts at hand. In Opinion Procedure

Release No. 10-02, DOJ described the due diligence

and controls that can minimize the likelihood of an

FCPA violation. In that matter, a Eurasian-based

subsidiary of a U.S. non-governmental organization

was asked by an agency of a foreign government to

make a grant to a local micronance institution (MFI)

as a prerequisite to the subsidiary’s transformation

to bank status. The subsidiary proposed contributing

$1.42 million to a local MFI to satisfy the request.

The subsidiary undertook an extensive, three-

stage due diligence process to select the proposed

grantee and imposed signicant controls on the

proposed grant, including ongoing monitoring and

auditing, earmarking funds for capacity building,

prohibiting compensation of board members,

and implementing anti-corruption compliance

provisions. DOJ explained that it would not take any

enforcement action because the company’s due

diligence and the controls it planned to put in place

suced to prevent an FCPA violation.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Other opinion releases also address charitable-

type grants or donations. Under the facts presented

in those releases, DOJ approved the proposed grant

or donation,

103

based on due diligence measures

and controls such as:

• certications by the recipient regarding

compliance with the FCPA;

104

• due diligence to conrm that none of the

recipient’s ocers was aliated with the

foreign government at issue;

105

• a requirement that the recipient provide

audited nancial statements;

106

• a written agreement with the recipient

restricting the use of funds;

107

• steps to ensure that the funds were

transferred to a valid bank account;

108

• conrmation that the charity’s commitments

were met before funds were disbursed;

109

and

• ongoing monitoring of the ecacy

of the program.

110

Legitimate charitable giving does not violate

the FCPA. Compliance with the FCPA merely requires

that charitable giving not be used as a vehicle to

conceal payments made to corruptly inuence

foreign ocials.

Five Questions to Consider When Making

Charitable Payments in a Foreign Country:

1. What is the purpose of the payment?

2. Is the payment consistent with the company’s

internal guidelines on charitable giving?

3. Is the payment at the request of a foreign

ocial?

4. Is a foreign ocial associated with the charity

and, if so, can the foreign ocial make

decisions regarding your business in that

country?

5. Is the payment conditioned upon receiving

business or other benets?

Who Is a Foreign Ocial?

The FCPA’s anti-bribery provisions apply to

corrupt payments made to (1) “any foreign ocial”;

(2) “any foreign political party or ocial thereof”;

(3) “any candidate for foreign political oce”; or

(4) any person, while knowing that all or a portion

of the payment will be oered, given, or promised

to an individual falling within one of these three

categories.

111

Although the statute distinguishes

between a “foreign ocial,” “foreign political party

or ocial thereof,” and “candidate for foreign

political oce,” the term “foreign ocial” in this

guide generally refers to an individual falling within

any of these three categories.

The FCPA denes “foreign ocial” to include:

any ocer or employee of a foreign government or

any department, agency, or instrumentality thereof,

or of a public international organization, or any

person acting in an ocial capacity for or on behalf

of any such government or department, agency,

or instrumentality, or for or on behalf of any such

public international organization.

112

As this language makes clear, the FCPA broadly

applies to corrupt payments to “any” ocer or

employee of a foreign government and to those

acting on the foreign government’s behalf.

113

The

FCPA thus covers corrupt payments to low-ranking

employees and high-level ocials alike.

114

The FCPA prohibits payments to foreign

ocials, not to foreign governments.

115

That

said, companies contemplating contributions or

donations to foreign governments should take

steps to ensure that no monies are used for

corrupt purposes, such as the personal benet of

individual foreign ocials.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Department, Agency, or Instrumentality

of a Foreign Government

Foreign ocials under the FCPA include

ocers or employees of a department, agency,

or instrumentality of a foreign government. When

a foreign government is organized in a fashion

similar to the U.S. system, what constitutes a

government department or agency is typically

clear (e.g., a ministry of energy, national security

agency, or transportation authority).

116

However,

governments can be organized in very dierent

ways.

117

Many operate through state-owned and

state-controlled entities, particularly in such areas

as aerospace and defense manufacturing, banking

and nance, healthcare and life sciences, energy

and extractive industries, telecommunications,

and transportation.

118

By including ocers or

employees of agencies and instrumentalities within

the denition of “foreign ocial,” the FCPA accounts

for this variability.

The term “instrumentality” is broad and

can include state-owned or state-controlled

entities. Whether a particular entity constitutes an

“instrumentality” under the FCPA requires a fact-

specic analysis of an entity’s ownership, control,

status, and function.

119

The Eleventh Circuit

addressed the denition of “instrumentality” in

United States v. Esquenazi, a case involving the

state-owned and controlled telecommunications

company of Haiti.

120

The Eleventh Circuit concluded

that an “instrumentality” under the FCPA is “an

entity controlled by the government of a foreign

country that performs a function the controlling

government treats as its own.”

121

Although the

court noted that this test is a fact-bound inquiry, it

provided the following non-exhaustive list of factors

to determine whether the government “controls”

an entity:

• the foreign government’s formal designation

of that entity;

• whether the government has a

majority interest in the entity;

• the government’s ability to hire and

re the entity’s principals;

• the extent to which the entity’s prots, if

any, go directly into the governmental scal

accounts, and, by the same token, the extent

to which the government funds the entity if it

fails to break even; and

• the length of time these indicia

have existed.

122

To determine whether the entity performs a

function that the government treats as its own, the

Eleventh Circuit listed the following non-exhaustive

factors:

• whether the entity has a monopoly over the

function it exists to carry out;

• whether the government subsidizes the costs

associated with the entity providing services;

• whether the entity provides services to the

public at large in the foreign country; and

• whether the public and the government of that

foreign country generally perceive the entity to

be performing a governmental function.

123

In addition, a number of courts in other

circuits have approved nal jury instructions

providing a similar non-exclusive list of factors to be

considered.

124

Companies should consider these factors

when evaluating the risk of FCPA violations and

designing compliance programs.

DOJ and SEC have pursued cases involving

instrumentalities since the time of the FCPA’s

enactment and have long used an analysis

of ownership, control, status, and function to

determine whether a particular entity is an agency

or instrumentality of a foreign government. For

example, the second-ever FCPA case charged by

DOJ involved a California company that paid bribes

through a Mexican corporation to two executives

of a state-owned Mexican national oil company.

125

And in the early 1980s, DOJ and SEC brought cases

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

involving a $1 million bribe to the chairman of

Trinidad and Tobago’s racing authority.

126

DOJ and SEC continue to regularly bring FCPA

cases involving bribes paid to employees of agencies

and instrumentalities of foreign governments.

In one such case, the subsidiary of a Swiss

engineering company paid bribes to ocials of a

state-owned and controlled electricity commission.

The commission was created by, owned by, and

controlled by the Mexican government, and it had

a monopoly on the transmission and distribution

of electricity in Mexico. Many of the commission’s

board members were cabinet-level government

ocials, and the director was appointed by Mexico’s

president.

127

Similarly, in the case involving Haiti’s

state-owned and controlled telecommunications

company, Miami telecommunications executives

were charged with paying bribes to the

telecommunications company’s employees. The

telecommunications company was 97% owned

and 100% controlled by the Haitian government,

Haiti granted the company a monopoly over

telecommunications service and gave it various tax

advantages, the company’s Director General was

chosen by the Haitian President with the consent

of the Haitian Prime Minister and the ministers of

public works and economic nance, and the Haitian

President appointed all of the telecommunications

company’s board members.

128

While no one factor is dispositive or

necessarily more important than another, as a

practical matter, an entity is unlikely to qualify as

an instrumentality if a government does not own

or control a majority of its shares. However, there

are circumstances in which an entity would qualify

as an instrumentality absent 50% or greater foreign

government ownership, which are reected in a

limited number of DOJ or SEC enforcement actions

brought in such situations. For example, in addition

to being convicted of funneling millions of dollars

in bribes to two sitting presidents in two dierent

countries, a French issuer’s three subsidiaries

were convicted of paying bribes to employees of

a Malaysian telecommunications company that

was 43% owned by Malaysia’s Ministry of Finance.

There, notwithstanding its minority ownership

stake in the company, the Ministry held the status

of a “special shareholder,” had veto power over

all major expenditures, and controlled important

operational decisions.

129

In addition, most senior

company ocers were political appointees,

including the Chairman and Director, the Chairman

of the Board of the Tender Committee, and the

Executive Director.

130

Thus, despite the Malaysian

government having a minority shareholder

position, the company was an instrumentality of

the Malaysian government as the government had

substantial control over the company.

Companies and individuals should also

remember that, whether an entity is an

instrumentality of a foreign government or a

private entity, commercial (i.e., private-to-private)

bribery may still violate the FCPA’s accounting

provisions, the Travel Act, anti-money laundering

laws, and other federal or foreign laws. Any type of

corrupt payment thus carries a risk of prosecution.

Public International Organizations

In 1998, the FCPA was amended to expand the

denition of “foreign ocial” to include employees

and representatives of public international

organizations.

131

A “public international organization”

is any organization designated as such by Executive

order under the International Organizations

Immunities Act, 22 U.S.C. § 288, or any other

organization that the President so designates.

132

Currently, public international organizations include

entities such as the United Nations, the World

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Bank, the International Monetary Fund, the World

Intellectual Property Organization, the World

Trade Organization, the OECD, the Organization

of American States, and numerous others. A

comprehensive list of organizations designated as

“public international organizations” is contained

in 22 U.S.C. § 288 and can also be found on the

U.S. Government Publishing Oce website at

https://www.govinfo.gov/content/pkg/USCODE-

2018-title22/html/USCODE-2018-title22-chap7-

subchapXVIII-sec288.htm. DOJ has brought charges

against persons who pay bribes to such employees

and representatives of such “public international

organizations.”

133

How Are Payments to Third Parties

Treated?

The FCPA expressly prohibits corrupt payments

made through third parties or intermediaries.

134

Specically, it covers payments made to “any

person, while knowing that all or a portion of such

money or thing of value will be oered, given, or

promised, directly or indirectly,”

135

to a foreign

ocial. Many companies doing business in a foreign

country retain a local individual or company to help

them conduct business. Although these foreign

agents may provide entirely legitimate advice

regarding local customs and procedures and may

help facilitate business transactions, companies

should be aware of the risks involved in engaging

third-party agents or intermediaries. The fact that a

bribe is paid by a third party does not eliminate the

potential for criminal or civil FCPA liability.

136

For example, a French global nancial

services institution and a U.S.-based investment

management rm retained a third-party sales agent

to win business in Libya. The nancial institutions

repeatedly engaged the third-party sales agent to

win business with Libyan state-owned nancial

institutions, ultimately paying the sales agent over

$90 million in commissions. In fact, the sales agent

used portions of the commission payments to bribe

high-level Libyan government ocials in order

to secure the placement of approximately $3.66

billion in assets with the nancial institutions. As

a consequence, the French global nancial services

institution and the U.S. investment management

rm paid a combined approximately $600 million

in penalties; the French nancial institution entered

into a deferred prosecution agreement with DOJ,

and a wholly owned subsidiary pleaded guilty; while

the U.S. nancial institution entered into a non-

prosecution agreement with DOJ, and disgorged

$34.5 million as part of its resolution with SEC.

137

In another case, between 1996 and 2012, a

publicly traded energy company in the Netherlands

engaged in the regular practice of retaining third-

party sales agents to pay bribes to foreign ocials

in at least ve countries: Brazil, Angola, Equatorial

Guinea, Kazakhstan, and Iraq. Over the course of the

conspiracy, the company paid at least $180 million

in “commission” payments to its agents, earning

prots of at least $2.8 billion. The company and

its U.S. subsidiary admitted to violating the FCPA,

as did its former CEO and a sales and marketing

executive.

138

Because Congress anticipated the use of third-

party agents in bribery schemes—for example, to

avoid actual knowledge of a bribe—it dened the

term “knowing” in a way that prevents individuals

and businesses from avoiding liability by putting

“any person” between themselves and the foreign

ocials.

139

Under the FCPA, a person’s state of mind

is “knowing” with respect to conduct, a circumstance,

or a result if the person:

• is aware that [he] is engaging in such conduct,

that such circumstance exists, or that such

result is substantially certain to occur; or

• has a rm belief that such circumstance exists

or that such result is substantially certain to

occur.

140

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Thus, a person has the requisite knowledge

when he is aware of a high probability of the

existence of such circumstance, unless the person

actually believes that such circumstance does not

exist.

141

As Congress made clear, it meant to impose

liability not only on those with actual knowledge of

wrongdoing, but also on those who purposefully

avoid actual knowledge:

[T]he so-called “head-in-the-sand”

problem—variously described in the

pertinent authorities as “conscious

disregard,” “willful blindness” or “deliberate

ignorance”—should be covered so that

management ocials could not take

refuge from the Act’s prohibitions by their

unwarranted obliviousness to any action

(or inaction), language or other “signaling

device” that should reasonably alert

them of the “high probability” of an FCPA

violation.

142

Common red ags associated with third parties

include:

• excessive commissions to third-party agents

or consultants;

• unreasonably large discounts to third-party

distributors;

• third-party “consulting agreements” that

include only vaguely described services;

• the third-party consultant is in a dierent

line of business than that for which it has

been engaged;

• the third party is related to or closely

associated with the foreign ocial;

• the third party became part of the

transaction at the express request or

insistence of the foreign ocial;

• the third party is merely a shell company

incorporated in an oshore jurisdiction; and

• the third party requests payment to

oshore bank accounts.

Businesses may reduce the FCPA risks

associated with third-party agents by implementing

an eective compliance program, which includes

due diligence of any prospective agents.

United States v. Kozeny, et al.

In December 2011, the U.S. Court of Appeals for the

Second Circuit upheld a conscious avoidance instruction

given during the 2009 trial of a businessman who was

convicted of conspiring to violate the FCPA’s anti-

bribery provisions by agreeing to make payments to

Azeri ocials in a scheme to encourage the privatization

of the Republic of Azerbaijan’s state oil company. The

court of appeals found that the instruction did not lack

a factual predicate, citing evidence and testimony at

trial demonstrating that the defendant knew corruption

was pervasive in Azerbaijan; that he was aware of his

business partner’s reputation for misconduct; that

he had created two U.S. companies in order to shield

himself and other investors from potential liability for

payments made in violation of the FCPA; and that the

defendant expressed concerns during a conference call

about whether his business partner and company were

bribing ocials.

The court of appeals also rejected the defendant’s

contention that the conscious avoidance charge had

improperly permitted the jury to convict him based on

negligence, explaining that ample evidence in the record

showed that the defendant had “serious concerns”

about the legality of his partner’s business practices

“and worked to avoid learning exactly what [he] was

doing,” and noting that the district court had specically

instructed the jury not to convict based on negligence.

What Armative Defenses

Are Available?

The FCPA’s anti-bribery provisions contain

two armative defenses: (1) that the payment

was lawful under the written laws of the foreign

country (the “local law” defense), and (2) that the

money was spent as part of demonstrating a

product or performing a contractual obligation (the

“reasonable and bona de business expenditure”

defense). Because these are armative defenses,

the defendant bears the burden of proving them.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

The Local Law Defense

For the local law defense to apply, a defendant

must establish that “the payment, gift, oer, or

promise of anything of value that was made, was

lawful under the written laws and regulations of

the foreign ocial’s, political party’s, party ocial’s,

or candidate’s country.”

143

The defendant must

establish that the payment was lawful under the

foreign country’s written laws and regulations at

the time of the oense. In creating the local law

defense in 1988, Congress sought “to make clear

that the absence of written laws in a foreign ocial’s

country would not by itself be sucient to satisfy

this defense.”

144

Thus, the fact that bribes may

not be prosecuted under local law is insucient

to establish the defense. In practice, the local law

defense arises infrequently, as the written laws

and regulations of countries rarely, if ever, permit

corrupt payments. Nevertheless, if a defendant can

establish that conduct that otherwise falls within

the scope of the FCPA’s anti-bribery provisions was

lawful under written, local law, he or she would have

a defense to prosecution.

In United States v. Kozeny, the defendant

unsuccessfully sought to assert the local law

defense regarding the law of Azerbaijan. The parties

disputed the contents and applicability of Azeri law,

and each presented expert reports and testimony

on behalf of their conicting interpretations. The

court ruled that the defendant could not invoke

the FCPA’s armative defense because Azeri law

did not actually legalize the bribe payment. The

court concluded that an exception under Azeri

law relieving of criminal liability bribe payors

who voluntarily disclose bribe payments to the

authorities did not make the bribes legal.

145

In United States v. Ng Lap Seng, the district

court rejected the defendant’s request to instruct

the jury with respect to the local law armative

defense.

146

In that case, the defendant was

convicted of conspiracy, violating the FCPA, bribery,

and money laundering, in connection with a scheme

to bribe two ambassadors to the United Nations. In

arguing in favor of a jury instruction for the local

law armative defense, the defendant maintained

that a nding by the jury that the payments at

issue were not unlawful under the written laws and

regulations of Antigua and the Dominican Republic

would require acquittal on the FCPA-related counts.

The court denied the defendant’s request for the

armative defense instruction, nding that the

proposed instruction was “inconsistent with the

plain meaning of the language of the written laws

and regulations armative defense contained in

the FCPA.”

147

The court further explained that the

defendant’s request was not directly supported

by the majority of sources that had addressed the

issue and, if applied, “would lead to impractical

results.”

148

Reasonable and Bona Fide Expenditures

The FCPA allows companies to provide

reasonable and bona de travel and lodging

expenses to a foreign ocial, and it is an armative

defense where expenses are directly related to

the promotion, demonstration, or explanation of a

company’s products or services, or are related to a

company’s execution or performance of a contract

with a foreign government or agency.

149

Trips that

are primarily for personal entertainment purposes,

however, are not bona de business expenses and

may violate the FCPA’s anti-bribery provisions.

150

Moreover, when expenditures, bona de or not,

are mischaracterized in a company’s books and

records, or where unauthorized or improper

expenditures occur due to a failure to implement

adequate internal controls, they may also violate

the FCPA’s accounting provisions. Purposeful

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

mischaracterization of expenditures may also, of

course, indicate a corrupt intent.

DOJ and SEC have consistently recognized

that businesses, both foreign and domestic,

are permitted to pay for reasonable expenses

associated with the promotion of their products

and services or the execution of existing contracts.

In addition, DOJ has frequently provided guidance

about legitimate promotional and contract-related

expenses—addressing travel and lodging expenses

in particular—through several opinion procedure

releases. Under the circumstances presented in

those releases,

151

DOJ opined that the following

types of expenditures on behalf of foreign ocials

did not warrant FCPA enforcement action:

• travel and expenses to visit company facilities

or operations;

• travel and expenses for training; and

• product demonstration or promotional

activities, including travel and expenses for

meetings.

Whether any particular payment is a bona

de expenditure necessarily requires a fact-specic

analysis. But the following non-exhaustive list of

safeguards, compiled from several releases, may

be helpful to businesses in evaluating whether a

particular expenditure is appropriate or may risk

violating the FCPA:

• Do not select the particular ocials who will

participate in the party’s proposed trip or

program

152

or else select them based on

predetermined, merit-based criteria.

153

• Pay all costs directly to travel and lodging

vendors and/or reimburse costs only upon

presentation of a receipt.

154

• Do not advance funds or pay for

reimbursements in cash.

155

• Ensure that any stipends are reasonable

approximations of costs likely to be

incurred

156

and/or that expenses are limited

to those that are necessary and reasonable.

157

• Ensure the expenditures are transparent,

both within the company and to the foreign

government.

158

• Do not condition payment of expenses on any

action by the foreign ocial.

159

• Obtain written conrmation that payment of

the expenses is not contrary to local law.

160

• Provide no additional compensation, stipends,

or spending money beyond what is necessary

to pay for actual expenses incurred.

161

• Ensure that costs and expenses on behalf of

the foreign ocials will be accurately recorded

in the company’s books and records.

162

In sum, while certain expenditures are more

likely to raise red ags, they will not give rise to

prosecution if they are: (1) reasonable, (2) bona

de and (3) directly related to (4) the promotion,

demonstration, or explanation of products or

services or the execution or performance of a

contract.

163

What Are Facilitating or Expediting

Payments?

The FCPA’s bribery prohibition contains a

narrow exception for “facilitating or expediting

payments” made in furtherance of routine

governmental action.

164

The facilitating payments

exception applies only when a payment is made to

further “routine governmental action” that involves

non-discretionary acts.

165

Examples of “routine

governmental action” include processing visas,

providing police protection or mail service, and

supplying utilities like phone service, power, and

water. Routine government action does not include

a decision to award new business or to continue

business with a particular party.

166

Nor does it

include acts that are within an ocial’s discretion or

that would constitute misuse of an ocial’s oce.

167

Thus, paying an ocial a small amount to have the

power turned on at a factory might be a facilitating

payment; paying an inspector to ignore the fact

that the company does not have a valid permit

to operate the factory would not be a facilitating

payment.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Examples of

“Routine Governmental Action”

An action that is ordinarily and commonly

performed by a foreign ocial in:

• obtaining permits, licenses, or other ocial

documents to qualify a person

to do business in a foreign country;

• processing governmental papers, such as visas

and work orders;

• providing police protection, mail pickup and

delivery, or scheduling inspections associated

with contract performance or inspections

related to transit of goods across country;

• providing phone service, power and water

supply, loading and unloading cargo, or

protecting perishable products or commodities

from deterioration; or

• actions of a similar nature.

Whether a payment falls within the exception

is not dependent on the size of the payment,

though size can be telling, as a large payment is

more suggestive of corrupt intent to inuence a

non-routine governmental action. But, like the

FCPA’s anti-bribery provisions more generally, the

facilitating payments exception focuses on the

purpose of the payment rather than its value. For

instance, an Oklahoma-based corporation violated

the FCPA when its subsidiary paid Argentine

customs ocials approximately $166,000 to

secure customs clearance for equipment and

materials that lacked required certications or

could not be imported under local law and to pay

a lower-than-applicable duty rate. The company’s

Venezuelan subsidiary had also paid Venezuelan

customs ocials approximately $7,000 to permit

the importation and exportation of equipment and

materials not in compliance with local regulations

and to avoid a full inspection of the imported

goods.

168

In another case, three subsidiaries of a

global supplier of oil drilling products and services

were criminally charged with authorizing an agent

to make at least 378 corrupt payments (totaling

approximately $2.1 million) to Nigerian Customs

Service ocials for preferential treatment during

the customs process, including the reduction or

elimination of customs duties.

169

Labeling a bribe as a “facilitating payment” in

a company’s books and records does not make it

one. A Swiss oshore drilling company, for example,

recorded payments to its customs agent in the

subsidiary’s “facilitating payment” account, even

though company personnel believed the payments

were, in fact, bribes. The company was charged

with violating both the FCPA’s anti-bribery and

accounting provisions.

170

Although true facilitating payments are

not illegal under the FCPA, they may still violate

local law in the countries where the company

is operating, and the OECD’s Working Group on

Bribery recommends that all countries encourage

companies to prohibit or discourage facilitating

payments, which the United States has done

regularly.

171

In addition, other countries’ foreign

bribery laws, such as the United Kingdom’s, may not

contain an exception for facilitating payments.

172

Individuals and companies should therefore be

aware that although true facilitating payments are

permissible under the FCPA, they may still subject

a company or individual to sanctions. As with any

expenditure, facilitating payments may violate

the FCPA if they are not properly recorded in an

issuer’s books and records.

173

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Hypothetical: Facilitating Payments

Company A is a large multinational mining company with operations in Foreign Country, where it recently identied

a signicant new ore deposit. It has ready buyers for the new ore but has limited capacity to get it to market. In order to

increase the size and speed of its ore export, Company A will need to build a new road from its facility to the port that can

accommodate larger trucks. Company A retains an agent in Foreign Country to assist it in obtaining the required permits,

including an environmental permit, to build the road. The agent informs Company A’s vice president for international

operations that he plans to make a one-time small cash payment to a clerk in the relevant government oce to ensure that

the clerk les and stamps the permit applications expeditiously, as the agent has experienced delays of three months when

he has not made this “grease” payment. The clerk has no discretion about whether to le and stamp the permit applications

once the requisite ling fee has been paid. The vice president authorizes the payment.

A few months later, the agent tells the vice president that he has run into a problem obtaining a necessary environmental

permit. It turns out that the planned road construction would adversely impact an environmentally sensitive and protected

local wetland. While the problem could be overcome by rerouting the road, such rerouting would cost Company A $1 million

more and would slow down construction by six months. It would also increase the transit time for the ore and reduce the

number of monthly shipments. The agent tells the vice president that he is good friends with the director of Foreign Country’s

Department of Natural Resources and that it would only take a modest cash payment to the director and the “problem would

go away.” The vice president authorizes the payment, and the agent makes it. After receiving the payment, the director issues

the permit, and Company A constructs its new road through the wetlands.

Was the payment to the clerk a violation of the FCPA?

No. Under these circumstances, the payment to the clerk would qualify as a facilitating payment, since it

is a one-time, small payment to obtain a routine, non-discretionary governmental service that Company A is

entitled to receive (i.e., the stamping and ling of the permit application). However, while the payment may

qualify as an exception to the FCPA’s anti-bribery provisions, it may violate other laws, both in Foreign Country

and elsewhere. In addition, if the payment is not accurately recorded, it could violate the FCPA’s books and

records provision.

Was the payment to the director a violation of the FCPA?

Yes. The payment to the director of the Department of Natural Resources was in clear violation of the

FCPA, since it was designed to corruptly inuence a foreign ocial into improperly approving a permit. The

issuance of the environmental permit was a discretionary act, and indeed, Company A should not have received

it. Company A, its vice president, and the local agent may all be prosecuted for authorizing and paying the bribe.

Does the FCPA Apply to Cases of

Extortion or Duress?

Situations involving extortion or duress will not

give rise to FCPA liability because a payment made

in response to true extortionate demands under

imminent threat of physical harm cannot be said

to have been made with corrupt intent or for the

purpose of obtaining or retaining business.

174

enacting the FCPA, Congress recognized that real-

world situations might arise in which a business is

compelled to pay an ocial in order to avoid threats

to health and safety. As Congress explained, “a

payment to an ocial to keep an oil rig from being

dynamited should not be held to be made with the

requisite corrupt purpose.”

175

Mere economic coercion, however, does not

amount to extortion. As Congress noted when it

enacted the FCPA: “The defense that the payment

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

was demanded on the part of a government ocial

as a price for gaining entry into a market or to obtain

a contract would not suce since at some point the

U.S. company would make a conscious decision

whether or not to pay a bribe.”

176

The fact that the

payment was “rst proposed by the recipient …

does not alter the corrupt purpose on the part of

the person paying the bribe.”

177

This distinction between extortion and

economic coercion was recognized by the court in

United States v. Kozeny. There, the court concluded

that although an individual who makes a payment

under duress (i.e., upon threat of physical harm)

will not be criminally liable under the FCPA,

178

bribe payor who claims payment was demanded

as a price for gaining market entry or obtaining a

contract “cannot argue that he lacked the intent to

bribe the ocial because he made the ‘conscious

decision’ to pay the ocial.”

179

While the bribe

payor in this situation “could have turned his back

and walked away,” in the oil rig example, “he could

not.”

180

Businesses operating in high-risk environments

may face real threats of violence or harm to their

employees, and payments made in response to

imminent threats to health or safety do not violate

the FCPA.

181

If such a situation arises, and to ensure

the safety of its employees, companies should

immediately contact the appropriate U.S. embassy

for assistance.

Principles of Corporate Liability for

Anti-Bribery Violations

General principles of corporate liability apply

to the FCPA. Thus, a company is liable when its

directors, ocers, employees, or agents, acting

within the scope of their employment, commit

FCPA violations intended, at least in part, to benet

the company.

182

Similarly, just as with any other

statute, DOJ and SEC look to principles of parent-

subsidiary and successor liability in evaluating

corporate liability. As described more fully below,

unlike with most other statutes, DOJ has instituted

an FCPA Corporate Enforcement Policy that applies

to corporate resolutions in the FCPA context.

Parent-Subsidiary Liability

There are two ways in which a parent company

may be liable for bribes paid by its subsidiary.

First, a parent may have participated suciently

in the activity to be directly liable for the conduct—

as, for example, when it directed its subsidiary’s

misconduct or otherwise directly participated in the

bribe scheme.

Second, a parent may be liable for its subsidiary’s

conduct under traditional agency principles. The

fundamental characteristic of agency is control.

183

Accordingly, DOJ and SEC evaluate the parent’s

control—including the parent’s knowledge and

direction of the subsidiary’s actions, both generally

and in the context of the specic transaction—

when evaluating whether a subsidiary is an agent

of the parent. Although the formal relationship

between the parent and subsidiary is important in

this analysis, so are the practical realities of how the

parent and subsidiary actually interact.

If an agency relationship exists and the

subsidiary is acting within the scope of authority

conferred by the parent, a subsidiary’s actions and

knowledge are imputed to its parent.

184

Moreover,

under traditional principles of respondeat superior, a

company is liable for the acts of its agents, including

its employees, undertaken within the scope of their

employment and intended, at least in part, to benet

the company.

185

Thus, if an agency relationship

exists between a parent and a subsidiary, the

parent is liable for bribery committed by the

subsidiary’s employees. For example, SEC brought

an administrative action against a parent for bribes

paid by the president of its indirect, wholly owned

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

subsidiary. In that matter, the subsidiary’s president

reported directly to the CEO of the parent issuer,

and the issuer routinely identied the president as a

member of its senior management in its annual ling

with SEC and in annual reports. Additionally, the

parent’s legal department approved the retention

of the third-party agent through whom the bribes

were arranged despite a lack of documented due

diligence and an agency agreement that violated

corporate policy; also, an ocer of the parent

approved one of the payments to the third-party

agent.

186

Under these circumstances, the parent

company had sucient knowledge and control of

its subsidiary’s actions to be liable under the FCPA.

Successor Liability

Companies acquire a host of liabilities when

they merge with or acquire another company,

including those arising out of contracts, torts,

regulations, and statutes. As a general legal matter,

when a company merges with or acquires another

company, the successor company assumes the

predecessor company’s liabilities.

187

Successor

liability is an integral component of corporate law

and, among other things, prevents companies from

avoiding liability by reorganizing.

188

At the same

time, DOJ and SEC recognize the potential benets

of corporate mergers and acquisitions, particularly

when the acquiring entity has a robust compliance

program in place and implements that program as

quickly as practicable at the merged or acquired

entity. Successor liability applies to all kinds of civil

and criminal liabilities,

189

and FCPA violations are

no exception. Whether successor liability applies to

a particular corporate transaction depends on the

facts and the applicable state, federal, and foreign

law. Successor liability does not, however, create

liability where none existed before. For example, if

an issuer were to acquire a foreign company that

was not previously subject to the FCPA’s jurisdiction,

the mere acquisition of that foreign company

would not retroactively create FCPA liability for the

acquiring issuer.

DOJ and SEC encourage companies to

conduct pre-acquisition due diligence and improve

compliance programs and internal controls after

acquisition for a variety of reasons.

First, due diligence helps an acquiring

company to accurately value the target company.

Contracts obtained through bribes may be legally

unenforceable, business obtained illegally may be

lost when bribe payments are stopped, there may

be liability for prior illegal conduct, and the prior

corrupt acts may harm the acquiring company’s

reputation and future business prospects.

Identifying these issues before an acquisition allows

companies to better evaluate any potential post-

acquisition liability and thus properly assess the

target’s value.

190

Second, due diligence reduces the

risk that the acquired company will continue to pay

bribes. Proper pre-acquisition due diligence can

identify business and regional risks and can also

lay the foundation for a swift and successful post-

acquisition integration into the acquiring company’s

corporate control and compliance environment.

Third, the consequences of potential violations

uncovered through due diligence can be handled

by the parties in an orderly and ecient manner

through negotiation of the costs and responsibilities

for the investigation and remediation. Finally,

comprehensive due diligence demonstrates a

genuine commitment to uncovering and preventing

FCPA violations.

DOJ and SEC also recognize that, in certain

instances, robust pre-acquisition due diligence may

not be possible. In such instances, DOJ and SEC

will look to the timeliness and thoroughness of the

acquiring company’s post-acquisition due diligence

and compliance integration eorts.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

In a signicant number of instances, DOJ

and SEC have declined to take action against

companies that voluntarily disclosed and

remediated conduct and cooperated with DOJ and

SEC in the merger and acquisition context.

191

And

DOJ and SEC have taken action against successor

companies only in limited circumstances, generally

in cases involving egregious and sustained

violations or where the successor company directly

participated in the violations or failed to stop the

misconduct from continuing after the acquisition.

In one case, a U.S.-based issuer was charged with

books and records and internal controls violations

for continuing a kickback scheme originated by its

predecessor.

192

Another recent case involved a

merger between two oil and gas companies, where

prior to the merger both predecessor companies

committed FCPA violations over the course of

many years. The two companies, one of which was

an issuer and the other a former issuer operating

through a U.S.-based subsidiary, merged to form

a new publicly traded company. Under these

circumstances—the merger of two companies that

had each engaged in bribery—both the new entity

and the foreign subsidiaries were liable under the

FCPA. The new parent entered into a deferred

prosecution agreement with DOJ and settled a civil

action with SEC, while the company’s U.S.-based

subsidiary pleaded guilty.

193

More often, DOJ and SEC have pursued

enforcement actions against the predecessor

company (rather than the acquiring company),

particularly when the acquiring company uncovered

and timely remedied the violations or when the

government’s investigation of the predecessor

company preceded the acquisition. In one such

case, a U.S.-based multinational conglomerate

acquired the power business of a French power and

transportation company, which had paid bribes to

obtain contracts prior to the acquisition. In that

case the matter was resolved with a guilty plea for

the French power and transportation company,

and deferred prosecution agreements for two of

the newly acquired subsidiaries; no successor

liability was sought against the acquiring entity.

194

Practical Tips to Reduce FCPA Risk in Mergers and Acquisitions

Companies pursuing mergers or acquisitions can take certain steps to identify and potentially reduce FCPA risks:

M&A Opinion Procedure Release Requests:

One option is to seek an opinion from DOJ in anticipation of a potential acquisition, such as occurred with

Opinion Release 08-02. That case involved special circumstances, namely, severely limited pre-acquisition due

diligence available to the potential acquiring company, and, because it was an opinion release (i.e., providing

certain assurances by DOJ concerning prospective conduct), it necessarily imposed demanding standards and

prescriptive timeframes in return for specic assurances from DOJ, which SEC, as a matter of discretion, also

honors. Thus, obtaining an opinion from DOJ can be a good way to address specic due diligence challenges,

but, because of the nature of such an opinion, it will likely contain more stringent requirements than may be

necessary in all circumstances.

M&A Risk-Based FCPA Due Diligence and Disclosure:

As a practical matter, most acquisitions will typically not require the type of prospective assurances

contained in an opinion from DOJ. DOJ and SEC encourage companies engaging in mergers and acquisitions to:

(1) conduct thorough risk-based FCPA and anti-corruption due diligence on potential new business acquisitions;

(cont’d)

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

(2) ensure that the acquiring company’s code of conduct and compliance policies and procedures regarding the

FCPA and other anti-corruption laws apply as quickly as is practicable to newly acquired businesses or merged

entities; (3) train the directors, ocers and employees of newly acquired businesses or merged entities, and

when appropriate, train agents and business partners, on the FCPA and other relevant anti-corruption laws

and the company’s code of conduct and compliance policies and procedures; (4) conduct an FCPA-specic audit

of all newly acquired or merged businesses as quickly as practicable; and (5) disclose any corrupt payments

discovered as part of its due diligence of newly acquired entities or merged entities. DOJ and SEC will give

meaningful credit to companies who undertake these actions, and, in appropriate circumstances, DOJ and SEC

may consequently decline to bring enforcement actions.

In another case, a Pennsylvania-based

issuer that supplied heating and air conditioning

products and services was subject to an ongoing

investigation by DOJ and SEC at the time that it

was acquired; DOJ and SEC resolved enforcement

actions only against the predecessor company,

which had by that time become a wholly owned

subsidiary of the successor company.

195

In another example, when a Florida-based

U.S. company discovered in post-acquisition due

diligence that the telecommunications company (a

domestic concern) it had acquired had engaged in

foreign bribery, the successor company disclosed

the FCPA violations to DOJ. It then conducted an

internal investigation, cooperated fully with DOJ,

and took appropriate remedial action—including

terminating senior management at the acquired

company. No enforcement action was taken against

the successor, but the predecessor company

pleaded guilty to one count of violating the FCPA

and agreed to pay a $2 million ne.

196

Later, four

executives from the predecessor company were

convicted of FCPA violations, three of whom

received terms of imprisonment.

197

On occasion, when an enforcement action has

been taken against a predecessor company, the

successor seeks assurances that it will not be subject

to a future enforcement action. In one such case,

a Dutch predecessor resolved FCPA charges with

DOJ through a deferred prosecution agreement.

198

While both the predecessor and successor signed

the agreement, which included a commitment to

ongoing cooperation and an improved compliance

program, only the predecessor company was

charged; in signing the agreement, the successor

company gained the certainty of conditional release

from criminal liability, even though it was not being

pursued for FCPA violations.

199

In another case,

after a Connecticut-based company uncovered

FCPA violations by a California company it sought

to acquire, both companies voluntarily disclosed

the conduct to DOJ and SEC.

200

The predecessor

company resolved its criminal liability through

a non-prosecution agreement with DOJ that

included an $800,000 monetary penalty and also

settled with SEC, paying a total of $1.1 million in

disgorgement, pre-judgment interest, and civil

penalties. The successor company proceeded

with the acquisition and separately entered into a

non-prosecution agreement with DOJ in which

it agreed, among other things, to ensure full

performance of the predecessor company’s non-

prosecution agreement. This agreement provided

certainty to the successor concerning its FCPA

liability.

201

Importantly, a successor company’s voluntary

disclosure, appropriate due diligence, and

implementation of an eective compliance program

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

may also decrease the likelihood of an enforcement

action regarding an acquired company’s post-

acquisition conduct when pre-acquisition due

diligence is not possible.

202

In fact, under the DOJ

FCPA Corporate Enforcement Policy, in appropriate

cases, an acquiring company that voluntarily discloses

misconduct may be eligible for a declination, even if

aggravating circumstances existed as to the acquired

entity.

Hypothetical: Successor Liability Where Acquired Company Was Not Previously Subject to the FCPA

Company A is a Delaware corporation with its principal oces in the United States and whose shares are listed on

a national U.S. exchange. Company A is considering acquiring Foreign Company, which is not an issuer or a domestic

concern. Foreign Company takes no actions within the United States that would make it subject to territorial jurisdiction.

Company A’s proposed acquisition would make Foreign Company a subsidiary of Company A.

Scenario 1:

Prior to acquiring Foreign Company, Company A engages in extensive due diligence of Foreign Company,

including: (1) having its legal, accounting, and compliance departments review Foreign Company’s sales and

nancial data, its customer contracts, and its third-party and distributor agreements; (2) performing a risk-

based analysis of Foreign Company’s customer base; (3) performing an audit of selected transactions engaged

in by Foreign Company; and (4) engaging in discussions with Foreign Company’s general counsel, vice president

of sales, and head of internal audit regarding all corruption risks, compliance eorts, and any other corruption-

related issues that have surfaced at Foreign Company over the past ten years. This due diligence aims to determine

whether Foreign Company has appropriate anti-corruption and compliance policies in place, whether Foreign

Company’s employees have been adequately trained regarding those policies, how Foreign Company ensures that

those policies are followed, and what remedial actions are taken if the policies are violated.

During the course of its due diligence, Company A learns that Foreign Company has made several

potentially improper payments in the form of an inated commission to a third-party agent in connection

with a government contract with Foreign Country. Immediately after the acquisition, Company A discloses

the conduct to DOJ and SEC, suspends and terminates those employees and the third-party agent

responsible for the payments, and makes certain that the illegal payments have stopped. It also quickly

integrates Foreign Company into Company A’s own robust internal controls, including its anti-corruption

and compliance policies, which it communicates to its new employees through required online and

in-person training in the local language. Company A also requires Foreign Company’s third-party distributors

and other agents to sign anti-corruption certications, complete training, and sign new contracts that incorporate

FCPA and anti-corruption representations and warranties and audit rights.

Based on these facts, could DOJ or SEC prosecute Company A?

No. Although DOJ and SEC have jurisdiction over Company A because it is an issuer, neither could pursue

Company A for conduct that occurred prior to its acquisition of Foreign Company. As Foreign Company was

neither an issuer nor a domestic concern and was not subject to U.S. territorial jurisdiction, DOJ and SEC have

no jurisdiction over its pre-acquisition misconduct. The acquisition of a company does not create jurisdiction

where none existed before.

Importantly, Company A’s extensive pre-acquisition due diligence allowed it to identify and halt the

corruption. As there was no continuing misconduct post-acquisition, the FCPA was not violated.

(cont’d)

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Scenario 2:

Company A performs only minimal and pro forma pre-acquisition due diligence. It does not conduct a risk-

based analysis, and its review of Foreign Company’s data, contracts, and third-party and distributor agreements

is cursory. Company A acquires Foreign Company and makes it a wholly owned subsidiary. Although Company A

circulates its compliance policies to all new personnel after the acquisition, it does not translate the compliance

policies into the local language or train its new personnel or third-party agents on anti-corruption issues.

A few months after the acquisition, an employee in Company A’s international sales oce (Sales Employee)

learns from a legacy Foreign Company employee that for years the government contract that generated most of

Foreign Company’s revenues depended on inated commissions to a third-party agent “to make the right person

happy at Foreign Government Agency.” Sales Employee is told that unless the payments continue the business

will likely be lost, which would mean that Company A’s new acquisition would quickly become a nancial failure.

The payments continue for two years after the acquisition. After another employee of Company A reports the

long-running bribe scheme to a director at Foreign Government Agency, Company A stops the payments and DOJ

and SEC investigate.

Based on these facts, would DOJ or SEC charge Company A?

Yes. DOJ and SEC have prosecuted companies like Company A in similar circumstances. Any charges would

not, however, be premised upon successor liability, but rather on Company A’s post-acquisition bribe payments,

which themselves created criminal and civil liability for Company A.

Scenario 3:

Under local law, Company A’s ability to conduct pre-acquisition due diligence on Foreign Company is limited.

In the due diligence it does conduct, Company A determines that Foreign Company is doing business in high-risk

countries and in high-risk industries but nds no red ags specic to Foreign Company’s operations. Post-

acquisition, Company A conducts extensive due diligence and determines that Foreign Company had paid bribes

to ocials with Foreign Government Agency Company A takes prompt action to remediate the problem, including

following the measures set forth in Opinion Procedure Release No. 08-02. Among other actions, it voluntarily

discloses the misconduct to DOJ and SEC, ensures all bribes are immediately stopped, takes remedial action

against all parties involved in the corruption, and quickly integrates Foreign Company into a robust compliance

program and Company A’s other internal controls.

Based on these facts, would DOJ or SEC prosecute Company A?

DOJ and SEC have declined to prosecute companies like Company A in similar circumstances. Companies

can follow the measures set forth in Opinion Procedure Release No. 08-02, or seek their own opinions, where

adequate pre-acquisition due diligence is not possible.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Hypothetical: Successor Liability Where Acquired Company Was Already Subject to the FCPA

Both Company A and Company B are Delaware corporations with their principal oces in the United States. Both

companies’ shares listed on a national U.S. exchange.

Scenario 1:

Company A is considering acquiring several of Company B’s business lines. Prior to the acquisition, Company A

engages in extensive due diligence, including: (1) having its legal, accounting, and compliance departments review

Company B’s sales and nancial data, its customer contracts, and its third-party and distributor agreements;

(2) performing a risk-based analysis of Company B’s customer base; (3) performing an audit of selected

transactions engaged in by Company B; and (4) engaging in discussions with Company B’s general counsel, vice

president of sales, and head of internal audit regarding all corruption risks, compliance eorts, and any other

major corruption-related issues that have surfaced at Company B over the past ten years. This due diligence aims

to determine whether Company B has appropriate anti-corruption and compliance policies in place, whether

Company B’s employees have been adequately trained regarding those policies, how Company B ensures that those

policies are followed, and what remedial actions are taken if the policies are violated. During the course of its due

diligence, Company A learns that Company B has made several potentially improper payments in connection with

a government contract with Foreign Country. As a condition of the acquisition, Company A requires Company B

to disclose the misconduct to the government. Company A makes certain that the illegal payments have stopped

and quickly integrates Company B’s business lines into Company A’s own robust internal controls, including its

anti-corruption and compliance policies, which it communicates to its new employees through required online

and in-person training in the local language. Company A also requires Company B’s third-party distributors and

other agents to sign anti-corruption certications, complete training, and sign new contracts that incorporate

FCPA and anti-corruption representations and warranties and audit rights.

Based on these facts, would DOJ or SEC prosecute?

DOJ and SEC have declined to prosecute companies like Company A in similar circumstances. DOJ and SEC

encourage companies like Company A to conduct extensive FCPA due diligence. By uncovering the corruption,

Company A put itself in a favorable position, and, because the corrupt payments have stopped, Company A has

no continuing liability. Whether DOJ and SEC might charge Company B depends on facts and circumstances

beyond the scope of this hypothetical. DOJ would consider its Principles of Federal Prosecution of Business

Organizations and SEC would consider the factors contained in the Seaboard Report, both of which are discussed

in Chapter 5. In general, the more egregious and long-standing the corruption, the more likely it is that DOJ

and SEC would prosecute Company B. In certain limited circumstances, DOJ and SEC have in the past declined

to bring charges against acquired companies, recognizing that acquiring companies may bear much of the

reputational damage and costs associated with such charges.

Scenario 2:

Company A plans to acquire Company B. Although, as in Scenario 1, Company A conducts extensive due

diligence, it does not uncover the bribery until after the acquisition. Company A then makes certain that the

illegal payments stop and voluntarily discloses the misconduct to DOJ and SEC. It quickly integrates Company

B into Company A’s own robust internal controls, including its anti-corruption and compliance policies, which

it communicates to its new employees through required online and in-person training in the local language.

Company A also requires Company B’s third-party distributors and other agents to sign anti-corruption

certications, complete training, and sign new contracts that incorporate FCPA and anti-corruption representations

and warranties and audit rights.

(cont’d)

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Based on these facts, would DOJ or SEC prosecute?

Absent unusual circumstances not contemplated by this hypothetical, DOJ and SEC are unlikely to prosecute

Company A for the pre-acquisition misconduct of Company B, provided that Company B still exists in a form

that would allow it to be prosecuted separately (e.g., Company B is a subsidiary of Company A). DOJ and SEC

understand that no due diligence is perfect and that society benets when companies with strong compliance

programs acquire and improve companies with weak ones. At the same time, however, neither the liability

for corruption—nor the harms caused by it—are eliminated when one company acquires another. Whether

DOJ and SEC will pursue a case against Company B (or, in unusual circumstances, Company A) will depend

on consideration of all the factors in the Principles of Federal Prosecution of Business Organizations and the

Seaboard Report, respectively.

Scenario 3:

Company A merges with Company B, which is in the same line of business and interacts with the same

Foreign Government customers, and forms Company C. Due diligence before the merger reveals that both

Company A and Company B have been engaging in similar bribery. In both cases, the bribery was extensive and

known by high-level management within the companies.

Based on these facts, would DOJ or SEC prosecute?

Yes. DOJ and SEC have prosecuted companies like Company C on the basis of successor liability.

Company C is a combination of two companies that both violated the FCPA, and their merger does not eliminate

their liability. In addition, since Company C is an ongoing concern, DOJ and SEC may impose a monitorship to

ensure that the bribery has ceased and a compliance program is developed to prevent future misconduct.

Additional Principles of Criminal

Liability for Anti-Bribery

Violations: Aiding and Abetting

and Conspiracy

Under federal law, individuals or companies

that aid or abet a crime, including an FCPA violation,

are as guilty as if they had directly committed the

oense themselves. The aiding and abetting statute

provides that whoever “commits an oense against

the United States or aids, abets, counsels, commands,

induces or procures its commission,” or “willfully

causes an act to be done which if directly performed

by him or another would be an oense against the

United States,” is punishable as a principal.

203

Aiding

and abetting is not an independent crime, and the

government must prove that an underlying FCPA

violation was committed.

204

Under normal principles of conspiracy liability,

individuals and companies, including foreign

nationals and companies, may also be liable for

conspiring to violate the FCPA—i.e., for agreeing

to commit an FCPA violation—even if they are

not, or could not be, independently charged

with a substantive FCPA violation. For instance, a

foreign, non-issuer company could be convicted

of conspiring with a domestic concern to violate

the FCPA. Under certain circumstances, it could

also be held liable for the domestic concern’s

substantive FCPA violations under Pinkerton v.

United States, which imposes liability on a defendant

for reasonably foreseeable crimes committed by a

co-conspirator in furtherance of a conspiracy that

the defendant joined.

205

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

A foreign company or individual may be held

liable for aiding and abetting an FCPA violation

or for conspiring to violate the FCPA, even if the

foreign company or individual did not take any act

in furtherance of the corrupt payment while in the

territory of the United States. In conspiracy cases,

the United States generally has jurisdiction over all

the conspirators where at least one conspirator is an

issuer, domestic concern, or commits a reasonably

foreseeable overt act within the United States.

206

For example, if a foreign company or individual

conspires to violate the FCPA with someone who

commits an overt act within the United States, the

United States can prosecute the foreign company

or individual for the conspiracy. The same principle

applies to aiding and abetting violations. For

instance, even though they took no action in the

United States, Japanese and European companies

were charged with conspiring with and aiding and

abetting a domestic concern’s FCPA violations.

207

However, in United States v. Hoskins, the

Second Circuit addressed the question of whether

individuals not directly covered by the FCPA anti-

bribery provisions could nevertheless be guilty of

conspiring to violate, or aiding and abetting the

violation of, the FCPA anti-bribery provisions, and

concluded they could not.

208

Therefore, at least in

the Second Circuit, an individual can be criminally

prosecuted for conspiracy to violate the FCPA anti-

bribery provisions or aiding and abetting an FCPA

anti-bribery violation only if that individual’s conduct

and role fall into one of the specically enumerated

categories expressly listed in the FCPA’s anti-bribery

provisions.

At least one district court from another circuit

has rejected the reasoning in the Hoskins decision,

and concluded that the defendants could be

criminally liable for conspiracy to violate the FCPA

anti-bribery provisions, and aiding and abetting

a violation, even though they do not “belong to

the class of individuals capable of committing a

substantive FCPA violation.”

209

Additional Principles of Civil

Liability for Anti-Bribery

Violations: Aiding and Abetting

and Causing

Both companies and individuals can be held

civilly liable for aiding and abetting FCPA anti-

bribery violations if they knowingly or recklessly

provide substantial assistance to a violator.

210

Similarly, in the administrative proceeding context,

companies and individuals may be held liable for

causing FCPA violations.

211

This liability extends to

the subsidiaries and agents of U.S. issuers.

In one case, the U.S. subsidiary of a Swiss

freight forwarding company was held civilly liable for

paying bribes on behalf of its customers in several

countries.

212

Although the U.S. subsidiary was not

an issuer for purposes of the FCPA, it was an “agent”

of several U.S. issuers. By paying bribes on behalf of

its issuers’ customers, the subsidiary both directly

violated the FCPA and aided and abetted the issuers’

FCPA violations.

What Is the Applicable Statute

of Limitations?

Statute of Limitations in Criminal Cases

The FCPA’s anti-bribery and accounting

provisions do not specify a statute of limitations for

criminal actions. Accordingly, the general statutes of

limitations periods apply. For substantive violations

of the FCPA anti-bribery provisions, the ve-year

limitations period set forth in 18 U.S.C. § 3282

applies.

213

For violations of the FCPA accounting

provisions, which are dened as “securities fraud

oense[s]” under 18 U.S.C. § 3301, there is a

limitations period of six years.

214

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

In cases involving FCPA conspiracies, the

government may be able to reach conduct

occurring before the general limitations period

applicable to conspiracies under 18 U.S.C. § 371.

For conspiracy oenses, the government generally

need prove only that one act in furtherance of the

conspiracy occurred during the limitations period,

thus enabling the government to prosecute bribes

paid or accounting violations occurring more than

ve or six years, respectively, prior to the ling of

formal charges.

215

There are at least two ways in which the

applicable limitations period is commonly

extended. First, companies or individuals

cooperating with DOJ may enter into a tolling

agreement that voluntarily extends the limitations

period. Companies and individuals may choose

to do this so that they may have additional time

to do their own investigation of the conduct, as

well as to give them an opportunity to meet with

the government to discuss the case and attempt

to reach a negotiated resolution. Second, under

18 U.S.C. § 3292, the government may seek a

court order suspending the statute of limitations

period in a criminal case for up to three years in

order to obtain evidence from foreign countries.

Generally, the suspension period begins when the

ocial request is made by the U.S. government to

the foreign authority and ends on the earlier of

the date on which the foreign authority takes nal

action on the request, or three years.

216

Statute of Limitations in Civil Actions

In civil cases brought by SEC, the statute

of limitations is set by 28 U.S.C. § 2462, which

provides for a ve-year limitation on any “suit or

proceeding for the enforcement of any civil ne,

penalty, or forfeiture.” The ve-year period begins

to run “when the claim rst accrued.” The ve-year

limitations period applies to SEC actions seeking

civil penalties, but it does not prevent SEC from

seeking equitable remedies, such as an injunction,

for conduct pre-dating the ve-year period. In

Kokesh v. SEC, the Supreme Court ruled that, because

the disgorgement remedy constitutes a “penalty,”

it is therefore subject to the ve-year statute of

limitations in 28 U.S.C. § 2462.

217

In cases against individuals who are not

residents of the United States, the statute is tolled

for any period when the defendants are not “found

within the United States in order that proper service

may be made thereon.”

218

Furthermore, companies

or individuals may enter into tolling agreements

that voluntarily extend the limitations period.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Chapter 3

The FCPA:

Accounting Provisions

THE FCPA: ACCOUNTING PROVISIONS

In addition to the anti-bribery provisions, the FCPA contains accounting provisions applicable

to public companies. The FCPA’s accounting provisions operate in tandem with the anti-

bribery provisions

219

and prohibit o-the-books accounting. Company management and

investors rely on a company’s nancial statements and internal accounting controls to

ensure transparency in the nancial health of the business, the risks undertaken, and the

transactions between the company and its customers and business partners. The accounting

provisions are designed to “strengthen the accuracy of the corporate books and records

and the reliability of the audit process which constitute the foundations of our system of

corporate disclosure.”

220

The accounting provisions consist of two

primary components. First, under the “books and

records” provision, issuers must make and keep

books, records, and accounts that, in reasonable

detail, accurately and fairly reect an issuer’s

transactions and dispositions of an issuer’s

assets.

221

Second, under the “internal controls”

provision, issuers must devise and maintain a

system of internal accounting controls sucient

to assure management’s control, authority,

and responsibility over the rm’s assets.

222

These components, and other aspects of the

accounting provisions, are discussed in greater

detail below.

Although the accounting provisions were

originally enacted as part of the FCPA, they do not

apply only to bribery-related violations. Rather,

the accounting provisions require that all public

companies account for all of their assets and

liabilities accurately and in reasonable detail, and

they form the backbone for most accounting fraud

and issuer disclosure cases brought by DOJ and

SEC.

223

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

In the past, “corporate bribery has been

concealed by the falsication of corporate

books and records” and the accounting

provisions “remove[] this avenue of

coverup.”

Senate Report No. 95-114, at 3 (1977)

What Is Covered by the Accounting

Provisions?

Books and Records Provision

Bribes, both foreign and domestic, are

often mischaracterized in companies’ books and

records. Section 13(b)(2)(A) of the Exchange Act

(15 U.S.C. § 78m(b)(2)(A)), commonly called the

“books and records” provision, requires issuers

to “make and keep books, records, and accounts,

which, in reasonable detail, accurately and fairly

reect the transactions and dispositions of the

assets of the issuer.”

224

The “in reasonable detail”

qualication was adopted by Congress “in light of

the concern that such a standard, if unqualied,

might connote a degree of exactitude and precision

which is unrealistic.”

225

The addition of this phrase

was intended to make clear “that the issuer’s

records should reect transactions in conformity

with accepted methods of recording economic

events and eectively prevent o-the-books slush

funds and payments of bribes.”

226

The term “reasonable detail” is dened

in the statute as the level of detail that would

“satisfy prudent ocials in the conduct

of their own aairs.”

227

Thus, as Congress

noted when it adopted this denition,

“[t]he concept of reasonableness of necessity

contemplates the weighing of a number of relevant

factors, including the costs of compliance.”

228

Although the standard is one of reasonable

detail, it is never appropriate to mischaracterize

transactions in a company’s books and records.

229

Bribes are often concealed under the guise of

legitimate payments, such as commissions or

consulting fees.

In instances where all the elements of a

violation of the anti-bribery provisions are not

met—where, for example, there was no use of

interstate commerce—companies nonetheless

may be liable if the improper payments are

inaccurately recorded. Consistent with the FCPA’s

approach to prohibiting payments of any value

that are made with a corrupt purpose, there is no

materiality threshold under the books and records

provision. In combination with the internal controls

provision, the requirement that issuers maintain

books and records that accurately and fairly

reect the corporation’s transactions “assure[s],

among other things, that the assets of the issuer

are used for proper corporate purpose[s].”

230

with the anti-bribery provisions, DOJ’s and SEC’s

enforcement of the books and records provision

has typically involved misreporting of either

large bribe payments or widespread inaccurate

recording of smaller payments made as part of a

systematic pattern of bribery, and both DOJ and

SEC look to the nature and seriousness of the

conduct in determining whether to pursue an

enforcement action.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Bribes Have Been Mischaracterized As:

• Commissions or Royalties

• Consulting Fees

• Sales and Marketing Expenses

• Scientic Incentives or Studies

• Travel and Entertainment Expenses

• Rebates or Discounts

• After Sales Service Fees

• Miscellaneous Expenses

• Petty Cash Withdrawals

• Free Goods

• Intercompany Accounts

• Supplier / Vendor Payments

• Write-os

• “Customs Intervention” Payments

Internal Accounting Controls Provision

The payment of bribes often occurs in

companies that have weak internal accounting

control environments. Internal controls over

nancial reporting are the processes used by

companies to provide reasonable assurances

regarding the reliability of nancial reporting and

the preparation of nancial statements. They

include various components, such as: a control

environment that covers the tone set by the

organization regarding integrity and ethics; risk

assessments; control activities that cover policies and

procedures designed to ensure that management

directives are carried out (e.g., approvals,

authorizations, reconciliations, and segregation

of duties); information and communication; and

monitoring. Section 13(b)(2)(B) of the Exchange Act

(15 U.S.C. § 78m(b)(2)(B)), commonly called the

“internal controls” provision, requires issuers to:

devise and maintain a system of internal accounting

controls sucient to provide reasonable assurances

that—

• (i) transactions are executed in accordance

with management’s general or specic

authorization;

• (ii) transactions are recorded as necessary

(I) to permit preparation of nancial

statements in conformity with generally

accepted accounting principles or any other

criteria applicable to such statements, and (II)

to maintain accountability for assets;

• (iii) access to assets is permitted only in

accordance with management’s general or

specic authorization; and

• (iv) the recorded accountability for assets

is compared with the existing assets at

reasonable intervals and appropriate action is

taken with respect to any dierences ….

231

Like the “reasonable detail” requirement in

the books and records provision, the Act denes

“reasonable assurances” as “such level of detail

and degree of assurance as would satisfy prudent

ocials in the conduct of their own aairs.”

232

The Act does not specify a particular set of

controls that companies are required to implement.

Rather, the internal accounting controls provision

gives companies the exibility to develop and

maintain a system of controls that is appropriate to

their particular needs and circumstances.

Although a company’s internal accounting

controls are not synonymous with a company’s

compliance program, an eective compliance

program contains a number of components that

may overlap with a critical component of an issuer’s

internal accounting controls. Fundamentally, the

design of a company’s internal controls must take

into account the operational realities and risks

attendant to the company’s business, such as: the

nature of its products or services; how the products

or services get to market; the nature of its work

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

force; the degree of regulation; the extent of its

government interaction; and the degree to which

it has operations in countries with a high risk of

corruption. Just as a company’s internal accounting

controls are tailored to its operations, its compliance

program needs to be tailored to the risks specic to

its operations. Businesses whose operations expose

them to a high risk of corruption will necessarily

devise and employ dierent compliance programs

than businesses that have a lesser exposure to

corruption, just as a nancial services company

would be expected to devise and employ dierent

internal accounting controls than a manufacturer.

Companies with ineective internal controls

often face risks of embezzlement and self-

dealing by employees, commercial bribery,

export control problems, and violations of other

U.S. and local laws.

A 2008 case against a German manufacturer

of industrial and consumer products illustrates a

systemic internal controls problem involving bribery

that was unprecedented in scale and geographic

reach.

From 2001 to 2007, the company created

elaborate payment schemes—including slush funds,

o the-books accounts, and systematic payments

to business consultants and other intermediaries—

to facilitate bribery. Payments were made in ways

that obscured their purpose and the ultimate

recipients of the money. In some cases, employees

obtained large amounts of cash from cash desks

and then transported the cash in suitcases across

international borders. Authorizations for some

payments were placed on sticky notes and later

removed to avoid any permanent record. The

company made payments totaling approximately

$1.36 billion through various mechanisms, including

$805.5 million as bribes and $554.5 million for

unknown purposes.

233

The company was charged

with internal controls and books and records

violations, along with anti-bribery violations, and

paid over $1.6 billion to resolve the case with

authorities in the United States and Germany.

234

The types of internal control failures identied

in the above example exist in many other cases

where companies were charged with internal

controls violations.

235

A 2010 case against a

multinational automobile manufacturer involved

bribery that occurred over a long period of time in

multiple countries.

236

In that case, the company

used dozens of ledger accounts, known internally

as “internal third party accounts,” to maintain credit

balances for the benet of government ocials.

237

The accounts were funded through several bogus

pricing mechanisms, such as “price surcharges,”

“price inclusions,” or excessive commissions.

238

The company also used articial discounts or

rebates on sales contracts to generate the money

to pay the bribes.

239

The bribes also were made

through phony sales intermediaries and corrupt

business partners, as well as through the use of

cash desks.

240

Sales executives would obtain cash

from the company in amounts as high as hundreds

of thousands of dollars, enabling the company to

obscure the purpose and recipients of the money

paid to government ocials.

241

In addition to

bribery charges, the company was charged with

internal controls and books and records violations.

Good internal accounting controls can prevent

not only FCPA violations, but also other illegal or

unethical conduct by the company, its subsidiaries,

and its employees. DOJ and SEC have repeatedly

brought FCPA cases that also involved other

types of misconduct, such as nancial fraud,

242

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commercial bribery,

243

export controls violations,

244

and embezzlement or self-dealing by company

employees.

245

Potential Reporting and Anti-Fraud

Violations

Issuers have reporting obligations under

Section 13(a) of the Exchange Act, which requires

issuers to le an annual report that contains

comprehensive information about the issuer.

Failure to properly disclose material information

about the issuer’s business, including material

revenue, expenses, prots, assets, or liabilities

related to bribery of foreign government ocials,

may give rise to anti-fraud and reporting violations

under Sections 10(b) and 13(a) of the Exchange Act.

For example, a California-based technology

company was charged with reporting violations, in

addition to violations of the FCPA’s anti-bribery and

accounting provisions, when its bribery scheme led

to material misstatements in its SEC lings.

246

The

company was awarded contracts procured through

bribery of Chinese ocials that generated material

revenue and prots. The revenue and prots helped

the company oset losses incurred to develop new

products expected to become the company’s future

source of revenue growth. The company improperly

recorded the bribe payments as sales commission

expenses in its books and records.

Companies engaged in bribery may also be

involved in activity that violates the anti-fraud and

reporting provisions. For example, an oil and gas

pipeline company and its employees perpetrated

a long-running scheme to use the company’s petty

cash accounts in Nigeria to make a variety of corrupt

payments to Nigerian tax and court ocials using

false invoices.

247

The company and its employees

also engaged in a fraudulent scheme to minimize

the company’s tax obligations in Bolivia by using

false invoices to claim false offsets to its value-

added tax obligations. The scheme resulted in

material overstatements of the company’s net

income in the company’s financial statements,

which violated the Exchange Act’s anti-fraud and

reporting provisions. Both schemes also violated

the books and records and internal controls

provisions.

What Are Management’s Other

Obligations?

Sarbanes-Oxley Act of 2002

In 2002, in response to a series of accounting

scandals involving U.S. companies, Congress

enacted the Sarbanes-Oxley Act (Sarbanes-Oxley

or SOX),

248

which strengthened the accounting

requirements for issuers. All issuers must comply

with Sarbanes-Oxley’s requirements, several of

which have FCPA implications.

SOX Section 302 (15 U.S.C. § 7241)—Responsibility

of Corporate Ocers for the Accuracy and Validity

of Corporate Financial Reports

Section 302 of Sarbanes-Oxley requires that

a company’s “principal ocers” (typically the

Chief Executive Ocer (CEO) and Chief Financial

Ocer (CFO)) take responsibility for and certify the

integrity of their company’s nancial reports on a

quarterly basis. Under Exchange Act Rule 13a-14,

which is commonly called the “SOX certication”

rule, each periodic report led by an issuer must

include a certication signed by the issuer’s

principal executive ocer and principal nancial

ocer stating, among other things, that: (i) based

on the ocer’s knowledge, the report contains no

material misstatements or omissions; (ii) based

on the ocer’s knowledge, the relevant nancial

statements are accurate in all material respects;

(iii) internal controls are properly designed; and

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(iv) the certifying ocers have disclosed to the

issuer’s audit committee and auditors all signicant

internal control deciencies.

SOX Section 404 (15 U.S.C. § 7262)—Reporting on

the State of a Company’s Internal Controls over

Financial Reporting

Sarbanes-Oxley also strengthened a company’s

required disclosures concerning the state of its

internal controls over nancial reporting. Under

Section 404, issuers are required to present in their

annual reports management’s conclusion regarding

the eectiveness of the company’s internal controls

over nancial reporting. This statement must also

assess the eectiveness of such internal controls

and procedures. In addition, the company’s

independent auditor must attest to and report on

its assessment of the eectiveness of the company’s

internal controls over nancial reporting.

As directed by Section 404, SEC has adopted

rules requiring issuers and their independent

auditors to report to the public on the eectiveness

of the company’s internal controls over nancial

reporting.

249

These internal controls include those

related to illegal acts and fraud—including acts of

bribery—that could result in a material misstatement

of the company’s nancial statements.

250

In 2007,

SEC issued guidance on controls over nancial

reporting.

251

SOX Section 802 (18 U.S.C. §§ 1519 and 1520)—

Criminal Penalties for Altering Documents

Section 802 of Sarbanes-Oxley prohibits

altering, destroying, mutilating, concealing, or

falsifying records, documents, or tangible objects

with the intent to obstruct, impede, or inuence a

potential or actual federal investigation. This section

also prohibits any accountant from knowingly and

willfully violating the requirement that all audit or

review papers be maintained for a period of ve

years.

Who Is Covered by the Accounting

Provisions?

Civil Liability for Issuers, Subsidiaries, and

Aliates

The FCPA’s accounting provisions apply to

every issuer that has a class of securities registered

pursuant to Section 12 of the Exchange Act or

that is required to le annual or other periodic

reports pursuant to Section 15(d) of the Exchange

Act.

252

These provisions apply to any issuer whose

securities trade on a national securities exchange

in the United States, including foreign issuers with

exchange-traded American Depository Receipts.

253

They also apply to companies whose stock trades

in the over-the-counter market in the United States

and which le periodic reports with the Commission,

such as annual and quarterly reports. Unlike the

FCPA’s anti-bribery provisions, the accounting

provisions do not apply to private companies.

254

Although the FCPA’s accounting provisions are

directed at “issuers,” an issuer’s books and records

include those of its consolidated subsidiaries and

aliates. An issuer’s responsibility thus extends

to ensuring that subsidiaries or aliates under its

control, including foreign subsidiaries and joint

ventures, comply with the accounting provisions.

For instance, DOJ and SEC brought enforcement

actions against a California company for violating

the FCPA’s accounting provisions when two Chinese

joint ventures in which it was a partner paid more

than $400,000 in bribes over a four-year period

to obtain business in China.

255

Sales personnel in

China made the illicit payments by obtaining cash

advances from accounting personnel, who recorded

the payments on the books as “business fees” or

“travel and entertainment” expenses. Although

the payments were made exclusively in China

by Chinese employees of the joint venture, the

California company failed to have adequate internal

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controls and failed to act on red ags indicating that

its aliates were engaged in bribery. The California

company paid $1.15 million in civil disgorgement

and a criminal monetary penalty of $1.7 million.

Companies may not be able to exercise

the same level of control over a minority-owned

subsidiary or aliate as they do over a majority or

wholly owned entity. Therefore, if a parent company

owns 50% or less of a subsidiary or aliate, the

parent is only required to use good faith eorts to

cause the minority-owned subsidiary or aliate to

devise and maintain a system of internal accounting

controls consistent with the issuer’s own obligations

under the FCPA.

256

In evaluating an issuer’s good

faith eorts, all the circumstances—including “the

relative degree of the issuer’s ownership of the

domestic or foreign rm and the laws and practices

governing the business operations of the country

in which such rm is located”—are taken into

account.

257

Civil Liability for Individuals and Other

Entities

Companies (including subsidiaries of issuers)

and individuals may also face civil liability for aiding

and abetting or causing an issuer’s violation of the

accounting provisions.

258

For example, in April 2010,

SEC charged four individuals—a Country Manager, a

Senior Vice President of Sales, a Regional Financial

Director, and an International Controller of a U.S.

issuer—for their roles in schemes to bribe Kyrgyz

and Thai government ocials to purchase tobacco

from their employer. The complaint alleged that,

among other things, the individuals aided and

abetted the issuer company’s violations of the

books and records and internal controls provisions

by “knowingly provid[ing] substantial assistance to”

the parent company.

259

All four executives settled

the charges against them, consenting to the entry of

nal judgments permanently enjoining them from

violating the accounting and anti-bribery provisions,

with two executives paying civil penalties.

260

in other areas of federal securities law, corporate

ocers also can be held liable as control persons.

261

Similarly, in October 2011, SEC instituted a

proceeding against a U.S. water valve manufacturer

and a former employee of the company’s Chinese

subsidiary for violations of the FCPA’s accounting

provisions.

262

The Chinese subsidiary had made

improper payments to employees of certain

design institutes to create design specications

that favored the company’s valve products. The

payments were disguised as sales commissions

in the subsidiary’s books and records, thereby

causing the U.S. issuer’s books and records to be

inaccurate. The general manager of the subsidiary,

who approved the payments and knew or should

have known that they were improperly recorded,

was ordered to cease-and-desist from committing

or causing violations of the accounting provisions,

among other charges.

263

Additionally, individuals and entities can be

held directly civilly liable for falsifying an issuer’s

books and records or for circumventing internal

controls. Exchange Act Rule 13b2-1 provides:

“No person shall, directly or indirectly, falsify

or cause to be falsied, any book, record or

account subject to [the books and records

provision] of the Securities Exchange Act.”

264

And Section 13(b)(5) of the Exchange Act

(15 U.S.C. § 78m(b)(5)) provides that “[n]o person

shall knowingly circumvent or knowingly fail

to implement a system of internal accounting

controls or knowingly falsify any book, record, or

account ….”

265

The Exchange Act denes “person” to

include a “natural person, company, government, or

political subdivision, agency, or instrumentality of a

government.”

266

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An issuer’s ocers and directors may

also be held civilly liable for making false

statements to a company’s auditor. Exchange Act

Rule 13b2-2 prohibits ocers and directors from

making (or causing to be made) materially false or

misleading statements, including an omission of

material facts, to an accountant. This liability arises

in connection with any audit, review, or examination

of a company’s nancial statements or in connection

with the ling of any document with SEC.

267

Finally, the principal executive and principal

nancial ocer, or persons performing similar

functions, can be held liable for violating Exchange

Act Rule 13a-14 by signing false personal

certications required by SOX. Thus, for example,

in January 2011, SEC charged the former CEO of

a U.S. issuer for his role in schemes to bribe Iraqi

government ocials in connection with the United

Nations Oil-For-Food Programme and to bribe

Iraqi and Indonesian ocials to purchase the

company’s fuel additives. There, the company used

false invoices and sham consulting contracts to

support large bribes that were passed on to foreign

ocials through an agent, and the bribes were

mischaracterized as legitimate commissions and

travel fees in the company’s books and records. The

ocer directed and authorized the bribe payments

and their false recording in the books and records. He

also signed annual and quarterly SOX certications

in which he falsely represented that the company’s

nancial statements were fairly presented and the

company’s internal controls suciently designed,

as well as annual representations to the company’s

external auditors where he falsely stated that he

complied with the company’s code of ethics and

was unaware of any violations of the code of ethics

by anyone else. The ocer was charged with aiding

and abetting violations of the books and records

and internal controls provisions, circumventing

internal controls, falsifying books and records,

making false statements to accountants, and

signing false certications.

268

He consented to the

entry of an injunction and paid disgorgement and a

civil penalty.

269

He also later pleaded guilty in the

United Kingdom to conspiring to corrupt Iraqi and

Indonesian ocials.

270

Criminal Liability for Accounting Violations

Criminal liability can be imposed on companies

and individuals for knowingly and willfully failing

to comply with the FCPA’s books and records or

internal controls provisions.

271

For example, a U.S.-based hedge fund was

criminally charged with violating the books and

records and the internal accounting controls

provisions of the FCPA, among other things. As part

of its deferred prosecution agreement, the company

admitted to falsifying its books and records by

falsifying records related to the retention and nature

of services of, and payments to, an intermediary it

used in Libya in order to conceal the true nature of

the payments. Also, the hedge fund admitted that

it failed to implement a system of internal controls

relating to due diligence for the retention of third-

party intermediaries, pre-clearance and approval

of agreements with third parties and agents,

notication to clients and prospective clients of

arrangements with third parties having an impact

on the client arrangements, documentation and

proof of services provided by the third parties,

auditing assets and operations in areas that posed

a high risk of corruption, ensuring appropriate

justication for the use of and payment to nominee

entities, and oversight of payment processes to

ensure that payments were made pursuant to

appropriate controls.

272

Similarly, a U.S.-based

electronics company entered into a deferred

prosecution agreement to resolve charges that it

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

knowingly and willfully caused its Japanese-parent

issuer to falsify its books and records concerning the

improper retention of consultants and concealment

of payments to third-party sales agents. As part

of its agreement, the company admitted that it

retained certain so-called consultants, who did

little or no actual consulting work, through a third-

party service provider and paid for those services

out of a budget over which a senior executive

had complete control and discretion, without

meaningful oversight by anyone at the company or

the parent. By mischaracterizing these payments

as “consultant payments” on its general ledger, the

company caused its issuer-parent to incorrectly

designate those payments as “selling and general

administrative expenses” on its books, records, and

accounts. In addition, the company admitted that

its senior executives provided false or incomplete

representations about the eectiveness of the

company’s internal controls to the parent on their

Sarbanes-Oxley certications.

273

Individuals can be held criminally liable for

accounting violations. For example, a former

managing director of a U.S. bank’s real estate

business in China pleaded guilty to conspiring

to evade internal accounting controls in order to

transfer a multi-million dollar ownership interest in

a Shanghai building to himself and a Chinese public

ocial with whom he had a personal friendship.

The former managing director repeatedly made

false representations to his employer about the

transaction and the ownership interests involved.

274

Conspiracy and Aiding and Abetting

Liability

Companies (including subsidiaries of issuers)

and individuals may face criminal liability for

conspiring to commit or for aiding and abetting

violations of the accounting provisions.

For example, the subsidiary of a Houston-

based company pleaded guilty both to conspiring to

commit and to aiding and abetting the company’s

books and records and anti-bribery violations.

275

The

subsidiary paid bribes of over $4 million and falsely

characterized the payments as “commissions,”

“fees,” or “legal services,” consequently causing the

company’s books and records to be inaccurate.

Although the subsidiary was not an issuer and

therefore could not be charged directly with an

accounting violation, it was criminally liable for its

involvement in the parent company’s accounting

violation.

Similarly, a U.S. subsidiary of a Swiss freight

forwarding company that was not an issuer was

charged with conspiring to commit and with aiding

and abetting the books and records violations of

its customers, who were issuers and therefore

subject to the FCPA’s accounting provisions.

276

The

U.S. subsidiary substantially assisted the issuer-

customers in violating the FCPA’s books and records

provision by masking the true nature of the bribe

payments in the invoices it submitted to the issuer-

customers.

277

The subsidiary thus faced criminal

liability for its involvement in the issuer-customers’

FCPA violations even though it was not itself subject

to the FCPA’s accounting provisions.

Unlike the FCPA anti-bribery provisions,

the accounting provisions apply to “any

person,” and thus are not subject to the

reasoning in the Second Circuit’s decision in

United States v. Hoskins limiting conspiracy and

aiding and abetting liability under the FCPA

anti-bribery provisions.

278

Auditor Obligations

All public companies in the United States must

le annual nancial statements that have been

prepared in conformity with U.S. Generally Accepted

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Accounting Principles (U.S. GAAP). These accounting

principles are among the most comprehensive in

the world. U.S. GAAP requires an accounting of all

assets, liabilities, revenue, and expenses as well as

extensive disclosures concerning the company’s

operations and nancial condition. A company’s

nancial statements should be complete and fairly

represent the company’s nancial condition.

279

Thus, under U.S. GAAP, any payments to foreign

government ocials must be properly accounted

for in a company’s books, records, and nancial

statements.

U.S. laws, including SEC Rules, require issuers

to undergo an annual external audit of their

nancial statements and to make those audited

nancial statements available to the public by

ling them with SEC. SEC Rules and the rules and

standards issued by the Public Company Accounting

Oversight Board (PCAOB) under SEC oversight,

require external auditors to be independent of the

companies that they audit. Independent auditors

must comply with the rules and standards set forth

by the PCAOB when they perform an audit of a

public company. The audit standards govern, for

example, the auditor’s responsibility concerning

material errors, irregularities, or illegal acts by a

client and its ocers, directors, and employees.

Additionally, the auditor has a responsibility to

obtain an understanding of an entity’s internal

controls over nancial reporting as part of its audit

and must communicate all signicant deciencies

and material weaknesses identied during the

audit to management and the audit committee.

280

Under Section 10A of the Exchange Act,

independent auditors who discover an illegal

act, such as the payment of bribes to domestic

or foreign government ocials, have certain

obligations in connection with their audits of public

companies.

281

Generally, Section 10A requires

auditors who become aware of illegal acts to report

such acts to appropriate levels within the company

and, if the company fails to take appropriate action,

to notify SEC.

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OTHER RELATED U.S. LAWS

Businesses and individuals should be aware that conduct that violates the FCPA’s anti-

bribery or accounting provisions may also violate other statutes or regulations. Moreover,

payments to foreign government ocials and intermediaries may violate these laws even

if all of the elements of an FCPA violation are not present.

Travel Act

The Travel Act, 18 U.S.C. § 1952, prohibits travel

in interstate or foreign commerce or using the mail

or any facility in interstate or foreign commerce,

with the intent to distribute the proceeds of any

unlawful activity or to promote, manage, establish,

or carry on any unlawful activity.

282

“Unlawful

activity” includes violations of not only the FCPA, but

also state commercial bribery laws. Thus, bribery

between private commercial enterprises may, in

some circumstances, be covered by the Travel

Act. Said dierently, if a company pays kickbacks

to an employee of a private company who is not

a foreign ocial, such private-to-private bribery

could possibly be charged under the Travel Act.

DOJ has previously charged both individual

and corporate defendants in FCPA cases with

violations of the Travel Act.

283

For instance, an

individual investor was convicted of conspiracy to

violate the FCPA and the Travel Act in 2009 where

the relevant “unlawful activity” under the Travel Act

was an FCPA violation involving a bribery scheme in

Azerbaijan.

284

Also in 2009, a California company

that engaged in both bribery of foreign ocials in

violation of the FCPA and commercial bribery in

violation of California state law pleaded guilty to

conspiracy to violate the FCPA and the Travel Act,

among other charges.

285

Money Laundering

Many FCPA cases also involve violations of

anti-money laundering statutes.

286

For example,

two Florida executives of a Miami-based

telecommunications company were convicted of

Chapter 4

Other Related

U.S. Laws

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

FCPA and money laundering conduct where they

conducted nancial transactions involving the

proceeds of specied unlawful activities—violations

of the FCPA, the criminal bribery laws of Haiti, and

wire fraud—in order to conceal and disguise these

proceeds.

Notably, although foreign ocials cannot

be prosecuted for FCPA violations,

287

they can be

prosecuted for money laundering violations where

the specied unlawful activity is a violation of the

FCPA.

288

Mail and Wire Fraud

The mail and wire fraud statutes may also

apply. In 2006, for example, a wholly owned foreign

subsidiary of a U.S. issuer pleaded guilty to both

FCPA and wire fraud counts where the scheme

included overbilling the subsidiary’s customers—

both government and private—and using part of

the overcharged money to pay kickbacks to the

customers’ employees. The wire fraud charges

alleged that the subsidiary had funds wired from

its parent’s Oregon bank account to o-the-books

bank accounts in South Korea that were controlled

by the subsidiary. The funds, amounting to almost

$2 million, were then paid to managers of state-

owned and private steel production companies

in China and South Korea as illegal commission

payments and kickbacks that were disguised

as refunds, commissions, and other seemingly

legitimate expenses.

289

Certication and Reporting

Violations

Certain other licensing, certication, and

reporting requirements imposed by the U.S.

government can also be implicated in the foreign

bribery context. For example, as a condition of its

facilitation of direct loans and loan guarantees to a

foreign purchaser of U.S. goods and services, the

Export-Import Bank of the United States requires

the U.S. supplier to make certications concerning

commissions, fees, or other payments paid in

connection with the nancial assistance and that

it has not and will not violate the FCPA.

290

A false

certication may give rise to criminal liability for

false statements.

291

Similarly, manufacturers, exporters, and

brokers of certain defense articles and services

are subject to registration, licensing, and reporting

requirements under the Arms Export Control

Act (AECA), 22 U.S.C. § 2751, et seq., and its

implementing regulations, the International Trac

in Arms Regulations (ITAR), 22 C.F.R. § 120, et seq. For

example, under AECA and ITAR, all manufacturers

and exporters of defense articles and services must

Controls. The sale of defense articles and services

valued at $500,000 or more triggers disclosure

requirements concerning fees and commissions,

including bribes, in an aggregate amount of

$100,000 or more.

292

Violations of AECA and ITAR

can result in civil and criminal penalties.

293

Tax Violations

Individuals and companies who violate the

FCPA may also violate U.S. tax law, which explicitly

prohibits tax deductions for bribes, such as false

sales “commissions” deductions intended to

conceal corrupt payments.

294

Internal Revenue

Service – Criminal Investigation has been involved

in a number of FCPA investigations involving tax

violations, as well as other nancial crimes like

money laundering.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

GUIDING PRINCIPLES OF ENFORCEMENT

What Does DOJ Consider When

Deciding Whether to Open an

Investigation or Bring Charges?

Whether and how DOJ will commence, decline,

or otherwise resolve an FCPA matter is guided by

the Principles of Federal Prosecution in the case of

individuals, and the Principles of Federal Prosecution

of Business Organizations and FCPA Corporate

Enforcement Policy in the case of companies.

DOJ Principles of Federal Prosecution

The Principles of Federal Prosecution, set forth in

Chapter 9-27.000 of the Justice Manual,

295

provide

guidance for DOJ prosecutors regarding initiating

or declining prosecution, selecting charges, and

plea-bargaining. The Principles of Federal Prosecution

provide that prosecutors should recommend or

commence federal prosecution if the putative

defendant’s conduct constitutes a federal oense

and the admissible evidence will probably be

sucient to obtain and sustain a conviction unless:

(1) no substantial federal interest would be served

by prosecution; (2) the person is subject to eective

prosecution in another jurisdiction; or (3) an

adequate non-criminal alternative to prosecution

exists. In assessing the existence of a substantial

federal interest, the prosecutor is advised to “weigh

all relevant considerations,” including the nature

and seriousness of the oense; the deterrent

eect of prosecution; the person’s culpability in

connection with the oense; the person’s history

with respect to criminal activity; the person’s

willingness to cooperate in the investigation or

prosecution of others; and the probable sentence

or other consequences if the person is convicted.

The Principles of Federal Prosecution also set out

the considerations to be weighed when deciding

whether to enter into a plea agreement with an

individual defendant, including the nature and

seriousness of the oense and the person’s

willingness to cooperate, as well as the desirability

of prompt and certain disposition of the case and

the expense of trial and appeal.

296

DOJ Principles of Federal Prosecution

of Business Organizations

The Principles of Federal Prosecution of Business

Organizations, set forth in Chapter 9-28.000 of the

Chapter 5

Guiding Principles

of Enforcement

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Justice Manual,

297

provide guidance regarding

the resolution of cases involving corporate

wrongdoing. The Principles of Federal Prosecution

of Business Organizations recognize that resolution

of corporate criminal cases by means other than

indictment, including non-prosecution and deferred

prosecution agreements, may be appropriate in

certain circumstances. Ten factors are considered in

conducting an investigation, determining whether

to charge a corporation, and negotiating plea or

other agreements:

• the nature and seriousness of the oense,

including the risk of harm to the public;

• the pervasiveness of wrongdoing within the

corporation, including the complicity in, or the

condoning of, the wrongdoing by corporate

management;

• the corporation’s history of similar

misconduct, including prior criminal, civil, and

regulatory enforcement actions against it;

• the corporation’s willingness to cooperate with

the government’s investigation, including as

to potential wrongdoing by the corporation’s

agents;

• the adequacy and eectiveness of the

corporation’s compliance program at the

time of the oense, as well as at the time of a

charging or resolution decision;

• the corporation’s timely and voluntary

disclosure of wrongdoing;

• the corporation’s remedial actions, including

any eorts to implement an adequate and

eective corporate compliance program

or to improve an existing one, to replace

responsible management, to discipline or

terminate wrongdoers, or to pay restitution;

• collateral consequences, including

whether there is disproportionate harm to

shareholders, pension holders, employees,

and others not proven personally culpable, as

well as impact on the public arising from the

prosecution;

• the adequacy of remedies such as civil or

regulatory enforcement actions, including

remedies resulting from the corporation’s

cooperation with relevant government

agencies; and

• the adequacy of the prosecution of individuals

responsible for the corporation’s malfeasance.

As these factors illustrate, in many

investigations it will be appropriate for a

prosecutor to consider a corporation’s pre-

indictment conduct, including voluntary disclosure,

cooperation, and remediation, in determining

whether to seek an indictment. In assessing

a corporation’s cooperation, prosecutors are

prohibited from requesting attorney-client

privileged materials with two exceptions—when

a corporation or its employee asserts an advice-

of-counsel defense and when the attorney-client

communications were in furtherance of a crime or

fraud. Otherwise, an organization’s cooperation

may only be assessed on the basis of whether

it disclosed the relevant facts underlying an

investigation—and not on the basis of whether

it has waived its attorney-client privilege or work

product protection.

298

DOJ FCPA Corporate Enforcement Policy

The FCPA Corporate Enforcement Policy

(CEP), contained in the Justice Manual, provides

that, where a company voluntarily self-discloses

misconduct, fully cooperates, and timely and

appropriately remediates, there will be a

presumption that DOJ will decline prosecution of

the company absent aggravating circumstances.

299

CEP declinations are public and available on the

Fraud Section’s website at https://www.justice.

gov/criminal-fraud/corporate-enforcement-

policy/declinations. Aggravating circumstances

that may warrant a criminal resolution instead

of a declination include, but are not limited

to: involvement by executive management of

the company in the misconduct; a signicant

prot to the company from the misconduct;

pervasiveness of the misconduct within the

company; and criminal recidivism.

300

Even where

aggravating circumstances exist, DOJ may still

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decline prosecution, as it did in several cases in

which senior management engaged in the bribery

scheme.

301

If a criminal resolution is appropriate,

where a company that voluntarily self-discloses,

fully cooperates, and timely and appropriately

remediates, DOJ will accord, or recommend to a

sentencing court, a 50% reduction o of the low end

of the U.S. Sentencing Guidelines (Guidelines) ne

range, except in the case of a criminal recidivist;

and generally will not require appointment of a

monitor if a company has, at the time of resolution,

implemented an eective compliance program.

302

The CEP also recognizes the potential benets

of corporate mergers and acquisitions, particularly

when the acquiring entity has a robust compliance

program in place and implements that program as

quickly as practicable at the merged or acquired

entity. Accordingly, where a company undertakes a

merger or acquisition, uncovers misconduct by the

merged or acquired entity through thorough and

timely due diligence or, in appropriate instances,

through post-acquisition audits or compliance

integration eorts, and voluntarily self-discloses the

misconduct and otherwise takes action consistent

with the CEP, there will be a presumption of a

declination in accordance with and subject to the

other requirements of the CEP. In appropriate cases,

an acquiring company that discloses misconduct

may be eligible for a declination, even if aggravating

circumstances existed as to the acquired entity.

Where a company does not voluntarily

self-disclose the misconduct, but nevertheless

fully cooperates, and timely and appropriately

remediates, the company will receive, or the

Department will recommend to a sentencing court,

up to a 25% reduction o of the low end of the

Guidelines ne range.

303

To be eligible for the benets of the CEP,

including a declination, the company is required to

pay all disgorgement, forfeiture, and/or restitution

resulting from the misconduct at issue.

304

The CEP also provides denitions of the terms

“voluntary self-disclosure,” “full cooperation,” and

“timely and appropriate remediation.” By outlining

in the Justice Manual how DOJ denes these terms

and the benets that will accrue to a company that

engages in such behavior, companies can make an

informed decision as to whether they believe such

behavior is in their best interest. Of course, if a

company chooses not to engage in such behavior,

and DOJ learns of the misconduct and establishes

sucient proof for prosecution, the company

should not expect to receive any benets outlined

in the CEP or to otherwise receive leniency.

305

The CEP applies only to DOJ, and does not bind

or apply to SEC.

306

The CEP and the declinations

that have been announced pursuant to it are posted

on DOJ’s website.

307

Three such cases are as follows:

CEP Declination Example 1

In 2018, DOJ declined prosecution of a privately

held company based in the United Kingdom that

manufactures and sells equipment used to detect

earthquakes and other seismic events. The

company had voluntarily self-disclosed to DOJ

that it had made numerous payments amounting

to nearly $1 million to the director of a Korean

government-funded research center. Following the

disclosure of these payments, DOJ indicted the

director and in July 2017 tried and convicted him

in the Central District of California of one count of

money laundering in violation of 18 U.S.C. § 1957.

The director was subsequently sentenced to 14

months in prison in October 2017.

The company received a declination under

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the CEP because it voluntarily self-disclosed,

fully cooperated, and timely and appropriately

remediated pursuant to the CEP. In addition, the

company was the subject of a parallel investigation

by the United Kingdom’s Serious Fraud Oce (SFO)

for legal violations relating to the same conduct

and committed to accepting responsibility with

the SFO (the company subsequently entered into

a deferred prosecution with the SFO and agreed to

pay approximately £2.07M of gross prots arising

from the payments to the director).

CEP Declination Example 2

In 2018, DOJ declined prosecution of

an insurance company incorporated and

headquartered in Barbados. DOJ’s investigation

found that the company, through its employees

and agents, paid approximately $36,000 in bribes

to a Barbadian government ocial in exchange

for insurance contracts resulting in approximately

$686,827 in total premiums for the contracts and

approximately $93,940 in net prots. Specically,

in or around August 2015 and April 2016, high-level

employees of the company took part in a scheme to

pay approximately $36,000 in bribes to the Minister

of Industry in Barbados, and to launder the bribe

payments into the United States.

Despite the high-level involvement of

corporate ocers in the misconduct, DOJ

declined prosecution based on a number of

factors, including but not limited to: (1) the

company’s timely, voluntary self-disclosure of

the conduct; (2) the company’s thorough and

comprehensive investigation; (3) the company’s

cooperation (including its provision of all known

relevant facts about the misconduct) and its

agreement to continue to cooperate in DOJ’s

ongoing investigations and/or prosecutions;

(4) the company’s agreement to disgorge to DOJ

all prots it made from the illegal conduct, which

equaled $93,940; (5) the steps the company had

taken to enhance its compliance program and its

internal accounting controls; (6) the company’s

remediation, including but not limited to

terminating all of the executives and employees

who were involved in the misconduct; and

(7) the fact that DOJ had been able to identify and

charge the culpable individuals.

CEP Declination Example 3

In 2019, DOJ declined prosecution of a

publicly traded technology services company.

DOJ’s investigation found that the company,

through its employees, authorized its agents

to pay an approximately $2 million bribe to

one or more government ocials in India in

exchange for securing and obtaining a statutorily

required planning permit in connection with the

development of an oce park, as well as other

improper payments in connection with other

projects in India. Despite the fact that certain

members of senior management participated in

and directed the criminal conduct at issue, DOJ

declined prosecution of the company based on an

assessment of the factors set forth in the CEP and

the Principles of Federal Prosecution of Business

Organizations, including but not limited to: (1) the

company’s voluntary self-disclosure within two

weeks of the Board learning of the criminal conduct;

(2) the company’s thorough and comprehensive

investigation; (3) the company’s full and proactive

cooperation in the matter (including its provision

of all known relevant facts about the misconduct)

and its agreement to continue to cooperate in

DOJ’s ongoing investigations and any prosecutions

that might result; (4) the nature and seriousness of

the oense; (5) the company’s lack of prior criminal

history; (6) the existence and eectiveness of the

company’s pre-existing compliance program,

as well as steps that it had taken to enhance its

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compliance program and internal accounting

controls; (7) the company’s full remediation,

including but not limited to terminating the

employment of, and disciplining, employees

and contractors involved in misconduct; (8) the

adequacy of remedies such as civil or regulatory

enforcement actions, including the company’s

resolution with SEC and agreement to pay a civil

penalty of $6 million and disgorgement; (9) the

company’s agreement to disgorge the full amount

of its cost savings from the bribery; and (10) the

fact that, as a result of the company’s timely

voluntary disclosure, DOJ was able to conduct an

independent investigation and identify individuals

with culpability for the corporation’s malfeasance.

What Does SEC Sta Consider

When Deciding Whether to Open

an Investigation or Recommend

Charges?

SEC’s Enforcement Manual, published by

SEC’s Enforcement Division and available on SEC’s

website,

308

sets forth information about how SEC

conducts investigations, as well as the guiding

principles that SEC sta considers when determining

whether to open or close an investigation and

whether civil charges are merited. There are

various ways that potential FCPA violations

come to the attention of SEC sta, including: tips

from informants or whistleblowers; information

developed in other investigations; self-reports

or public disclosures by companies; referrals

from other oces or agencies; public sources,

such as media reports and trade publications;

and proactive investigative techniques, including

risk-based initiatives. Investigations can be

formal, such as where SEC has issued a formal

order of investigation that authorizes its sta to

issue investigative subpoenas for testimony and

documents, or informal, such as where the sta

proceeds with the investigation without the use of

investigative subpoenas.

In determining whether to open an

investigation and, if so, whether an enforcement

action is warranted, SEC sta considers a

number of factors, including: the statutes or rules

potentially violated; the egregiousness of the

potential violation; the potential magnitude of the

violation; whether the potentially harmed group

is particularly vulnerable or at risk; whether the

conduct is ongoing; whether the conduct can be

investigated eciently and within the statute of

limitations period; and whether other authorities,

including federal or state agencies or regulators,

might be better suited to investigate the conduct.

SEC sta also may consider whether the case

involves a possibly widespread industry practice

that should be addressed, whether the case

involves a recidivist, and whether the matter gives

SEC an opportunity to be visible in a community

that might not otherwise be familiar with SEC or

the protections aorded by the securities laws.

For more information about the Enforcement

Division’s procedures concerning investigations,

enforcement actions, and cooperation with

other regulators, see the Enforcement Manual at

https://www.sec.gov/divisions/enforce/

enforcementmanual.pdf.

Self-Reporting, Cooperation, and

Remedial Eorts

While the conduct underlying any FCPA inves-

tigation is obviously a fundamental and threshold

consideration in deciding what, if any, action to

take, both DOJ and SEC place a high premium on

self-reporting, along with cooperation and remedial

eorts, in determining the appropriate resolution of

FCPA matters.

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Criminal Cases

Under DOJ’s Principles of Federal Prosecution

of Business Organizations and the CEP, federal

prosecutors consider whether the company

made a voluntary and timely disclosure as well

as the company’s willingness to provide relevant

information and evidence and identify relevant

actors inside and outside the company, including

senior executives.

In addition, prosecutors may consider a

company’s remedial actions, including eorts

to improve an existing compliance program

or appropriate disciplining of wrongdoers.

309

A company’s remedial measures should be

meaningful and illustrate its recognition of the

seriousness of the misconduct, for example,

by taking steps to implement the personnel,

operational, and organizational changes necessary

to establish an awareness among employees that

criminal conduct will not be tolerated.

310

The Principles of Federal Prosecution similarly

provide that prosecutors may consider an

individual’s willingness to cooperate in deciding

whether a prosecution should be undertaken and

how it should be resolved. Although a willingness

to cooperate will not, by itself, generally relieve a

person of criminal liability, it may be given “serious

consideration” in evaluating whether to enter into

a plea agreement with a defendant, depending on

the nature and value of the cooperation oered.

311

The U.S. Sentencing Guidelines similarly

take into account an individual defendant’s

cooperation and voluntary disclosure. Under

§ 5K1.1, a defendant’s cooperation, if suciently

substantial, may justify the government ling a

motion for a reduced sentence. And under § 5K2.16,

a defendant’s voluntary disclosure of an oense

prior to its discovery—if the oense was unlikely

to have been discovered otherwise—may warrant

a downward departure in certain circumstances.

Chapter 8 of the Sentencing Guidelines, which

governs the sentencing of organizations, takes into

account an organization’s remediation as part of

an “eective compliance and ethics program.” One

of the seven elements of such a program provides

that after the detection of criminal conduct, “the

organization shall take reasonable steps to respond

appropriately to the criminal conduct and to prevent

further similar criminal conduct, including making

any necessary modications to the organization’s

compliance and ethics program.”

312

Having an

eective compliance and ethics program may lead

to a three-point reduction in an organization’s

culpability score under § 8C2.5, which aects the

ne calculation under the Guidelines. Similarly,

an organization’s self-reporting, cooperation,

and acceptance of responsibility may lead to ne

reductions under § 8C2.5(g) by decreasing the

culpability score. Conversely, an organization will

not qualify for the compliance program reduction

when it unreasonably delayed reporting the

oense.

313

Similar to § 5K1.1 for individuals,

organizations can qualify for departures pursuant

to § 8C4.1 of the Guidelines for cooperating in the

prosecution of others.

Civil Cases

SEC’s Framework for Evaluating Cooperation by

Companies

SEC’s framework for evaluating cooperation

by companies is set forth in its 2001 Report of

Investigation Pursuant to Section 21(a) of the

Securities Exchange Act of 1934 and Commission

Statement on the Relationship of Cooperation to

Agency Enforcement Decisions, which is commonly

known as the Seaboard Report.

314

The report,

which explained the Commission’s decision not to

take enforcement action against a public company

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for certain accounting violations caused by its

subsidiary, details the many factors SEC considers

in determining whether, and to what extent, it

grants leniency to companies for cooperating in

its investigations and for related good corporate

citizenship. Specically, the report identies four

broad measures of a company’s cooperation:

• self-policing prior to the discovery of the

misconduct, including establishing eective

compliance procedures and an appropriate

tone at the top;

• self-reporting of misconduct when it is

discovered, including conducting a thorough

review of the nature, extent, origins, and

consequences of the misconduct, and

promptly, completely, and eectively

disclosing the misconduct to the public, to

regulatory agencies, and to self-regulatory

organizations;

• remediation, including dismissing or

appropriately disciplining wrongdoers,

modifying and improving internal controls

and procedures to prevent recurrence of the

misconduct, and appropriately compensating

those adversely aected; and

• cooperation with law enforcement authorities,

including providing SEC sta with all

information relevant to the underlying

violations and the company’s remedial eorts.

Since every enforcement matter is dierent,

this analytical framework sets forth general

principles but does not limit SEC’s broad discretion

to evaluate every case individually on its own

unique facts and circumstances. Similar to SEC’s

treatment of cooperating individuals, credit for

cooperation by companies may range from taking

no enforcement action to pursuing reduced

sanctions in connection with enforcement actions.

SEC’s Framework for Evaluating Cooperation by

Individuals

In 2010, SEC announced a new cooperation

program for individuals.

315

SEC sta has a wide

range of tools to facilitate and reward cooperation

by individuals, from taking no enforcement action

to pursuing reduced sanctions in connection with

enforcement actions. Although the evaluation of

cooperation depends on the specic circumstances,

SEC generally evaluates four factors to determine

whether, to what extent, and in what manner to

credit cooperation by individuals:

• the assistance provided by the cooperating

individual in SEC’s investigation or related

enforcement actions, including, among

other things: the value and timeliness of the

cooperation, including whether the individual

was the rst to report the misconduct to SEC

or to oer his or her cooperation; whether

the investigation was initiated based upon

the information or other cooperation by the

individual; the quality of the cooperation,

including whether the individual was truthful

and the cooperation was complete; the time

and resources conserved as a result of the

individual’s cooperation; and the nature of the

cooperation, such as the type of assistance

provided;

• the importance of the matter in which the

individual provided cooperation;

• the societal interest in ensuring that the

cooperating individual is held accountable for

his or her misconduct, including the severity of

the individual’s misconduct, the culpability of

the individual, and the eorts undertaken by

the individual to remediate the harm; and

• the appropriateness of a cooperation credit

in light of the prole of the cooperating

individual.

Corporate Compliance Program

In a global marketplace, an eective

compliance program reinforces a company’s

internal controls and is essential to detecting

and preventing FCPA violations.

316

Eective

compliance programs are tailored to the company’s

specic business and to the risks associated with

that business. They are dynamic and evolve as the

business and the markets change.

An eective compliance program promotes

“an organizational culture that encourages ethical

conduct and a commitment to compliance with

the law.”

317

Such a program protects a company’s

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reputation, ensures investor value and condence,

reduces uncertainty in business transactions,

and secures a company’s assets.

318

A company’s

compliance and ethics program can help prevent,

detect, remediate, and report misconduct, including

FCPA violations, where it is well-constructed,

eectively implemented, appropriately resourced,

and consistently enforced.

In addition to considering whether a

company has self-reported, cooperated, and

taken appropriate remedial actions, DOJ and SEC

also consider the adequacy and eectiveness of a

company’s compliance program at the time of the

misconduct and at the time of the resolution when

deciding what, if any, action to take. In criminal

resolutions, the compliance program factors

into three key areas of decision: (1) the form of

resolution or prosecution, if any; (2) the monetary

penalty, if any; and (3) the compliance obligations

to be included in any corporate criminal resolution

(e.g., whether a compliance monitor is appropriate

and the length and nature of any reporting

obligations).

319

For example, compliance program

adequacy may inuence whether or not charges

should be resolved through a guilty plea, deferred

prosecution agreement (DPA) or non-prosecution

agreement (NPA), as well as the appropriate

length of any DPA or NPA, or the term of

corporate probation.

320

As discussed above, SEC’s

Seaboard Report focuses, among other things, on

a company’s self-policing prior to the discovery

of the misconduct, including whether it had

established eective compliance procedures.

321

Likewise, three of the ten factors set forth in DOJ’s

Principles of Federal Prosecution of Business

Organizations relate, either directly or indirectly, to

a compliance program’s design, implementation,

and eectiveness, including the pervasiveness of

wrongdoing within the company, the adequacy

and eectiveness of the company’s compliance

program, and the nature of the company’s remedial

actions.

322

DOJ also considers the U.S. Sentencing

Guidelines’ elements of an eective compliance

program, as set forth in § 8B2.1 of the Guidelines.

These considerations reect the recognition

that a company’s failure to prevent every single

violation does not necessarily mean that a

particular company’s compliance program was

not generally eective. DOJ and SEC understand

that “no compliance program can ever prevent all

criminal activity by a corporation’s employees,”

323

and they do not hold companies to a standard

of perfection. An assessment of a company’s

compliance program, including its design and

good faith implementation and enforcement, is an

important part of the government’s assessment of

whether a violation occurred, and if so, what action

should be taken. In appropriate circumstances,

DOJ and SEC may decline to pursue charges against

a company based on the company’s eective

compliance program, or may otherwise seek to

reward a company for its program, even when that

program did not prevent the particular underlying

FCPA violation that gave rise to the investigation.

324

DOJ and SEC have no formulaic requirements

regarding compliance programs. Rather, they

employ a common-sense and pragmatic approach

to evaluating compliance programs, making

inquiries related to three basic questions:

• Is the company’s compliance program well

designed?

• Is it being applied in good faith? In other

words, is the program adequately resourced

and empowered to function eectively?

• Does it work in practice?

325

This guide contains information regarding

some of the basic elements DOJ and SEC consider

when evaluating compliance programs. Although

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the focus is on compliance with the FCPA, given

the existence of anti-corruption laws in many other

countries, businesses should consider designing

programs focused on anti-corruption compliance

more broadly.

326

Hallmarks of Eective Compliance

Programs

Individual companies may have dierent

compliance needs depending on their size and the

particular risks associated with their businesses,

among other factors. When it comes to compliance,

there is no one-size-ts-all program. Thus, the

discussion below is meant to provide insight into

the aspects of compliance programs that DOJ

and SEC assess, recognizing that companies may

consider a variety of factors when making their

own determination of what is appropriate for

their specic business needs.

327

Indeed, small and

medium-size enterprises likely will have dierent

compliance programs from large multinational

corporations, a fact DOJ and SEC take into account

when evaluating companies’ compliance programs.

Compliance programs that employ a

“check-the-box” approach may be inecient

and, more importantly, ineective. Because each

compliance program should be tailored to an

organization’s specic needs, risks, and challenges,

the information provided below should not be

considered a substitute for a company’s own

assessment of the corporate compliance program

most appropriate for that particular business

organization. In the end, if designed carefully,

implemented earnestly, and enforced fairly, a

company’s compliance program—no matter how

large or small the organization—will allow the

company generally to prevent violations, detect

those that do occur, and remediate them promptly

and appropriately.

Commitment from Senior Management and a

Clearly Articulated Policy Against Corruption

Within a business organization, compliance

begins with the board of directors and senior

executives setting the proper tone for the rest of

the company. Managers and employees take their

cues from these corporate leaders. Thus, DOJ and

SEC consider the commitment of corporate leaders

to a “culture of compliance”

328

and look to see if

this high-level commitment is also reinforced and

implemented by middle managers and employees at

all levels of a business. A well-designed compliance

program that is not enforced in good faith, such as

when corporate management explicitly or implicitly

encourages employees to engage in misconduct to

achieve business objectives, will be ineective. DOJ

and SEC have often encountered companies with

compliance programs that are strong on paper but

that nevertheless have signicant FCPA violations

because management has failed to eectively

implement the program even in the face of

obvious signs of corruption. This may be the result

of aggressive sales sta preventing compliance

personnel from doing their jobs eectively and of

senior management, more concerned with securing

a valuable business opportunity than enforcing a

culture of compliance, siding with the sales team.

The higher the nancial stakes of the transaction,

the greater the temptation for management to

choose prot over compliance.

A strong ethical culture directly supports a

strong compliance program. By adhering to ethical

standards, senior managers will inspire middle

managers to reinforce those standards. Compliant

middle managers, in turn, will encourage employees

to strive to attain those standards throughout the

organizational structure.

329

In short, compliance with the FCPA and ethical

rules must start at the top. DOJ and SEC thus

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evaluate whether senior management has clearly

articulated company standards, communicated

them in unambiguous terms, adhered to them

scrupulously, and disseminated them throughout

the organization.

Code of Conduct and Compliance Policies and

Procedures

A company’s code of conduct is often the

foundation upon which an eective compliance

program is built. As DOJ has repeatedly noted in its

charging documents, the most eective codes are

clear, concise, and accessible to all employees and

to those conducting business on the company’s

behalf. Indeed, it would be dicult to eectively

implement a compliance program if it was not

available in the local language so that employees

in foreign subsidiaries can access and understand

it. When assessing a compliance program, DOJ and

SEC will review whether the company has taken

steps to make certain that the code of conduct

remains current and eective and whether a

company has periodically reviewed and updated

its code.

Whether a company has policies and

procedures that outline responsibilities for

compliance within the company, detail proper

internal controls, auditing practices, and

documentation policies, and set forth disciplinary

procedures will also be considered by DOJ and

SEC. These types of policies and procedures will

depend on the size and nature of the business

and the risks associated with the business.

Eective policies and procedures require an in-

depth understanding of the company’s business

model, including its products and services,

third-party agents, customers, government

interactions, and industry and geographic risks.

The risks that a company may need to address

include the nature and extent of transactions

with foreign governments, including payments to

foreign ocials; use of third parties; gifts, travel,

and entertainment expenses; charitable and

political donations; and facilitating and expediting

payments. For example, some companies with

global operations have created web-based

approval processes to review and approve

routine gifts, travel, and entertainment involving

foreign ocials and private customers with clear

monetary limits and annual limitations. Many of

these systems have built-in exibility so that senior

management, or in-house legal counsel, can be

apprised of and, in appropriate circumstances,

approve unique requests. These types of systems

can be a good way to conserve corporate resources

while, if properly implemented, preventing and

detecting potential FCPA violations.

Regardless of the specic policies and

procedures implemented, these standards should

apply to personnel at all levels of the company.

Oversight, Autonomy, and Resources

In appraising a compliance program, DOJ and

SEC also consider whether a company has assigned

responsibility for the oversight and implementation

of a company’s compliance program to one or more

specic senior executives within an organization.

330

Those individuals must have appropriate authority

within the organization, adequate autonomy

from management, and sucient resources to

ensure that the company’s compliance program is

implemented eectively.

331

Adequate autonomy

generally includes direct access to an organization’s

governing authority, such as the board of directors

and committees of the board of directors (e.g., the

audit committee).

332

Depending on the size and

structure of an organization, it may be appropriate

for day-to-day operational responsibility to be

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delegated to other specic individuals within a

company.

333

DOJ and SEC recognize that the

reporting structure will depend on the size and

complexity of an organization. Moreover, the

amount of resources devoted to compliance

will depend on the company’s size, complexity,

industry, geographical reach, and risks associated

with the business. In assessing whether a company

has reasonable internal controls, DOJ and SEC

typically consider whether the company devoted

adequate stang and resources to the compliance

program given the size, structure, and risk prole

of the business.

Risk Assessment

Assessment of risk is fundamental to

developing a strong compliance program, and

is another factor DOJ and SEC evaluate when

assessing a company’s compliance program.

334

One-size-ts-all compliance programs are

generally ill-conceived and ineective because

resources inevitably are spread too thin, with too

much focus on low-risk markets and transactions

to the detriment of high-risk areas. Devoting a

disproportionate amount of time policing modest

entertainment and gift-giving instead of focusing

on large government bids, questionable payments

to third-party consultants, or excessive discounts

to resellers and distributors may indicate that a

company’s compliance program is ineective. A

$50 million contract with a government agency

in a high-risk country warrants greater scrutiny

than modest and routine gifts and entertainment.

Similarly, performing identical due diligence on

all third-party agents, irrespective of risk factors,

is often counterproductive, diverting attention

and resources away from those third parties

that pose the most signicant risks. DOJ and SEC

will give meaningful credit to a company that

implements in good faith a comprehensive, risk-

based compliance program, even if that program

does not prevent an infraction in a low risk area

because greater attention and resources had

been devoted to a higher risk area. Conversely, a

company that fails to prevent an FCPA violation

on an economically signicant, high-risk

transaction because it failed to perform a level

of due diligence commensurate with the size and

risk of the transaction is likely to receive reduced

credit based on the quality and eectiveness of its

compliance program.

As a company’s risk for FCPA violations

increases, that business should consider

increasing its compliance procedures, including

due diligence and periodic internal audits. The

degree of appropriate due diligence is fact-specic

and should vary based on industry, country, size,

and nature of the transaction, and the method

and amount of third-party compensation.

Factors to consider, for instance, include risks

presented by: the country and industry sector,

the business opportunity, potential business

partners, level of involvement with governments,

amount of government regulation and oversight,

and exposure to customs and immigration in

conducting business aairs. When assessing a

company’s compliance program, DOJ and SEC

take into account whether and to what degree a

company analyzes and addresses the particular

risks it faces.

Training and Continuing Advice

Compliance policies cannot work unless

eectively communicated throughout a company.

Accordingly, DOJ and SEC will evaluate whether a

company has taken steps to ensure that relevant

policies and procedures have been communicated

throughout the organization, including through

periodic training and certication for all directors,

ocers, relevant employees, and, where

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appropriate, agents and business partners.

335

For

example, many larger companies have implemented

a mix of web-based and in-person training conducted

at varying intervals. Such training typically covers

company policies and procedures, instruction on

applicable laws, practical advice to address real-life

scenarios, and case studies. Regardless of how a

company chooses to conduct its training, however,

the information should be presented in a manner

appropriate for the targeted audience, including

providing training and training materials in the

local language. For example, companies may want

to consider providing dierent types of training to

their sales personnel and accounting personnel

with hypotheticals or sample situations that are

similar to the situations they might encounter. In

addition to the existence and scope of a company’s

training program, a company should develop

appropriate measures, depending on the size

and sophistication of the particular company, to

provide guidance and advice on complying with

the company’s ethics and compliance program,

including when such advice is needed urgently.

Such measures will help ensure that the compliance

program is understood and followed appropriately

at all levels of the company.

Incentives and Disciplinary Measures

In addition to evaluating the design and

implementation of a compliance program throughout

an organization, enforcement of that program is

fundamental to its eectiveness.

336

A compliance

program should apply from the board room to the

supply room—no one should be beyond its reach.

DOJ and SEC will thus consider whether, when

enforcing a compliance program, a company has

appropriate and clear disciplinary procedures,

whether those procedures are applied reliably and

promptly, and whether they are commensurate

with the violation. Many companies have found that

publicizing disciplinary actions internally, where

appropriate under local law, can have an important

deterrent eect, demonstrating that unethical and

unlawful actions have swift and sure consequences.

DOJ and SEC recognize that positive incentives

can also drive compliant behavior. The incentives

can take many forms such as personnel evaluations

and promotions, rewards for improving and

developing a company’s compliance program, and

rewards for ethics and compliance leadership.

337

Some organizations, for example, have made

adherence to compliance a signicant metric for

management’s bonuses so that compliance becomes

an integral part of management’s everyday concern.

Beyond nancial incentives, some companies have

highlighted compliance within their organizations

by recognizing compliance professionals and

internal audit sta. Others have made working in

the company’s compliance organization a way to

advance an employee’s career.

SEC, for instance, has encouraged companies

to embrace methods to incentivize ethical and

lawful behavior:

[M]ake integrity, ethics and compliance

part of the promotion, compensation and

evaluation processes as well. For at the

end of the day, the most eective way to

communicate that “doing the right thing”

is a priority, is to reward it. Conversely, if

employees are led to believe that, when

it comes to compensation and career

advancement, all that counts is short-

term protability, and that cutting ethical

corners is an acceptable way of getting

there, they’ll perform to that measure.

To cite an example from a dierent

walk of life: a college football coach can

be told that the graduation rates of his

players are what matters, but he’ll know

dierently if the sole focus of his contract

extension talks or the decision to re him

is his win-loss record.

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A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

No matter what the disciplinary scheme or

potential incentives a company decides to adopt,

DOJ and SEC will consider whether they are fairly

and consistently applied across the organization.

No executive should be above compliance, no

employee below compliance, and no person

within an organization deemed too valuable to be

disciplined, if warranted. Rewarding good behavior

and sanctioning bad behavior reinforces a culture of

compliance and ethics throughout an organization.

Third-Party Due Diligence and Payments

DOJ’s and SEC’s FCPA enforcement actions

demonstrate that third parties, including agents,

consultants, and distributors, are commonly used

to conceal the payment of bribes to foreign ocials

in international business transactions. Risk-based

due diligence is particularly important with third

parties and will also be considered by DOJ and

SEC in assessing the eectiveness of a company’s

compliance program.

Although the degree of appropriate due

diligence may vary based on industry, country,

size and nature of the transaction, and historical

relationship with the third party, some guiding

principles always apply.

First, as part of risk-based due diligence,

companies should understand the qualications

and associations of its third-party partners,

including its business reputation, and relationship,

if any, with foreign ocials. The degree of scrutiny

should increase as red ags surface.

Second, companies should have an

understanding of the business rationale for

including the third party in the transaction. Among

other things, the company should understand the

role of and need for the third party and ensure that

the contract terms specically describe the services

to be performed. Additional considerations

include payment terms and how those payment

terms compare to typical terms in that industry

and country, as well as the timing of the third

party’s introduction to the business. Moreover,

companies may want to conrm and document

that the third party is actually performing the work

for which it is being paid and that its compensation

is commensurate with the work being provided.

Third, companies should undertake some

form of ongoing monitoring of third-party

relationships.

339

Where appropriate, this may

include updating due diligence periodically,

exercising audit rights, providing periodic training,

and requesting annual compliance certications by

the third party.

In addition to considering a company’s

due diligence on third parties, DOJ and SEC also

assess whether the company has informed third

parties of the company’s compliance program

and commitment to ethical and lawful business

practices and, where appropriate, whether it has

sought assurances from third parties, through

certications and otherwise, of reciprocal

commitments. These can be meaningful ways to

mitigate third-party risk.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Hypothetical: Third-Party Vetting

Part 1: Consultants

Company A, a U.S. issuer headquartered in Delaware, wants to start doing business in a country that

poses high risks of corruption. Company A learns about a potential $50 million contract with the country’s

Ministry of Immigration. This is a very attractive opportunity to Company A, both for its protability

and to open the door to future projects with the government. At the suggestion of the company’s senior

vice president of international sales (Sales Executive), Company A hires a local businessman who assures

them that he has strong ties to political and government leaders in the country and can help them win

the contract. Company A enters into a consulting contract with the local businessman (Consultant). The

agreement requires Consultant to use his best eorts to help the company win the business and provides

for Consultant to receive a signicant monthly retainer as well as a success fee of 3% of the value of any

contract the company wins.

What steps should Company A consider taking before hiring Consultant?

There are several factors here that might lead Company A to perform heightened FCPA-related due

diligence prior to retaining Consultant: (1) the market (high-risk country); (2) the size and signicance of

the deal to the company; (3) the company’s rst time use of this particular consultant; (4) the consultant’s

strong ties to political and government leaders; (5) the success fee structure of the contract; and (6) the

vaguely dened services to be provided. In order to minimize the likelihood of incurring FCPA liability,

Company A should carefully vet Consultant and his role in the transaction, including close scrutiny of

the relationship between Consultant and any Ministry of Immigration ocials or other government

ocials. Although there is nothing inherently illegal about contracting with a third party that has close

connections to politicians and government ocials to perform legitimate services on a transaction, this

type of relationship can be susceptible to corruption. Among other things, Company A may consider

conducting due diligence on Consultant, including background and reference checks; ensuring that

the contract spells out exactly what services and deliverables (such as written status reports or other

documentation) Consultant is providing; training Consultant on the FCPA and other anti-corruption

laws; requiring Consultant to represent that he will abide by the FCPA and other anti-corruption laws;

including audit rights in the contract (and exercising those rights); and ensuring that payments requested

by Consultant have the proper supporting documentation before they are approved for payment.

Part 2: Distributors and Local Partners

Assume the following alternative facts:

Instead of hiring Consultant, Company A retains an often-used local distributor (Distributor) to sell

Company A’s products to the Ministry of Immigration. In negotiating the pricing structure, Distributor,

which had introduced the project to Company A, claims that the standard discount price to Distributor

creates insucient margin for Distributor to cover warehousing, distribution, installation, marketing,

and training costs and requests an additional discount or rebate, or, in the alternative, a contribution

to its marketing eorts, either in the form of a lump sum or as a percentage of the total contract. The

requested discount/allowance is signicantly larger than usual, although there is precedent at Company A

for granting this level of discount in unique circumstances. Distributor further advises Company A that the

Ministry’s procurement ocials responsible for awarding the contract have expressed a strong preference

for including a particular local company (Local Partner) in the transaction as a subcontractor of Company A

(cont’d)

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

to perform installation, training, and other services that would normally have been performed by Distributor

of Company A. According to Distributor, the Ministry has a solid working relationship with Local Partner,

and it would cause less disruption for Local Partner to perform most of the on-site work at the Ministry.

One of the principals (Principal 1) of the Local Partner is an ocial in another government ministry.

What additional compliance considerations do these alternative facts raise?

As with Consultant in the rst scenario above, Company A should carefully vet Distributor and Local

Partner and their roles in the transaction in order to minimize the likelihood of incurring FCPA liability.

While Company A has an established relationship with Distributor, the fact that Distributor has requested

an additional discount warrants further inquiry into the economic justication for the change, particularly

where, as here, the proposed transaction structure contemplates paying Local Partner to provide many

of the same services that Distributor would otherwise provide. In many cases, it may be appropriate for

distributors to receive larger discounts to account for unique circumstances in particular transactions.

That said, a common mechanism to create additional margin for bribe payments is through excessive

discounts or rebates to distributors. Accordingly, when a company has pre-existing relationships with

distributors and other third parties, transaction-specic due diligence—including an analysis of payment

terms to conrm that the payment is commensurate with the work being performed—can be critical even

in circumstances where due diligence of the distributor or other third party raises no initial red ags.

Company A should carefully scrutinize the relationship among Local Partner, Distributor, and

Ministry of Immigration ocials. While there is nothing inherently illegal about contracting with a third

party that is recommended by the end-user, or even hiring a government ocial to perform legitimate

services on a transaction unrelated to his or her government job, these facts raise additional red ags

that warrant signicant scrutiny. Among other things, Company A would be well-advised to require

Principal 1 to verify that he will have no role in the Ministry of Immigration’s decision to award the

contract to Company A, notify the Ministry of Immigration and his own ministry of his proposed

involvement in the transaction, and certify that he will abide by the FCPA and other anti-corruption laws

and that his involvement in the transaction is permitted under local law.

Assume the following additional facts:

Under its company policy for a government transaction of this size, Company A requires both nance

and compliance approval. The nance ocer is concerned that the discounts to Distributor are signicantly

larger than what they have approved for similar work and will cut too deeply into Company A’s prot

margin. The nance ocer is also skeptical about including Local Partner to perform some of the same

services that Company A is paying Distributor to perform. Unsatised with Sales Executive’s explanation,

she requests a meeting with Distributor and Principal 1. At the meeting, Distributor and Principal 1 oer

vague and inconsistent justications for the payments and fail to provide any supporting analysis, and

Principal 1 seems to have no real expertise in the industry. During a coee break, Distributor comments

to Sales Executive that the nance ocer is naïve about “how business is done in my country.” Following

the meeting, Sales Executive dismisses the nance ocer’s concerns, assuring her that the proposed

transaction structure is reasonable and legitimate. Sales Executive also reminds the nance ocer that

“the deal is key to their growth in the industry.”

The compliance ocer focuses his due diligence on vetting Distributor and Local Partner and hires

a business investigative rm to conduct a background check. Distributor appears reputable, capable, and

nancially stable and is willing to take on real risk in the project, nancial and otherwise. However, the

compliance ocer learns that Distributor has established an oshore bank account for the transaction.

(cont’d)

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

The compliance ocer further learns that Local Partner’s business was organized two years ago

and appears nancially stable but has no expertise in the industry and has established an oshore

shell company and bank account to conduct this transaction. The background check also reveals that

Principal 1 is a former college roommate of a senior ocial of the Ministry of Immigration. The Sales

Executive dismisses the compliance ocer’s concerns, commenting that what Local Partner does with its

payments “isn’t our problem.” Sales Executive also strongly objects to the compliance ocer’s request

to meet with Principal 1 to discuss the oshore company and account, assuring him that it was done

for legitimate tax purposes and complaining that if Company A continues to “harass” Local Partner and

Distributor, they would partner with Company A’s chief competitor. The compliance ocer and the

nance ocer discuss their concerns with each other but ultimately sign o on the deal even though their

questions had not been answered. Their decision is motivated in large part by their conversation with

Sales Executive, who told them that this was the region’s most important contract and that the detailed

FCPA questionnaires and robust anti-corruption representations in the contracts placed the burden on

Distributor and Local Partner to act ethically.

Company A goes forward with the Distributor and Local Partner agreements and wins the contract

after six months. The nance ocer approves Company A’s payments to Local Partner via the oshore

account, even though Local Partner’s invoices did not contain supporting detail or documentation of any

services provided. Company A recorded the payments as legitimate operational expenses on its books and

records. Sales Executive received a large year-end bonus due to the award of the contract. In fact, Local

Partner and Distributor used part of the payments and discount margin, respectively, to funnel bribe

payments to several Ministry of Immigration ocials, including Principal 1’s former college roommate,

in exchange for awarding the contract to Company A. Thousands of dollars are also wired to the personal

oshore bank account of Sales Executive.

How would DOJ and SEC evaluate the potential FCPA liability of Company A and its employees?

This is not the case of a single “rogue employee” circumventing an otherwise robust compliance

program. Although Company A’s nance and compliance ocers had the correct instincts to scrutinize

the structure and economics of the transaction and the role of the third parties, their due diligence

was incomplete. When the initial inquiry identied signicant red ags, they approved the transaction

despite knowing that their concerns were unanswered or the answers they received raised additional

concerns and red ags. Relying on due diligence questionnaires and anti-corruption representations

is insucient, particularly when the risks are readily apparent. Nor can Company A or its employees

shield themselves from liability because it was Distributor and Local Partner—rather than Company A

directly—that made the payments.

The facts suggest that Sales Executive had actual knowledge of or was willfully blind to the

consultant’s payment of the bribes. He also personally proted from the scheme (both from the kickback

and from the bonus he received from the company) and intentionally discouraged the nance and

compliance ocers from learning the full story. Sales Executive is therefore subject to liability under the

anti-bribery, books and records, and internal controls provisions of the FCPA, and others may be as well.

Company A may also be liable for violations of the anti-bribery, books and records, and internal controls

provisions of the FCPA given the number and signicance of red ags that established a high probability

of bribery and the role of employees and agents acting on the company’s behalf.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Condential Reporting and Internal Investigation

An eective compliance program should

include a mechanism for an organization’s

employees and others to report suspected or

actual misconduct or violations of the company’s

policies on a condential basis and without fear of

retaliation.

340

Companies may employ, for example,

anonymous hotlines or ombudsmen. Moreover,

once an allegation is made, companies should

have in place an ecient, reliable, and properly

funded process for investigating the allegation and

documenting the company’s response, including

any disciplinary or remediation measures taken.

Companies will want to consider taking “lessons

learned” from any reported violations and the

outcome of any resulting investigation to update

their internal controls and compliance program and

focus future training on such issues, as appropriate.

Continuous Improvement: Periodic Testing and

Review

Finally, a good compliance program should

constantly evolve. A company’s business changes

over time, as do the environments in which it

operates, the nature of its customers, the laws

that govern its actions, and the standards of its

industry. In addition, compliance programs that do

not just exist on paper but are followed in practice

will inevitably uncover compliance weaknesses and

require enhancements. Consequently, DOJ and SEC

evaluate whether companies regularly review and

improve their compliance programs and do not

allow them to become stale.

An organization should take the time to review

and test its controls, and it should think critically

about its potential weaknesses and risk areas.

For example, some companies have undertaken

employee surveys to measure their compliance

culture and strength of internal controls, identify

best practices, and detect new risk areas. Other

companies periodically test their internal controls

with targeted audits to make certain that controls

on paper are working in practice. DOJ and SEC will

give meaningful credit to thoughtful eorts to create

a sustainable compliance program if a problem is

later discovered. Similarly, undertaking proactive

evaluations before a problem strikes can lower the

applicable penalty range under the U.S. Sentencing

Guidelines.

341

Although the nature and the frequency

of proactive evaluations may vary depending on

the size and complexity of an organization, the

idea behind such eorts is the same: continuous

improvement and sustainability.

342

Mergers and Acquisitions: Pre-Acquisition Due

Diligence and Post-Acquisition Integration

In the context of the FCPA, mergers and

acquisitions present both risks and opportunities.

A company that does not perform adequate FCPA

due diligence prior to a merger or acquisition may

face both legal and business risks.

343

Perhaps most

commonly, inadequate due diligence can allow a

course of bribery to continue—with all the attendant

harms to a business’ protability and reputation, as

well as potential civil and criminal liability.

In contrast, companies that conduct eective

FCPA due diligence on their acquisition targets

are able to evaluate more accurately each target’s

value and negotiate for the costs of the bribery

to be borne by the target. In addition, such

actions demonstrate to DOJ and SEC a company’s

commitment to compliance and are taken into

account when evaluating any potential enforcement

action. For example, DOJ and SEC declined to take

enforcement action against an acquiring issuer

when the issuer, among other things, uncovered

the corruption at the company being acquired as

part of due diligence, ensured that the corruption

was voluntarily disclosed to the government,

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

cooperated with the investigation, and incorporated

the acquired company into its compliance program

and internal controls. On the other hand, SEC took

action against the acquired company, and DOJ

took action against a subsidiary of the acquired

company.

344

When pre-acquisition due diligence

is not possible, DOJ has described procedures,

contained in Opinion Procedure Release No. 08-02,

pursuant to which companies can nevertheless be

rewarded if they choose to conduct thorough post-

acquisition FCPA due diligence.

345

FCPA due diligence, however, is normally only

a portion of the compliance process for mergers

and acquisitions. DOJ and SEC evaluate whether

the acquiring company promptly incorporated the

acquired company into all of its internal controls,

including its compliance program. Companies should

consider training new employees, reevaluating

third parties under company standards, and, where

appropriate, conducting audits on new business

units.

For example, as a result of due diligence

conducted by a California-based issuer before

acquiring the majority interest in a joint venture,

the issuer learned of corrupt payments to obtain

business. However, the issuer only implemented

its internal controls “halfway” so as not to “choke

the sales engine and cause a distraction for the

sales guys.” As a result, the improper payments

continued, and the issuer was held liable for

violating the FCPA’s internal controls and books and

records provisions.

346

Investigation, Analysis, and Remediation of

Misconduct

The truest measure of an eective compliance

program is how it responds to misconduct.

Accordingly, for a compliance program to be truly

eective, it should have a well-functioning and

appropriately funded mechanism for the timely

and thorough investigations of any allegations

or suspicions of misconduct by the company, its

employees, or agents. An eective investigations

structure will also have an established means of

documenting the company’s response, including any

disciplinary or remediation measures taken.

In addition to having a mechanism for

responding to the specic incident of misconduct,

the company’s program should also integrate

lessons learned from any misconduct into the

company’s policies, training, and controls. To do

so, a company will need to analyze the root causes

of the misconduct to timely and appropriately

remediate those causes to prevent future

compliance breaches.

Other Guidance on Compliance and

International Best Practices

In addition to this guide, DOJ has published

guidance concerning the Evaluation of Corporate

Compliance Programs.

347

The Evaluation of

Corporate Compliance Programs is meant to assist

prosecutors in making informed decisions as to

whether, and to what extent, the corporation’s

compliance program was effective at the time

of the offense, and is effective at the time of a

charging decision or resolution, for purposes

of determining the appropriate: (1) form of any

resolution or prosecution; (2) monetary penalty,

if any; and (3) compliance obligations contained

in any corporate criminal resolution (e.g.,

monitorship or reporting obligations). The DOJ

compliance guidance provides companies insight

into the types of questions that prosecutors ask

to evaluate and assess a company’s compliance

program.

In addition, the U.S. Departments of

Commerce and State have both issued

publications that contain guidance regarding

compliance programs. The Department of

Commerce’s International Trade Administration

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has published Business Ethics: A Manual for

Managing a Responsible Business Enterprise

in Emerging Market Economies,

348

and the

Department of State has published Fighting

Global Corruption: Business Risk Management.

349

There is also a developing international

consensus on compliance best practices,

and a number of inter-governmental and

non-governmental organizations have

issued guidance regarding best practices for

compliance.

350

Most notably, the OECD’s 2009

Anti-Bribery Recommendation and its Annex

II, Good Practice Guidance on Internal Controls,

Ethics, and Compliance,

351

published in February

2010, were drafted based on consultations

with the private sector and civil society and

set forth specific good practices for ensuring

effective compliance programs and measures

for preventing and detecting foreign bribery.

In addition, businesses may wish to refer to the

following resources:

• Asia-Pacic Economic Cooperation—Anti-

Corruption Code of Conduct for Business

352

• International Chamber of Commerce—

ICC Rules on Combating Corruption

353

• Transparency International—Business

Principles for Countering Bribery

354

• United Nations Global Compact—

The Ten Principles

355

• World Bank—Integrity Compliance Guidelines

356

• World Economic Forum—Partnering Against

Corruption–Principles for Countering Bribery

357

Compliance Program Case Study

DOJ and SEC actions relating to a nancial institution’s real estate transactions with a government agency in China

illustrate the benets of implementing and enforcing a comprehensive risk-based compliance program. The case involved

a joint venture real estate investment in the Luwan District of Shanghai, China, between a U.S.-based nancial institution

and a state-owned entity that functioned as the District’s real estate arm. The government entity conducted the transactions

through two special purpose vehicles (“SPVs”), with the second SPV purchasing a 12% stake in a real estate project.

The nancial institution, through a robust compliance program, frequently trained its employees, imposed a

comprehensive payment-approval process designed to prevent bribery, and staed a compliance department with a direct

reporting line to the board of directors. As appropriate given the industry, market, and size and structure of the transactions,

the nancial institution (1) provided extensive FCPA training to the senior executive responsible for the transactions and

(2) conducted extensive due diligence on the transactions, the local government entity, and the SPVs. Due diligence on the

entity included reviewing Chinese government records; speaking with sources familiar with the Shanghai real estate market;

checking the government entity’s payment records and credit references; conducting an on-site visit and placing a pretextual

telephone call to the entity’s oces; searching media sources; and conducting background checks on the entity’s principals.

The nancial institution vetted the SPVs by obtaining a letter with designated bank account information from a Chinese

ocial associated with the government entity (the “Chinese Ocial”); using an international law rm to request and review

50 documents from the SPVs’ Canadian attorney; interviewing the attorney; and interviewing the SPVs’ management.

Notwithstanding the nancial institution’s robust compliance program and good faith enforcement of it, the company

failed to learn that the Chinese Ocial personally owned nearly 50% of the second SPV (and therefore a nearly 6% stake

in the joint venture) and that the SPV was used as a vehicle for corrupt payments. This failure was due, in large part,

to misrepresentations by the Chinese Ocial, the nancial institution’s executive in charge of the project, and the SPV’s

attorney that the SPV was 100% owned and controlled by the government entity. DOJ and SEC declined to take enforcement

action against the nancial institution, and its executive pleaded guilty to conspiracy to violate the FCPA’s internal control

provisions and also settled with SEC.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

FCPA PENALTIES, SANCTIONS,

AND REMEDIES

What Are the Potential

Consequences for Violations

of the FCPA?

The FCPA provides for dierent criminal and

civil penalties for companies and individuals.

Criminal Penalties

For each violation of the anti-bribery

provisions, the FCPA provides that corporations

and other business entities are subject to a ne of

up to $2 million.

358

Individuals, including ocers,

directors, stockholders, and agents of companies,

are subject to a ne of up to $250,000 and

imprisonment for up to ve years.

359

For each violation of the accounting provisions,

the FCPA provides that corporations and other

business entities are subject to a ne of up to $25

million.

360

Individuals are subject to a ne of up to

$5 million and imprisonment for up to 20 years.

361

Under the Alternative Fines Act, 18 U.S.C.

§ 3571(d), courts may impose signicantly higher

nes than those provided by the FCPA—up to

twice the benet that the defendant obtained by

making the corrupt payment, as long as the facts

supporting the increased nes are included in the

indictment and either proved to the jury beyond

a reasonable doubt or admitted in a guilty plea

proceeding.

362

Fines imposed on individuals may

not be paid by their employer or principal.

363

U.S. Sentencing Guidelines

When calculating penalties for violations

of the FCPA, DOJ focuses its analysis on the U.S.

Sentencing Guidelines

364

in all of its resolutions,

including guilty pleas, DPAs, and NPAs. The

Guidelines provide a very detailed and predictable

structure for calculating penalties for all federal

crimes, including violations of the FCPA. To

determine the appropriate penalty, the “oense

level” is rst calculated by examining both the

severity of the crime and facts specic to the crime,

with appropriate reductions for cooperation and

acceptance of responsibility, and, for business

entities, additional factors such as voluntary

disclosure, pre-existing compliance programs, and

remediation.

Chapter 6

FCPA Penalties,

Sanctions, and Remedies

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

The Guidelines provide dierent penalties

for the dierent provisions of the FCPA. The

initial oense level for violations of the anti-

bribery provisions is determined under § 2C1.1,

while violations of the accounting provisions are

assessed under § 2B1.1. For individuals, the initial

oense level is modied by factors set forth in

Chapters 3, 4, and 5 of the Guidelines

365

to identify

a nal oense level. This nal oense level,

combined with other factors, is used to determine

whether the Guidelines would recommend that

incarceration is appropriate, the length of any

term of incarceration, and the appropriate amount

of any ne. For corporations, the oense level is

modied by factors particular to organizations as

described in Chapter 8 to determine the applicable

organizational penalty.

For example, violations of the anti-bribery

provisions are calculated pursuant to § 2C1.1.

The oense level is determined by rst identifying

the base oense level;

366

adding additional

levels based on specic oense characteristics,

including whether the oense involved more than

one bribe, the value of the bribe or the benet

that was conferred, and the level of the public

ocial;

367

adjusting the oense level based on

the defendant’s role in the oense;

368

and using

the total oense level as well as the defendant’s

criminal history category to determine the advisory

guideline range.

369

For violations of the accounting

provisions assessed under § 2B1.1, the procedure is

generally the same, except that the specic oense

characteristics dier. For instance, for violations

of the FCPA’s accounting provisions, the oense

level may be increased if a substantial part of the

scheme occurred outside the United States or if the

defendant was an ocer or director of a publicly

traded company at the time of the oense.

370

For companies, the oense level is calculated

pursuant to §§ 2C1.1 or 2B1.1 in the same way

as for an individual—by starting with the base

oense level and increasing it as warranted by

any applicable specic oense characteristics.

The organizational guidelines found in Chapter 8,

however, provide the structure for determining the

nal advisory guideline ne range for organizations.

The base ne consists of the greater of the amount

corresponding to the total oense level, calculated

pursuant to the Guidelines, or the pecuniary gain

or loss from the oense.

371

This base ne is then

multiplied by a culpability score that can either

reduce the ne to as little as ve percent of the

base ne or increase the recommended ne to

up to four times the amount of the base ne.

372

As described in § 8C2.5, this culpability score is

calculated by taking into account numerous factors

such as the size of the organization committing the

criminal acts; the involvement in or tolerance of

criminal activity by high-level personnel within the

organization; and prior misconduct or obstructive

behavior. The culpability score is reduced if

the organization had an eective pre-existing

compliance program to prevent violations and if

the organization voluntarily disclosed the oense,

cooperated in the investigation, and accepted

responsibility for the criminal conduct.

373

Civil Penalties

Although only DOJ has the authority to pursue

criminal actions, both DOJ and SEC have civil

enforcement authority under the FCPA. DOJ may

pursue civil actions for anti-bribery violations by

domestic concerns (and their ocers, directors,

employees, agents, or stockholders) and foreign

nationals and companies for violations while in

the United States, while SEC may pursue civil

actions against issuers and their ocers, directors,

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

employees, agents, or stockholders for violations of

the anti-bribery and the accounting provisions.

374

For violations of the anti-bribery provisions,

corporations and other business entities are

subject to a civil penalty of up to $21,410 per

violation.

375

Individuals, including ocers, directors,

stockholders, and agents of companies, are

similarly subject to a civil penalty of up to $21,410

per violation,

376

which may not be paid by their

employer or principal.

377

For violations of the accounting provisions in

district court actions, SEC may obtain a civil penalty

not to exceed the greater of (a) the gross amount of

the pecuniary gain to the defendant as a result of

the violations or (b) a specied dollar limitation. The

specied dollar limitations are based on the nature

of the violation and potential risk to investors,

ranging from $9,639 to $192,768 for an individual

and $96,384 to $963,837 for a company.

378

SEC may

obtain civil penalties both in actions led in federal

court and in administrative proceedings.

379

Forfeiture and Disgorgement

In addition to criminal and civil penalties,

companies may also be required to forfeit the

proceeds of their crimes, or disgorge the prots

generated from the crimes. While the purpose of

a penalty or ne is to punish and deter misconduct,

the purpose of forfeiture and disgorgement is

primarily to return the perpetrator to the same

position as before the crime, ensuring that the

perpetrator does not prot from the misconduct.

However, in Kokesh v. SEC, the Supreme Court ruled

that the civil disgorgement remedy is subject to the

same ve-year statute of limitations as a penalty

under 28 U.S.C. § 2462. Following Kokesh, in SEC v.

Liu, the court again addressed the disgorgement

remedy stating, “[e]quity courts have routinely

deprived wrongdoers of their net prots from

unlawful activity,” and holding that disgorgement

is permissible equitable relief when it does not

exceed a wrongdoer’s net prots and is awarded for

victims.

380

Coordinated Resolutions and

Avoiding “Piling On”

In resolving cases against companies, DOJ and

SEC strive to avoid imposing duplicative penalties,

forfeiture, and disgorgement for the same conduct.

DOJ and SEC attempt to similarly credit nes,

penalties, forfeiture, and disgorgement of foreign

authorities resolving with the same company for

the same conduct. In a case involving a publicly-

traded Brazilian petrochemical company, DOJ, SEC,

Brazilian authorities, and Swiss authorities credited

one another in imposing nes and disgorgement.

381

DOJ has coordinated resolutions with foreign

authorities in more than 10 cases, and SEC has

coordinated resolutions with foreign authorities in

at least ve.

382

DOJ has memorialized this practice

of coordinating resolutions to avoid “piling on” in

the Justice Manual, which instructs prosecutors

to “endeavor, as appropriate, to coordinate with

and consider the amount of nes, penalties, and/

or forfeiture paid to other federal, state, local, or

foreign enforcement authorities that are seeking

to resolve a case with a company for the same

misconduct.”

383

In determining whether and how

much to credit another authority, prosecutors are to

consider, among other factors, “the egregiousness

of a company’s misconduct; statutory mandates

regarding penalties, nes, and/or forfeitures;

the risk of unwarranted delay in achieving a nal

resolution; and the adequacy and timeliness of a

company’s disclosures and its cooperation with the

Department, separate from any such disclosures

and cooperation with other relevant enforcement

authorities.”

384

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Collateral Consequences

In addition to the criminal and civil penalties

described above, individuals and companies who

violate the FCPA may face signicant collateral

consequences, including suspension or debarment

from contracting with the federal government,

cross-debarment by multilateral development

banks, and the suspension or revocation of certain

export privileges.

Debarment

Under federal guidelines governing

procurement, an individual or company that

violates the FCPA or other criminal statutes may

be barred from doing business with the federal

government. The Federal Acquisition Regulations

(FAR) provide for the potential suspension or

debarment of companies that contract with the

government upon conviction of or civil judgment

for bribery, falsication or destruction of records,

the making of false statements, or “[c]ommission

of any other oense indicating a lack of business

integrity or business honesty that seriously and

directly aects the present responsibility of a

Government contractor or subcontractor.”

385

These measures are not intended to be punitive

and may be imposed only if “in the public’s interest

for the Government’s protection.”

386

Under the FAR, a decision to debar or

suspend is discretionary. The decision is not

made by DOJ prosecutors or SEC sta, but

instead by independent debarment authorities

within each agency, such as the Department of

Defense or the General Services Administration,

which analyze a number of factors to determine

whether a company should be suspended,

debarred, or otherwise determined to be

ineligible for government contracting. Such

factors include whether the contractor has

eective internal control systems in place, self-

reported the misconduct in a timely manner, and

has taken remedial measures.

387

If a cause for

debarment exists, the contractor has the burden

of demonstrating to the satisfaction of the

debarring ocial that it is presently responsible

and that debarment is not necessary.

388

Each

federal department and agency determines

the eligibility of contractors with whom it deals.

However, if one department or agency debars

or suspends a contractor, the debarment or

suspension applies to the entire executive branch

of the federal government, unless a department

or agency shows compelling reasons not to debar

or suspend the contractor.

389

Although guilty pleas, DPAs, and NPAs do

not result in automatic debarment from U.S.

government contracting, committing a federal

crime and the factual admissions underlying

a resolution are factors that the independent

debarment authorities may consider. Moreover,

indictment alone can lead to suspension of the

right to do business with the government.

390

The

Justice Manual also provides that when a company

engages in fraud against the government, a

prosecutor may not negotiate away an agency’s

right to debar or delist the company as part of the

plea bargaining process.

391

In making debarment

determinations, contracting agencies, including

at the state and local level, may consult with DOJ

in advance of awarding a contract. Depending on

the circumstances, DOJ may provide information

to contracting authorities in the context of

the corporate settlement about the facts and

circumstances underlying the criminal conduct

and remediation measures undertaken by the

company, if any. This information sharing is not

advocacy, and the ultimate debarment decisions

are squarely within the purview of the independent

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

debarment authorities. In some situations, the

contracting agency may impose its own oversight

requirements in order for a company that has

admitted to violations of federal law to be awarded

federal contracts, such as the Corporate Integrity

Agreements often required by the Department of

Health and Human Services.

Cross-Debarment by Multilateral

Development Banks

Multilateral Development Banks (MDBs),

like the World Bank, also have the ability to debar

companies and individuals for corrupt practices.

392

Each MDB has its own process for evaluating

alleged corruption in connection with MDB-funded

projects. When appropriate, DOJ and SEC work

with MDBs to share evidence and refer cases. On

April 9, 2010, the African Development Bank Group,

the Asian Development Bank, the European Bank

for Reconstruction and Development, the Inter-

American Development Bank Group, and the World

Bank Group entered into an agreement under which

entities debarred by one MDB will be sanctioned for

the same misconduct by other signatory MDBs.

393

This cross-debarment agreement means that if a

company is debarred by one MDB, it is debarred by

all.

394

Loss of Export Privileges

Companies and individuals who violate the

FCPA may face consequences under other regulatory

regimes, such as the Arms Export Control Act (AECA),

22 U.S.C. § 2751, et seq., and its implementing

regulations, the International Trac in Arms

Regulations (ITAR), 22 C.F.R. § 120, et seq. AECA

and ITAR together provide for the suspension,

revocation, amendment, or denial of an arms export

license if an applicant has been indicted or convicted

for violating the FCPA.

395

They also set forth certain

factors for the Department of State’s Directorate

of Defense Trade Controls (DDTC)

396

to consider

when determining whether to grant, deny, or return

without action license applications for certain

types of defense materials. One of those factors is

whether there is reasonable cause to believe that

an applicant for a license has violated (or conspired

to violate) the FCPA; if so, the Department of State

“may disapprove the application.”

397

In addition, it is

the policy of the Department of State not to consider

applications for licenses involving any persons

who have been convicted of violating the AECA or

convicted of conspiracy to violate the AECA.

398

an action related to the criminal resolution of a U.K.

military products manufacturer, the DDTC imposed

a “policy of denial” for export licenses on three of

the company’s subsidiaries that were involved in

violations of AECA and ITAR.

399

When Is a Compliance Monitor

or Independent Consultant

Appropriate?

One of the primary goals of both criminal

prosecutions and civil enforcement actions against

companies that violate the FCPA is ensuring that such

conduct does not occur again. As a consequence,

enhanced compliance and reporting requirements

may be part of criminal and civil resolutions of FCPA

matters. The amount of enhanced compliance and

kind of reporting required varies according to the

facts and circumstances of individual cases.

In criminal cases, a company’s sentence, or

a DPA or NPA with a company, may require the

appointment of an independent corporate monitor.

Whether a monitor is appropriate depends on the

specic facts and circumstances of the case. In 2008,

DOJ issued internal guidance regarding the selection

and use of corporate monitors in DPAs and NPAs

with companies.

400

Additional guidance has since

been issued.

401

A monitor is an independent third

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

party who assesses and monitors a company’s

adherence to the compliance requirements of

an agreement that was designed to reduce the

risk of recurrence of the company’s misconduct.

Appointment of a monitor is not appropriate in

all circumstances, and a monitor should never

be imposed for punitive purposes, but it may be

appropriate, for example, where a company does

not already have an eective internal compliance

program or needs to establish necessary internal

controls. DOJ’s guidance provides that, in

determining whether to impose a monitor as part

of a corporate resolution, prosecutors should

assess (1) the potential benets that employing

a monitor may have for the corporation and

the public, and (2) the cost of a monitor and its

impact on the operations of a corporation.

402

evaluating the potential benets of a monitor,

prosecutors consider, among other factors:

(a) whether the underlying misconduct involved

the manipulation of corporate books and records

or the exploitation of an inadequate compliance

program or internal control systems; (b) whether

the misconduct at issue was pervasive across

the business organization or approved or

facilitated by senior management; (c) whether the

corporation has made signicant investments in,

and improvements to, its corporate compliance

program and internal control systems; and

(d) whether remedial improvements to the

compliance program and internal controls have

been tested to demonstrate that they would

prevent or detect similar misconduct in the

future.

403

“Where a corporation’s compliance

program and controls are demonstrated to be

eective and appropriately resourced at the

time of resolution, a monitor will likely not be

necessary.”

404

In civil cases, a company may similarly be

required to retain an independent compliance

consultant or monitor to provide an independent,

third-party review of the company’s internal controls.

The consultant recommends improvements, to

the extent necessary, which the company must

adopt. When both DOJ and SEC require a company

to retain a monitor, the two agencies have been

able to coordinate their requirements so that the

company can retain one monitor to fulll both sets

of requirements.

The most successful monitoring relationships

are those in which the company embraces the

monitor or consultant. If the company takes the

recommendations and suggestions seriously and

uses the monitoring period as a time to nd and x

any outstanding compliance issues, the company

can emerge from the monitorship with a stronger,

long-lasting compliance program.

Factors DOJ and SEC Consider

When Determining Whether a Compliance

Monitor Is Appropriate Include:

• Nature and seriousness of the oense

• Duration of the misconduct

• Pervasiveness of the misconduct,

including whether the conduct cuts across

geographic and/or product lines

• The risk prole of the company, including

its nature, size, geographical reach, and

business model

• Quality of the company’s compliance

program at the time of the misconduct

• Subsequent remediation eorts and quality

of the company’s compliance program at

the time of resolution

• Whether the company’s current

compliance program has been fully

implemented and tested

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

RESOLUTIONS

What Are the Dierent Types of

Resolutions with DOJ?

Criminal Complaints, Informations, and

Indictments

Charges against individuals and companies are

brought in three dierent ways under the Federal

Rules of Criminal Procedure: criminal complaints,

criminal informations, and indictments.

DOJ may agree to resolve criminal FCPA matters

against companies either through a declination

or, in appropriate cases, a negotiated resolution

resulting in a plea agreement, deferred prosecution

agreement, or non-prosecution agreement. For

individuals, a negotiated resolution will generally

take the form of a plea agreement, which may

include language regarding cooperation, or a

non-prosecution cooperation agreement. When

negotiated resolutions cannot be reached with

companies or individuals, the matter may proceed

to trial.

Plea Agreements

Plea agreements—whether with companies

or individuals—are governed by Rule 11 of the

Federal Rules of Criminal Procedure. The defendant

generally admits to the facts supporting the charges,

admits guilt, and is convicted of the charged crimes

when the plea agreement is presented to and

accepted by a court.

The plea agreement may jointly recommend

a sentence or ne, jointly recommend an analysis

under the U.S. Sentencing Guidelines, or leave such

items open for argument at the time of sentencing.

Deferred Prosecution Agreements

Under a deferred prosecution agreement, or a

DPA as it is commonly known, DOJ les a charging

document with the court,

405

but it simultaneously

requests that the prosecution be deferred, that is,

postponed for the purpose of allowing the company

to demonstrate its good conduct. DPAs generally

require a defendant to agree to pay a monetary

penalty, waive the statute of limitations, cooperate

with the government, admit the relevant facts, and

enter into certain compliance and remediation

commitments, potentially including a corporate

compliance monitor. DPAs describe the company’s

conduct, cooperation, and remediation, if any,

and provide a calculation of the penalty pursuant

Chapter 7

Resolutions

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

to the U.S. Sentencing Guidelines. In addition to

being publicly led, DOJ places all of its DPAs on

its website. If the company successfully completes

its obligations during the term of the agreement

(typically three years), DOJ will then move to

dismiss the led charges. A company’s successful

completion of a DPA is not treated as a criminal

conviction. Other countries, such as the United

Kingdom and France, have also instituted DPA-like

frameworks to resolve corporate matters whereby

a company can avoid prosecution if it adheres to

conditions imposed upon it for a set period of time.

Non-Prosecution Agreements

Under a non-prosecution agreement, or an

NPA as it is commonly known, DOJ maintains the

right to le charges but refrains from doing so to

allow the company to demonstrate its good conduct

during the term of the NPA. Unlike a DPA, an NPA

is not led with a court but is instead maintained

by the parties. In circumstances where an NPA

is with a company for FCPA-related oenses, it

is made available to the public through DOJ’s

website. The requirements of an NPA are similar

to those of a DPA, and generally require a waiver

of the statute of limitations, ongoing cooperation,

admission of the material facts, and compliance and

remediation commitments, in addition to payment

of a monetary penalty. If the company complies with

the agreement throughout its term, DOJ does not

le criminal charges. If an individual complies with

the terms of his or her NPA, namely, truthful and

complete cooperation and continued law-abiding

conduct, DOJ will not pursue criminal charges.

Declinations

As discussed above, DOJ’s decision to bring

or decline to bring an enforcement action under

the FCPA is made pursuant to the Principles of

Federal Prosecution, in the case of individuals, and

the Principles of Federal Prosecution of Business

Organizations and the CEP, in the case of companies.

As described, in the case of individuals, the Principles

of Federal Prosecution advise prosecutors to weigh

all relevant considerations, including:

• federal law enforcement priorities;

• the nature and seriousness of the oense;

• the deterrent eect of prosecution;

• the person’s culpability in connection with the

oense;

• the person’s history of criminal activity;

• the person’s willingness to cooperate in the

investigation or prosecution of others; and

• the probable sentence or other consequences

if the person is convicted.

406

The Principles of Federal Prosecution provide

additional commentary about each of these

factors. For instance, they explain that prosecutors

should take into account federal law enforcement

priorities because federal law enforcement and

judicial resources are not sucient to permit

prosecution of every alleged oense over which

federal jurisdiction exists. The deterrent eect of

prosecution should also be kept in mind because

some oenses, “although seemingly not of great

importance by themselves, if commonly committed

would have a substantial cumulative impact on the

community.”

407

As discussed above, the Principles of Federal

Prosecution of Business Organizations require

prosecutors to consider ten factors when

determining whether to prosecute a corporate

entity for an FCPA violation, including the nature

and seriousness of the oense; the pervasiveness

of wrongdoing within the company; the company’s

history of similar conduct; the existence and

eectiveness of the company’s pre-existing

compliance program; whether the company

voluntarily self-disclosed the misconduct; the

extent of the company’s cooperation with the

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

government’s investigation; the company’s

remediation; the collateral consequences that

would ow from the resolution; the adequacy

of prosecutions against individuals; and the

adequacy of remedies, such as civil or regulatory

enforcement actions.

Pursuant to these guidelines, DOJ has

declined to prosecute both individuals and

corporate entities in numerous cases based on

the particular facts and circumstances presented

in those matters, taking into account the available

evidence.

408

To protect the privacy rights and other

interests of the uncharged and other potentially

interested parties, DOJ has a long-standing policy

not to provide, without the party’s consent, non-

public information on matters it has declined to

prosecute. To put DOJ’s declinations in context,

however, DOJ has recently declined several dozen

cases against companies where potential FCPA

violations were alleged.

In addition to the Principles of Federal

Prosecution of Business Organizations, as

discussed above, DOJ has implemented the CEP

to provide additional incentives and benets

to companies that voluntarily self-disclose

misconduct, fully cooperate, and fully remediate,

including a presumption of a declination (with

the disgorgement of ill-gotten prots), absent

aggravating circumstances. A declination pursuant

to the CEP is a case that would have been prosecuted

or criminally resolved except for the company’s

voluntary disclosure, full cooperation, remediation,

and payment of disgorgement, forfeiture, and/

or restitution. If a case would have been declined

in the absence of such circumstances, it is not

considered as a declination pursuant to the CEP.

Declinations awarded under the CEP are made

public on the DOJ/FCPA website.

What Are the Dierent Types of

Resolutions with SEC?

Civil Injunctive Actions and Remedies

In a civil injunctive action, SEC seeks a court

order enjoining the defendant from future violations

of the laws charged in the action. Civil contempt

sanctions, brought by SEC, are remedial rather than

punitive in nature and serve one of two purposes:

to compensate the party injured as a result of the

violation of the injunction or force compliance with

the terms of the injunction.

Where a defendant has proted from a

violation of law, SEC can obtain the equitable

relief of disgorgement of ill-gotten gains and pre-

judgment interest and can also obtain civil money

penalties pursuant to Sections 21(d)(3) and 32(c) of

the Exchange Act. SEC may also seek ancillary relief

(such as an accounting from a defendant). Pursuant

to Section 21(d)(5), SEC also may seek, and any

federal court may grant, any other equitable relief

that may be appropriate or necessary for the benet

of investors, such as enhanced remedial measures

or the retention of an independent compliance

consultant or monitor.

Civil Administrative Actions and Remedies

SEC has the ability to institute various types

of administrative proceedings against a person or

an entity that it believes has violated the law. This

type of enforcement action is brought by SEC’s

Enforcement Division and is litigated before an SEC

administrative law judge (ALJ). The ALJ’s decision

is subject to appeal directly to the Securities and

Exchange Commission itself, and the Commission’s

decision is in turn subject to review by a U.S. Court

of Appeals.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Administrative proceedings provide for a

variety of relief. For regulated persons and entities,

such as broker-dealers and investment advisers and

persons associated with them, sanctions include

censure, limitation on activities, suspension of

up to twelve months, and bar from association or

revocation of registration. For professionals such

as attorneys and accountants, SEC can order in

Rule 102(e) proceedings that the professional be

censured, suspended, or barred from appearing

or practicing before SEC.

409

SEC sta can seek an

order from an administrative law judge requiring

the respondent to cease and desist from any

current or future violations of the securities laws.

In addition, SEC can obtain disgorgement, pre-

judgment interest, and civil money penalties in

administrative proceedings under Section 21B of

the Exchange Act, and also can order other relief

to eect compliance with the federal securities

laws, such as enhanced remedial measures or the

retention of an independent compliance consultant

or monitor.

Deferred Prosecution Agreements

A deferred prosecution agreement is a

written agreement between SEC and a potential

cooperating individual or company in which SEC

agrees to forego an enforcement action against the

individual or company if the individual or company

agrees to, among other things: (1) cooperate

truthfully and fully in SEC’s investigation and

related enforcement actions; (2) enter into a long-

term tolling agreement; (3) comply with express

prohibitions and/or undertakings during a period

of deferred prosecution; and (4) under certain

circumstances, agree either to admit or not to

contest underlying facts that SEC could assert to

establish a violation of the federal securities laws.

If the agreement is violated during the period of

deferred prosecution, SEC sta may recommend

an enforcement action to the Commission

against the individual or company for the original

misconduct as well as any additional misconduct.

Furthermore, if the Commission authorizes the

enforcement action, SEC sta may use any factual

admissions made by the cooperating individual

or company in support of a motion for summary

judgment, while maintaining the ability to bring an

enforcement action for any additional misconduct

at a later date.

In May of 2011, SEC entered into its rst

deferred prosecution agreement against a company

for violating the FCPA.

410

In that case, a global

manufacturer of steel pipe products violated the

FCPA by bribing Uzbekistan government ocials

during a bidding process to supply pipelines for

transporting oil and natural gas. The company

made almost $5 million in prots when it was

subsequently awarded several contracts by the

Uzbekistan government. The company discovered

the misconduct during a worldwide review of its

operations and brought it to the government’s

attention. In addition to self-reporting, the company

conducted a thorough internal investigation;

provided complete, real-time cooperation with SEC

and DOJ sta; and undertook extensive remediation,

including enhanced anti-corruption procedures and

training. Under the terms of the DPA, the company

paid $5.4 million in disgorgement and prejudgment

interest. The company also paid a $3.5 million

monetary penalty to resolve a criminal investigation

by DOJ through an NPA.

411

For further information about deferred

prosecution agreements, see SEC’s Enforcement

Manual.

412

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Non-Prosecution Agreements

A non-prosecution agreement is a written

agreement between SEC and a potential cooperating

individual or company, entered into in limited and

appropriate circumstances, that provides that SEC

will not pursue an enforcement action against the

individual or company if the individual or company

agrees to, among other things: (1) cooperate

truthfully and fully in SEC’s investigation and related

enforcement actions; and (2) comply, under certain

circumstances, with express undertakings. If the

agreement is violated, SEC sta retains its ability

to recommend an enforcement action to the

Commission against the individual or company.

For further information about non-prosecution

agreements, see SEC’s Enforcement Manual.

413

Termination Letters and Declinations

As discussed above, SEC’s decision to bring or

decline to bring an enforcement action under the

FCPA is made pursuant to the guiding principles set

forth in SEC’s Enforcement Manual. The same factors

that apply to SEC sta ’s determination of whether

to recommend an enforcement action against an

individual or entity apply to the decision to close an

investigation without recommending enforcement

action.

414

Generally, SEC sta considers, among

other things:

• the seriousness of the conduct and potential

violations;

• the resources available to SEC sta to pursue

the investigation;

• the suciency and strength of the evidence;

• the extent of potential investor harm if an

action is not commenced; and

• the age of the conduct underlying the

potential violations.

SEC has declined to take enforcement action

against both individuals and companies based

on the facts and circumstances present in those

matters, where, for example, the conduct was not

egregious, the company fully cooperated, and the

company identied and remediated the misconduct

quickly. SEC Enforcement Division policy is to notify

individuals and entities at the earliest opportunity

when the sta has determined not to recommend

an enforcement action against them to the

Commission. This notication takes the form of a

termination letter.

In order to protect the privacy rights and other

interests of the uncharged and other potentially

interested parties, SEC does not provide non-public

information related to closed investigations unless

required by law.

What Are Some Examples of Past Declinations by DOJ and SEC?

As discussed above, under the CEP, DOJ has announced declinations of companies that voluntarily self-disclosed,

fully cooperated and timely and appropriately remediated. Other than those pursuant to the CEP, neither DOJ or SEC

typically publicizes declinations but, to provide some insight into the process, the following are anonymized examples

of matters DOJ and SEC have declined to pursue:

Example 1: Public Company Declination

DOJ and SEC declined to take enforcement action against a public U.S. company. Factors taken into consideration

included:

• The company discovered that its employees had received competitor bid information from a third-

party with connections to the foreign government.

(cont’d)

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

• The company began an internal investigation, withdrew its contract bid, terminated the employees

involved, severed ties to the third-party agent, and voluntarily disclosed the conduct to DOJ’s

Antitrust Division, which also declined prosecution.

• During the internal investigation, the company uncovered various FCPA red ags, including prior

concerns about the third-party agent, all of which the company voluntarily disclosed to DOJ and SEC.

• The company immediately took substantial steps to improve its compliance program.

Example 2: Public Company Declination

DOJ and SEC declined to take enforcement action against a public U.S. company. Factors taken into consideration

included:

• With knowledge of employees of the company’s subsidiary, a retained construction company paid

relatively small bribes, which were wrongly approved by the company’s local law rm, to foreign

building code inspectors.

• When the company’s compliance department learned of the bribes, it immediately ended the

conduct, terminated its relationship with the construction company and law rm, and terminated or

disciplined the employees involved.

• The company completed a thorough internal investigation and voluntarily disclosed to DOJ and SEC.

• The company reorganized its compliance department, appointed a new compliance ocer dedicated

to anti-corruption, improved the training and compliance program, and undertook a review of all of

the company’s international third-party relationships.

Example 3: Public Company Declination

DOJ and SEC declined to take enforcement action against a U.S. publicly held industrial services company for

bribes paid by a small foreign subsidiary. Factors taken into consideration included:

• The company self-reported the conduct to DOJ and SEC.

• The total amount of the improper payments was relatively small, and the activity appeared to be an

isolated incident by a single employee at the subsidiary.

• The prots potentially obtained from the improper payments were very small.

• The payments were detected by the company’s existing internal controls. The company’s audit

committee conducted a thorough independent internal investigation. The results of the investigation

were provided to the government.

• The company cooperated fully with investigations by DOJ and SEC.

• The company implemented signicant remedial actions and enhanced its internal control structure.

Example 4: Public Company Declination

DOJ and SEC declined to take enforcement action against a U.S. publicly held oil-and-gas services company for

small bribes paid by a foreign subsidiary’s customs agent. Factors taken into consideration included:

• The company’s internal controls timely detected a potential bribe before a payment was made.

• When company management learned of the potential bribe, management immediately reported

the issue to the company’s General Counsel and Audit Committee and prevented the payment from

occurring.

(cont’d)

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

• Within weeks of learning of the attempted bribe, the company provided in-person FCPA training to

employees of the subsidiary and undertook an extensive internal investigation to determine whether

any of the company’s subsidiaries in the same region had engaged in misconduct.

• The company self-reported the misconduct and the results of its internal investigation to DOJ and

SEC.

• The company cooperated fully with investigations by DOJ and SEC.

• In addition to the immediate training at the relevant subsidiary, the company provided

comprehensive FCPA training to all of its employees and conducted an extensive review of its anti-

corruption compliance program.

• The company enhanced its internal controls and record-keeping policies and procedures, including

requiring periodic internal audits of customs payments.

• As part of its remediation, the company directed that local lawyers rather than customs agents be

used to handle its permits, with instructions that “no matter what, we don’t pay bribes”—a policy

that resulted in a longer and costlier permit procedure.

Example 5: Public Company Declination

DOJ and SEC declined to take enforcement action against a U.S. publicly held consumer products company in

connection with its acquisition of a foreign company. Factors taken into consideration included:

• The company identied the potential improper payments to local government ocials as part of its

pre-acquisition due diligence.

• The company promptly developed a comprehensive plan to investigate, correct, and remediate any

FCPA issues after acquisition.

• The company promptly self-reported the issues prior to acquisition and provided the results of its

investigation to the government on a real-time basis.

• The acquiring company’s existing internal controls and compliance program were robust.

• After the acquisition closed, the company implemented a comprehensive remedial plan, ensured

that all improper payments stopped, provided extensive FCPA training to employees of the new

subsidiary, and promptly incorporated the new subsidiary into the company’s existing internal

controls and compliance environment.

Example 6: Private Company Declination

In 2011, DOJ declined to take prosecutorial action against a privately held U.S. company and its foreign subsidiary.

Factors taken into consideration included:

• The company voluntarily disclosed bribes paid to social security ocials in a foreign country.

The total amount of the bribes was small.

• When discovered, the corrupt practices were immediately terminated.

• The conduct was thoroughly investigated, and the results of the investigation were promptly provided

to DOJ.

• All individuals involved were either terminated or disciplined. The company also terminated its

relationship with its foreign law rm.

• The company instituted improved training and compliance programs commensurate with its size and

risk exposure.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

WHISTLEBLOWER PROVISIONS

AND PROTECTIONS

Assistance and information from a whistleblower who knows of possible securities law

violations can be among the most powerful weapons in the law enforcement arsenal.

Through their knowledge of the circumstances and individuals involved, whistleblowers

can help SEC and DOJ identify potential violations much earlier than might otherwise

have been possible, thus allowing SEC and DOJ to minimize the harm to investors, better

preserve the integrity of the U.S. capital markets, and more swiftly hold accountable those

responsible for unlawful conduct.

The Sarbanes-Oxley Act of 2002 and the Dodd-

Frank Act of 2010 both contain provisions aecting

whistleblowers who report FCPA violations.

Sarbanes-Oxley prohibits issuers from retaliating

against whistleblowers and provides that

employees who are retaliated against for reporting

possible securities law violations may le a

complaint with the Department of Labor, for which

they would be eligible to receive reinstatement,

back pay, and other compensation.

415

Sarbanes-

Oxley also prohibits retaliation against employee

whistleblowers under the obstruction of justice

statute.

416

In 2010, the Dodd-Frank Act added Section

21F to the Exchange Act, addressing whistleblower

incentives and protections. Section 21F authorizes

SEC to provide monetary awards to eligible

individuals who voluntarily come forward with

high quality, original information that leads to

enforcement actions in which over $1,000,000

in sanctions is ordered.

417

The Commission

issues awards in an aggregate amount equal

to not less than 10 percent, and not more than

30 percent, of monetary sanctions that have

been collected in the actions. The Dodd-Frank

Act also prohibits employers from retaliating

against whistleblowers and creates a private

right of action for employees who are retaliated

against.

418

Furthermore, businesses should be aware

that retaliation against a whistleblower may also

violate state, local, and foreign laws that provide

protection of whistleblowers.

Chapter 8

Whistleblower

Provisions and

Protections

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

On August 12, 2011, the nal rules for SEC’s

Whistleblower Program became eective. These

rules set forth the requirements for a whistleblower

to be eligible for an award, factors that SEC will

use to determine the amount of the award,

the categories of individuals who are excluded

from award consideration, and the categories of

individuals who are subject to limitations in award

considerations.

419

The nal rules strengthen

incentives for employees to report the suspected

violations internally through internal compliance

programs when appropriate, although they do not

require an employee to do so in order to qualify

for an award.

420

Individuals with information about a possible

violation of the federal securities laws, including

FCPA violations, should submit that information to

SEC either online through SEC’s Tips, Complaints,

and Referrals (TCR) system and complaint form

(available at https://www.sec.gov/tcr) or by mailing

or faxing a completed Form TCR to the Commission’s

Oce of the Whistleblower.

Whistleblowers can submit information

anonymously. To be considered under SEC’s

whistleblower program as eligible for an award,

however, the information must be submitted

on an anonymous whistleblower’s behalf by an

attorney.

421

Whether or not a whistleblower reports

anonymously, SEC is committed to protecting the

identity of a whistleblower to the fullest extent

possible under the statute.

422

SEC’s Oce of the

Whistleblower administers SEC’s Whistleblower

Program and answers questions from the public

regarding the program. Additional information

regarding SEC’s Whistleblower Program, including

answers to frequently asked questions, is available

online at http://www.sec.gov/whistleblower.

SEC Oce of the Whistleblower

100 F Street NE, Mail Stop 5971

Washington, DC 20549

Facsimile: (703) 813-9322

Online Report Form:

http://www.sec.gov/whistleblower

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

DOJ OPINION PROCEDURE

DOJ’s opinion procedure remains a valuable mechanism for companies and individuals

to determine whether proposed conduct would be prosecuted by DOJ under the FCPA.

423

Generally speaking, under the opinion procedure process, parties submit information to

DOJ, after which DOJ issues an opinion about whether the proposed conduct falls within its

enforcement policy. All of DOJ’s prior opinions are available online.

424

Parties interested in

obtaining such an opinion should follow these steps:

425

First, those seeking an opinion should

evaluate whether their question relates to actual,

prospective conduct.

426

The opinion procedure

cannot be used to obtain opinions on purely

historical conduct or on hypothetical questions.

DOJ will not consider a request unless that portion

of the transaction for which an opinion is sought

involves only prospective conduct, although the

transaction as a whole may have components

that already have occurred. An executed contract

is not a prerequisite and, in most—if not all—

instances, an opinion request should be made

before the requestor commits to proceed with a

transaction.

427

Those seeking requests should be

aware that FCPA opinions relate only to the FCPA’s

anti-bribery provisions.

428

Second, before making the request, the

company or individual should check that they

are either an issuer or a domestic concern, as

only those categories of parties can receive an

opinion.

429

If the transaction involves more than

one issuer or domestic concern, consider making

a request for an opinion jointly, as opinions apply

only to the parties that request them.

430

Third, those seeking an opinion must put

their request in writing. The request must be

specic and accompanied by all relevant and

material information bearing on the conduct and

Chapter 9

DOJ Opinion

Procedure

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

circumstances for which an opinion is requested.

Material information includes background

information, complete copies of all operative

documents, and detailed statements of all collateral

or oral understandings, if any. Those seeking

opinions are under an armative obligation

to make full and true disclosures.

431

Materials

disclosed to DOJ will not be made public without

the consent of the party submitting them.

432

Fourth, the request must be signed. For

corporate requestors, the signatory should be

an appropriate senior ocer with operational

responsibility for the conduct that is the subject

of the request and who has been designated

by the corporation’s chief executive ocer. In

appropriate cases, DOJ also may require the chief

executive ocer to sign the request. Those signing

the request must certify that it contains a true,

correct, and complete disclosure with respect to

the proposed conduct and the circumstances of

the conduct.

433

Fifth, an original and ve copies of the request

should be addressed to the Assistant Attorney

General in charge of the Criminal Division, Attention:

FCPA Opinion Group.

434

The mailing address is

P.O. Box 28188 Central Station, Washington, D.C.

20038. DOJ also asks that you send an electronic

courtesy copy to [email protected].

DOJ will evaluate the request for an FCPA

opinion.

435

A party may withdraw a request for

an opinion at any time prior to the release of an

opinion.

436

If the request is complete and all the

relevant information has been submitted, DOJ

will respond to the request by issuing an opinion

within 30 days.

437

If the request is incomplete,

DOJ will identify for the requestor what additional

information or documents are required for DOJ

to review the request. Such information must be

provided to DOJ promptly. Once the additional

information has been received, DOJ will issue an

opinion within 30 days of receipt of that additional

information.

438

DOJ’s FCPA opinions state whether,

for purposes of DOJ’s present enforcement policy,

the prospective conduct would violate either the

issuer or domestic concern anti-bribery provisions

of the FCPA.

439

DOJ also may take other positions

in the opinion as it considers appropriate.

440

the extent that the opinion concludes that the

proposed conduct would not violate the FCPA,

a rebuttable presumption is created that the

requestor’s conduct that was the basis of the

opinion is in compliance with the FCPA.

441

In order

to provide non-binding guidance to the business

community, DOJ makes versions of its opinions

publicly available on its website.

442

If, after receiving an opinion, a party is

concerned about prospective conduct that is

beyond the scope of conduct specied in a previous

request, the party may submit an additional

request for an opinion using the procedures

outlined above.

443

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

CONCLUSION

The FCPA was designed to prevent corrupt practices, protect investors, and provide a

fair playing eld for those honest companies trying to win business based on quality and

price rather than bribes. Following Congress’ leadership in enacting the FCPA 43 years

ago, and through determined international diplomatic and law enforcement eorts in the

time since, laws like the FCPA prohibiting foreign bribery have been enacted by most of the

United States’ major trading partners.

This guide is designed to provide practical advice about, and useful insights into, our

enforcement considerations. For businesses desiring to compete fairly in foreign markets,

it is our goal to maximize those businesses’ ability to comply with the FCPA in the most

eective and ecient way suitable to their business and the markets in which they operate.

Through our ongoing eorts with the U.S. and international business and legal communities

and non-governmental organizations, DOJ and SEC can continue eectively to protect the

integrity of our markets and reduce corruption around the world.

Chapter 10

Conclusion

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

THE FOREIGN CORRUPT PRACTICES ACT

15 U.S.C. §§ 78dd-1, 78dd-2, 78dd-3, 78m, 78ff

15 U.S.C. § 78dd-1 Prohibited foreign trade

practices by issuers [Section 30A of the

Securities Exchange Act of 1934]

(a) Prohibition

It shall be unlawful for any issuer which has a

class of securities registered pursuant to section

78l of this title or which is required to le reports

under section 78o(d) of this title, or for any ocer,

director, employee, or agent of such issuer or

any stockholder thereof acting on behalf of such

issuer, to make use of the mails or any means or

instrumentality of interstate commerce corruptly in

furtherance of an oer, payment, promise to pay,

or authorization of the payment of any money, or

oer, gift, promise to give, or authorization of the

giving of anything of value to—

(1) any foreign ocial for purposes of—

(A) (i) inuencing any act or decision of such

foreign ocial in his ocial capacity, (ii) inducing

such foreign ocial to do or omit to do any act in

violation of the lawful duty of such ocial, or (iii)

securing any improper advantage; or

(B) inducing such foreign ocial to use

his inuence with a foreign government or

instrumentality thereof to aect or inuence

any act or decision of such government or

instrumentality,

in order to assist such issuer in obtaining

or retaining business for or with, or directing

business to, any person;

(2) any foreign political party or ocial thereof

or any candidate for foreign political oce for

purposes of—

(A) (i) inuencing any act or decision of such

party, ocial, or candidate in its or his ocial

capacity, (ii) inducing such party, ocial, or

candidate to do or omit to do an act in violation of

the lawful duty of such party, ocial, or candidate,

or (iii) securing any improper advantage; or

(B) inducing such party, ocial, or candidate to

use its or his inuence with a foreign government

or instrumentality thereof to aect or inuence

any act or decision of such government or

instrumentality,

in order to assist such issuer in obtaining or

retaining business for or with, or directing business

to, any person; or

(3) any person, while knowing that all or a

portion of such money or thing of value will be

oered, given, or promised, directly or indirectly,

to any foreign ocial, to any foreign political party

or ocial thereof, or to any candidate for foreign

political oce, for purposes of—

APPENDIX

The Foreign Corrupt

Practices Act

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

(A) (i) inuencing any act or decision of such

foreign ocial, political party, party ocial, or

candidate in his or its ocial capacity, (ii) inducing

such foreign ocial, political party, party ocial, or

candidate to do or omit to do any act in violation

of the lawful duty of such foreign ocial, political

party, party ocial, or candidate, or (iii) securing

any improper advantage; or

(B) inducing such foreign ocial, political party,

party ocial, or candidate to use his or its inuence

with a foreign government or instrumentality

thereof to aect or inuence any act or decision

of such government or instrumentality, in order to

assist such issuer in obtaining or retaining business

for or with, or directing business to, any person.

(b) Exception for routine governmental action

Subsections (a) and (g) shall not apply to any

facilitating or expediting payment to a foreign

ocial, political party, or party ocial the purpose

of which is to expedite or to secure the performance

of a routine governmental action by a foreign

ocial, political party, or party ocial.

It shall be an armative defense to actions

under subsection (a) or (g) that—

(1) the payment, gift, oer, or promise of

anything of value that was made, was lawful

under the written laws and regulations of the

foreign ocial’s, political party’s, party ocial’s, or

candidate’s country; or

(2) the payment, gift, oer, or promise of

anything of value that was made, was a reasonable

and bona de expenditure, such as travel and

lodging expenses, incurred by or on behalf of a

foreign ocial, party, party ocial, or candidate

and was directly related to—

(A) the promotion, demonstration, or

explanation of products or services; or

(B) the execution or performance of a contract

with a foreign government or agency thereof.

(d) Guidelines by Attorney General

Not later than one year after August 23, 1988,

the Attorney General, after consultation with the

Commission, the Secretary of Commerce, the

United States Trade Representative, the Secretary

of State, and the Secretary of the Treasury, and

after obtaining the views of all interested persons

through public notice and comment procedures,

shall determine to what extent compliance

with this section would be enhanced and the

business community would be assisted by further

clarication of the preceding provisions of this

section and may, based on such determination and

to the extent necessary and appropriate, issue—

(1) guidelines describing specic types of

conduct, associated with common types of export

sales arrangements and business contracts,

which for purposes of the Department of Justice’s

present enforcement policy, the Attorney General

determines would be in conformance with the

preceding provisions of this section; and

(2) general precautionary procedures which

issuers may use on a voluntary basis to conform

their conduct to the Department of Justice’s present

enforcement policy regarding the preceding

provisions of this section. The Attorney General

shall issue the guidelines and procedures referred

to in the preceding sentence in accordance with

the provisions of subchapter II of chapter 5 of title

5 and those guidelines and procedures shall be

subject to the provisions of chapter 7 of that title.

(e) Opinions of Attorney General

(1) The Attorney General, after consultation

with appropriate departments and agencies of

the United States and after obtaining the views of

all interested persons through public notice and

comment procedures, shall establish a procedure

to provide responses to specic inquiries by issuers

concerning conformance of their conduct with

the Department of Justice’s present enforcement

policy regarding the preceding provisions of this

section. The Attorney General shall, within 30 days

after receiving such a request, issue an opinion in

response to that request. The opinion shall state

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

whether or not certain specied prospective conduct

would, for purposes of the Department of Justice’s

present enforcement policy, violate the preceding

provisions of this section. Additional requests for

opinions may be led with the Attorney General

regarding other specied prospective conduct

that is beyond the scope of conduct specied in

previous requests. In any action brought under the

applicable provisions of this section, there shall be

a rebuttable presumption that conduct, which is

specied in a request by an issuer and for which

the Attorney General has issued an opinion that

such conduct is in conformity with the Department

of Justice’s present enforcement policy, is in

compliance with the preceding provisions of this

section. Such a presumption may be rebutted by

a preponderance of the evidence. In considering

the presumption for purposes of this paragraph,

a court shall weigh all relevant factors, including

but not limited to whether the information

submitted to the Attorney General was accurate

and complete and whether it was within the scope

of the conduct specied in any request received by

the Attorney General. The Attorney General shall

establish the procedure required by this paragraph

in accordance with the provisions of subchapter II

of chapter 5 of Title 5 and that procedure shall be

subject to the provisions of chapter 7 of that title.

(2) Any document or other material which

is provided to, received by, or prepared in the

Department of Justice or any other department

or agency of the United States in connection

with a request by an issuer under the procedure

established under paragraph (1), shall be exempt

from disclosure under section 552 of title 5 and

shall not, except with the consent of the issuer, be

made publicly available, regardless of whether the

Attorney General responds to such a request or

the issuer withdraws such request before receiving

a response.

(3) Any issuer who has made a request to

the Attorney General under paragraph (1) may

withdraw such request prior to the time the

Attorney General issues an opinion in response to

such request. Any request so withdrawn shall have

no force or eect.

(4) The Attorney General shall, to the

maximum extent practicable, provide timely

guidance concerning the Department of Justice’s

present enforcement policy with respect to the

preceding provisions of this section to potential

exporters and small businesses that are unable

to obtain specialized counsel on issues pertaining

to such provisions. Such guidance shall be limited

to responses to requests under paragraph (1)

concerning conformity of specied prospective

conduct with the Department of Justice’s present

enforcement policy regarding the preceding

provisions of this section and general explanations

of compliance responsibilities and of potential

liabilities under the preceding provisions of this

section.

(f) Denitions

For purposes of this section:

(1)(A) The term “foreign ocial” means any

ocer or employee of a foreign government or any

department, agency, or instrumentality thereof,

or of a public international organization, or any

person acting in an ocial capacity for or on behalf

of any such government or department, agency,

or instrumentality, or for or on behalf of any such

public international organization.

(B) For purposes of subparagraph (A), the term

“public international organization” means—

(i) an organization that is designated by

Executive order pursuant to section 288 of title 22;

(ii) any other international organization that is

designated by the President by Executive order for

the purposes of this section, eective as of the date

of publication of such order in the Federal Register.

(2) (A) A person’s state of mind is “knowing”

with respect to conduct, a circumstance, or a result

if—

(i) such person is aware that such person is

engaging in such conduct, that such circumstance

exists, or that such result is substantially certain to

occur; or

(ii) such person has a rm belief that

such circumstance exists or that such result is

substantially certain to occur.

(B) When knowledge of the existence of a

particular circumstance is required for an oense,

such knowledge is established if a person is aware

of a high probability of the existence of such

circumstance, unless the person actually believes

that such circumstance does not exist.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

(3)(A) The term “routine governmental action”

means only an action which is ordinarily and

commonly performed by a foreign ocial in—

(i) obtaining permits, licenses, or other ocial

documents to qualify a person to do business in a

foreign country;

(ii) processing governmental papers, such as

visas and work orders;

(iii) providing police protection, mail pick-up

and delivery, or scheduling inspections associated

with contract performance or inspections related

to transit of goods across country;

(iv) providing phone service, power and water

supply, loading and unloading cargo, or protecting

perishable products or commodities from

deterioration; or

(v) actions of a similar nature.

(B) The term “routine governmental action”

does not include any decision by a foreign ocial

whether, or on what terms, to award new business

to or to continue business with a particular party,

or any action taken by a foreign ocial involved

in the decision making process to encourage a

decision to award new business to or continue

business with a particular party.

(g) Alternative Jurisdiction

(1) It shall also be unlawful for any issuer

organized under the laws of the United States, or

a State, territory, possession, or commonwealth of

the United States or a political subdivision thereof

and which has a class of securities registered

pursuant to section 78l of this title or which is

required to le reports under section 78o(d)) of

this title, or for any United States person that is

an ocer, director, employee, or agent of such

issuer or a stockholder thereof acting on behalf

of such issuer, to corruptly do any act outside

the United States in furtherance of an oer,

payment, promise to pay, or authorization of the

payment of any money, or oer, gift, promise to

give, or authorization of the giving of anything of

value to any of the persons or entities set forth in

paragraphs (1), (2), and (3) of this subsection (a)

of this section for the purposes set forth therein,

irrespective of whether such issuer or such ocer,

director, employee, agent, or stockholder makes

use of the mails or any means or instrumentality of

interstate commerce in furtherance of such oer,

gift, payment, promise, or authorization.

(2) As used in this subsection, the term “United

States person” means a national of the United

States (as dened in section 1101 of title 8) or

any corporation, partnership, association, joint-

stock company, business trust, unincorporated

organization, or sole proprietorship organized

under the laws of the United States or any State,

territory, possession, or commonwealth of the

United States, or any political subdivision thereof.

* * *

15 U.S.C. § 78dd-2 Prohibited foreign trade

practices by domestic concerns

(a) Prohibition

It shall be unlawful for any domestic concern,

other than an issuer which is subject to section

78dd-1 of this title, or for any ocer, director,

employee, or agent of such domestic concern or

any stockholder thereof acting on behalf of such

domestic concern, to make use of the mails or any

means or instrumentality of interstate commerce

corruptly in furtherance of an oer, payment,

promise to pay, or authorization of the payment

of any money, or oer, gift, promise to give, or

authorization of the giving of anything of value to—

(1) any foreign ocial for purposes of—

(A) (i) inuencing any act or decision of such

foreign ocial in his ocial capacity, (ii) inducing

such foreign ocial to do or omit to do any act in

violation of the lawful duty of such ocial, or (iii)

securing any improper advantage; or

(B) inducing such foreign ocial to use

his inuence with a foreign government or

instrumentality thereof to aect or inuence

any act or decision of such government or

instrumentality,

in order to assist such domestic concern in

obtaining or retaining business for or with, or

directing business to, any person;

(2) any foreign political party or ocial thereof

or any candidate for foreign political oce for

purposes of—

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

(A) (i) inuencing any act or decision of such

party, ocial, or candidate in its or his ocial

capacity, (ii) inducing such party, ocial, or

candidate to do or omit to do an act in violation of

the lawful duty of such party, ocial, or candidate,

or (iii) securing any improper advantage; or

(B) inducing such party, ocial, or candidate to

use its or his inuence with a foreign government

or instrumentality thereof to aect or inuence

any act or decision of such government or

instrumentality,

in order to assist such domestic concern in

obtaining or retaining business for or with, or

directing business to, any person;

(3) any person, while knowing that all or a

portion of such money or thing of value will be

oered, given, or promised, directly or indirectly,

to any foreign ocial, to any foreign political party

or ocial thereof, or to any candidate for foreign

political oce, for purposes of—

(A) (i) inuencing any act or decision of such

foreign ocial, political party, party ocial, or

candidate in his or its ocial capacity, (ii) inducing

such foreign ocial, political party, party ocial, or

candidate to do or omit to do any act in violation

of the lawful duty of such foreign ocial, political

party, party ocial, or candidate, or (iii) securing

any improper advantage; or

(B) inducing such foreign ocial, political party,

party ocial, or candidate to use his or its inuence

with a foreign government or instrumentality

thereof to aect or inuence any act or decision of

such government or instrumentality,

in order to assist such domestic concern in

obtaining or retaining business for or with, or

directing business to, any person.

(b) Exception for routine governmental action

Subsections (a) and (i) of this section shall not

apply to any facilitating or expediting payment to a

foreign ocial, political party, or party ocial the

purpose of which is to expedite or to secure the

performance of a routine governmental action by a

foreign ocial, political party, or party ocial.

It shall be an armative defense to actions

under subsection (a) or (i) of this section that—

(1) the payment, gift, oer, or promise of

anything of value that was made, was lawful under

the written laws and regulations of the foreign

ocial’s, political party’s, party ocial’s, or

candidate’s country; or

(2) the payment, gift, offer, or promise

of anything of value that was made, was a

reasonable and bona fide expenditure, such as

travel and lodging expenses, incurred by or on

behalf of a foreign official, party, party official, or

candidate and was directly related to—

(A) the promotion, demonstration, or

explanation of products or services; or

(B) the execution or performance of a contract

with a foreign government or agency thereof.

(d) Injunctive relief

(1) When it appears to the Attorney General

that any domestic concern to which this section

applies, or ocer, director, employee, agent,

or stockholder thereof, is engaged, or about

to engage, in any act or practice constituting a

violation of subsection (a) or (i) of this section, the

Attorney General may, in his discretion, bring a

civil action in an appropriate district court of the

United States to enjoin such act or practice, and

upon a proper showing, a permanent injunction

or a temporary restraining order shall be granted

without bond.

(2) For the purpose of any civil investigation

which, in the opinion of the Attorney General, is

necessary and proper to enforce this section, the

Attorney General or his designee are empowered

to administer oaths and armations, subpoena

witnesses, take evidence, and require the production

of any books, papers, or other documents which

the Attorney General deems relevant or material

to such investigation. The attendance of witnesses

and the production of documentary evidence may

be required from any place in the United States, or

any territory, possession, or commonwealth of the

United States, at any designated place of hearing.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

(3) In case of contumacy by, or refusal to obey

a subpoena issued to, any person, the Attorney

General may invoke the aid of any court of the

United States within the jurisdiction of which

such investigation or proceeding is carried on, or

where such person resides or carries on business,

in requiring the attendance and testimony of

witnesses and the production of books, papers,

or other documents. Any such court may issue an

order requiring such person to appear before the

Attorney General or his designee, there to produce

records, if so ordered, or to give testimony

touching the matter under investigation. Any

failure to obey such order of the court may be

punished by such court as a contempt thereof.

All process in any such case may be served in the

judicial district in which such person resides or

may be found. The Attorney General may make

such rules relating to civil investigations as may

be necessary or appropriate to implement the

provisions of this subsection.

(e) Guidelines by Attorney General

Not later than 6 months after August 23,

1988, the Attorney General, after consultation

with the Securities and Exchange Commission,

the Secretary of Commerce, the United States

Trade Representative, the Secretary of State, and

the Secretary of the Treasury, and after obtaining

the views of all interested persons through public

notice and comment procedures, shall determine

to what extent compliance with this section would

be enhanced and the business community would

be assisted by further clarication of the preceding

provisions of this section and may, based on such

determination and to the extent necessary and

appropriate, issue—

(1) guidelines describing specic types of

conduct, associated with common types of export

sales arrangements and business contracts,

which for purposes of the Department of Justice’s

present enforcement policy, the Attorney General

determines would be in conformance with the

preceding provisions of this section; and

(2) general precautionary procedures which

domestic concerns may use on a voluntary basis

to conform their conduct to the Department of

Justice’s present enforcement policy regarding the

preceding provisions of this section.

The Attorney General shall issue the guidelines

and procedures referred to in the preceding

sentence in accordance with the provisions of

subchapter II of chapter 5 of title 5 and those

guidelines and procedures shall be subject to the

provisions of chapter 7 of that title.

(f) Opinions of Attorney General

(1) The Attorney General, after consultation

with appropriate departments and agencies of

the United States and after obtaining the views of

all interested persons through public notice and

comment procedures, shall establish a procedure

to provide responses to specic inquiries by

domestic concerns concerning conformance of

their conduct with the Department of Justice’s

present enforcement policy regarding the

preceding provisions of this section. The Attorney

General shall, within 30 days after receiving such

a request, issue an opinion in response to that

request. The opinion shall state whether or not

certain specied prospective conduct would,

for purposes of the Department of Justice’s

present enforcement policy, violate the preceding

provisions of this section. Additional requests for

opinions may be led with the Attorney General

regarding other specied prospective conduct

that is beyond the scope of conduct specied in

previous requests. In any action brought under the

applicable provisions of this section, there shall

be a rebuttable presumption that conduct, which

is specied in a request by a domestic concern

and for which the Attorney General has issued an

opinion that such conduct is in conformity with

the Department of Justice’s present enforcement

policy, is in compliance with the preceding

provisions of this section. Such a presumption may

be rebutted by a preponderance of the evidence.

In considering the presumption for purposes of

this paragraph, a court shall weigh all relevant

factors, including but not limited to whether the

information submitted to the Attorney General was

accurate and complete and whether it was within

the scope of the conduct specied in any request

received by the Attorney General. The Attorney

General shall establish the procedure required by

this paragraph in accordance with the provisions

of subchapter II of chapter 5 of title 5 and that

procedure shall be subject to the provisions of

chapter 7 of that title.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

(2) Any document or other material which

is provided to, received by, or prepared in the

Department of Justice or any other department or

agency of the United States in connection with a

request by a domestic concern under the procedure

established under paragraph (1), shall be exempt

from disclosure under section 552 of title 5 and

shall not, except with the consent of the domestic

concern, be made publicly available, regardless of

whether the Attorney General response to such a

request or the domestic concern withdraws such

request before receiving a response.

(3) Any domestic concern who has made a

request to the Attorney General under paragraph

(1) may withdraw such request prior to the time

the Attorney General issues an opinion in response

to such request. Any request so withdrawn shall

have no force or eect.

(4) The Attorney General shall, to the

maximum extent practicable, provide timely

guidance concerning the Department of Justice’s

present enforcement policy with respect to

the preceding provisions of this section to

potential exporters and small businesses that are

unable to obtain specialized counsel on issues

pertaining to such provisions. Such guidance

shall be limited to responses to requests under

paragraph (1) concerning conformity of specied

prospective conduct with the Department of

Justice’s present enforcement policy regarding the

preceding provisions of this section and general

explanations of compliance responsibilities and of

potential liabilities under the preceding provisions

of this section.

(g) Penalties

(1)(A) Any domestic concern that is not a natural

person and that violates subsection (a) or (i) of this

section shall be ned not more than $2,000,000.

(B) Any domestic concern that is not a natural

person and that violates subsection (a) or (i) of this

section shall be subject to a civil penalty of not

more than $10,000 imposed in an action brought

by the Attorney General.

(2)(A) Any natural person that is an ocer,

director, employee, or agent of a domestic concern,

or stockholder acting on behalf of such domestic

concern, who willfully violates subsection (a) or (i) of

this section shall be ned not more than $100,000

or imprisoned not more than 5 years, or both.

(B) Any natural person that is an ocer,

director, employee, or agent of a domestic concern,

or stockholder acting on behalf of such domestic

concern, who violates subsection (a) or (i) of this

section shall be subject to a civil penalty of not

more than $10,000 imposed in an action brought

by the Attorney General.

(3) Whenever a ne is imposed under paragraph

(2) upon any ocer, director, employee, agent, or

stockholder of a domestic concern, such ne may

not be paid, directly or indirectly, by such domestic

concern.

(h) Denitions

For purposes of this section:

(1) The term “domestic concern” means—

(A) any individual who is a citizen, national, or

resident of the United States; and

(B) any corporation, partnership, association,

joint-stock company, business trust, unincorporated

organization, or sole proprietorship which has its

principal place of business in the United States,

or which is organized under the laws of a State

of the United States or a territory, possession, or

commonwealth of the United States.

(2)(A) The term “foreign ocial” means any

ocer or employee of a foreign government or any

department, agency, or instrumentality thereof,

or of a public international organization, or any

person acting in an ocial capacity for or on behalf

of any such government or department, agency,

or instrumentality, or for or on behalf of any such

public international organization.

(B) For purposes of subparagraph (A), the term

“public international organization” means—

(i) an organization that has been designated

by Executive order pursuant to section 288 of title

22; or

(ii) any other international organization that is

designated by the President by Executive order for

the purposes of this section, eective as of the date

of publication of such order in the Federal Register.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

(3)(A) A person’s state of mind is “knowing” with

respect to conduct, a circumstance, or a result if—

(i) such person is aware that such person is

engaging in such conduct, that such circumstance

exists, or that such result is substantially certain to

occur; or

(ii) such person has a rm belief that

such circumstance exists or that such result is

substantially certain to occur.

(B) When knowledge of the existence of a

particular circumstance is required for an oense,

such knowledge is established if a person is aware

of a high probability of the existence of such

circumstance, unless the person actually believes

that such circumstance does not exist.

(4)(A) The term “routine governmental action”

means only an action which is ordinarily and

commonly performed by a foreign ocial in—

(i) obtaining permits, licenses, or other ocial

documents to qualify a person to do business in a

foreign country;

(ii) processing governmental papers, such as

visas and work orders;

(iii) providing police protection, mail pick-up

and delivery, or scheduling inspections associated

with contract performance or inspections related

to transit of goods across country;

(iv) providing phone service, power and water

supply, loading and unloading cargo, or protecting

perishable products or commodities from

deterioration; or

(v) actions of a similar nature.

(B) The term “routine governmental action”

does not include any decision by a foreign ocial

whether, or on what terms, to award new business

to or to continue business with a particular party,

or any action taken by a foreign ocial involved

in the decision-making process to encourage a

decision to award new business to or continue

business with a particular party.

(5) The term “interstate commerce” means

trade, commerce, transportation, or communication

among the several States, or between any foreign

country and any State or between any State and

any place or ship outside thereof, and such term

includes the intrastate use of—

(A) a telephone or other interstate means of

communication, or

(B) any other interstate instrumentality.

(i) Alternative Jurisdiction

(1) It shall also be unlawful for any United

States person to corruptly do any act outside

the United States in furtherance of an oer,

payment, promise to pay, or authorization of the

payment of any money, or oer, gift, promise to

give, or authorization of the giving of anything of

value to any of the persons or entities set forth

in paragraphs (1), (2), and (3) of subsection (a),

for the purposes set forth therein, irrespective

of whether such United States person makes use

of the mails or any means or instrumentality of

interstate commerce in furtherance of such oer,

gift, payment, promise, or authorization.

(2) As used in this subsection, a “United

States person” means a national of the United

States (as dened in section 1101 of title 8) or

any corporation, partnership, association, joint-

stock company, business trust, unincorporated

organization, or sole proprietorship organized

under the laws of the United States or any State,

territory, possession, or commonwealth of the

United States, or any political subdivision thereof.

* * *

15 U.S.C. § 78dd-3 Prohibited foreign trade

practices by persons other than issuers or

domestic concerns

(a) Prohibition

It shall be unlawful for any person other than

an issuer that is subject to section 78dd-1 [Section

30A of the Exchange Act] of this title or a domestic

concern (as dened in section 78dd-2 of this title),

or for any ocer, director, employee, or agent of

such person or any stockholder thereof acting on

behalf of such person, while in the territory of the

United States, corruptly to make use of the mails

or any means or instrumentality of interstate

commerce or to do any other act in furtherance of

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

an oer, payment, promise to pay, or authorization

of the payment of any money, or oer, gift, promise

to give, or authorization of the giving of anything of

value to—

(1) any foreign ocial for purposes of—

(A) (i) inuencing any act or decision of such

foreign ocial in his ocial capacity, (ii) inducing

such foreign ocial to do or omit to do any act in

violation of the lawful duty of such ocial, or (iii)

securing any improper advantage; or

(B) inducing such foreign ocial to use

his inuence with a foreign government or

instrumentality thereof to aect or inuence any act

or decision of such government or instrumentality,

in order to assist such person in obtaining or

retaining business for or with, or directing business

to, any person;

(2) any foreign political party or ocial thereof

or any candidate for foreign political oce for

purposes of—

(A) (i) inuencing any act or decision of such

party, ocial, or candidate in its or his ocial

capacity, (ii) inducing such party, ocial, or

candidate to do or omit to do an act in violation of

the lawful duty of such party, ocial, or candidate,

or (iii) securing any improper advantage; or

(B) inducing such party, ocial, or candidate to

use its or his inuence with a foreign government

or instrumentality thereof to aect or inuence

any act or decision of such government or

instrumentality,

in order to assist such person in obtaining or

retaining business for or with, or directing business

to, any person; or

(3) any person, while knowing that all or a

portion of such money or thing of value will be

oered, given, or promised, directly or indirectly,

to any foreign ocial, to any foreign political party

or ocial thereof, or to any candidate for foreign

political oce, for purposes of—

(A) (i) inuencing any act or decision of such

foreign ocial, political party, party ocial, or

candidate in his or its ocial capacity, (ii) inducing

such foreign ocial, political party, party ocial, or

candidate to do or omit to do any act in violation

of the lawful duty of such foreign ocial, political

party, party ocial, or candidate, or (iii) securing

any improper advantage; or

(B) inducing such foreign ocial, political

party, party ocial, or candidate to use his

or its inuence with a foreign government or

instrumentality thereof to aect or inuence any act

or decision of such government or instrumentality,

in order to assist such person in obtaining or

retaining business for or with, or directing business

to, any person.

(b) Exception for routine governmental action

Subsection (a) of this section shall not apply

to any facilitating or expediting payment to a

foreign ocial, political party, or party ocial the

purpose of which is to expedite or to secure the

performance of a routine governmental action by a

foreign ocial, political party, or party ocial.

It shall be an armative defense to actions

under subsection (a) of this section that—

(1) the payment, gift, oer, or promise of

anything of value that was made, was lawful

under the written laws and regulations of the

foreign ocial’s, political party’s, party ocial’s, or

candidate’s country; or

(2) the payment, gift, oer, or promise of

anything of value that was made, was a reasonable

and bona de expenditure, such as travel and

lodging expenses, incurred by or on behalf of a

foreign ocial, party, party ocial, or candidate

and was directly related to—

(A) the promotion, demonstration, or

explanation of products or services; or

(B) the execution or performance of a contract

with a foreign government or agency thereof.

(d) Injunctive relief

(1) When it appears to the Attorney General

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

that any person to which this section applies, or

ocer, director, employee, agent, or stockholder

thereof, is engaged, or about to engage, in any act

or practice constituting a violation of subsection

(a) of this section, the Attorney General may, in

his discretion, bring a civil action in an appropriate

district court of the United States to enjoin such

act or practice, and upon a proper showing, a

permanent injunction or a temporary restraining

order shall be granted without bond.

(2) For the purpose of any civil investigation

which, in the opinion of the Attorney General, is

necessary and proper to enforce this section, the

Attorney General or his designee are empowered

to administer oaths and armations, subpoena

witnesses, take evidence, and require the production

of any books, papers, or other documents which

the Attorney General deems relevant or material

to such investigation. The attendance of witnesses

and the production of documentary evidence may

be required from any place in the United States, or

any territory, possession, or commonwealth of the

United States, at any designated place of hearing.

(3) In case of contumacy by, or refusal to obey

a subpoena issued to, any person, the Attorney

General may invoke the aid of any court of the

United States within the jurisdiction of which

such investigation or proceeding is carried on, or

where such person resides or carries on business,

in requiring the attendance and testimony of

witnesses and the production of books, papers,

or other documents. Any such court may issue an

order requiring such person to appear before the

Attorney General or his designee, there to produce

records, if so ordered, or to give testimony touching

the matter under investigation. Any failure to obey

such order of the court may be punished by such

court as a contempt thereof.

(4) All process in any such case may be served

in the judicial district in which such person resides

or may be found. The Attorney General may make

such rules relating to civil investigations as may

be necessary or appropriate to implement the

provisions of this subsection.

(e) Penalties

(1)(A) Any juridical person that violates

subsection (a) of this section shall be ned not

more than $2,000,000.

(B) Any juridical person that violates subsection

(a) of this section shall be subject to a civil penalty

of not more than $10,000 imposed in an action

brought by the Attorney General.

(2)(A) Any natural person who willfully violates

subsection (a) of this section shall be ned not

more than $100,000 or imprisoned not more than

5 years, or both.

(B) Any natural person who violates subsection

(a) of this section shall be subject to a civil penalty

of not more than $10,000 imposed in an action

brought by the Attorney General.

(3) Whenever a ne is imposed under

paragraph (2) upon any ocer, director, employee,

agent, or stockholder of a person, such ne may

not be paid, directly or indirectly, by such person.

(f) Denitions

For purposes of this section:

(1) The term “person,” when referring to

an oender, means any natural person other

than a national of the United States (as dened

in section 1101 of title 8) or any corporation,

partnership, association, joint-stock company,

business trust, unincorporated organization, or

sole proprietorship organized under the law of a

foreign nation or a political subdivision thereof.

(2)(A) The term “foreign ocial” means any

ocer or employee of a foreign government or any

department, agency, or instrumentality thereof,

or of a public international organization, or any

person acting in an ocial capacity for or on behalf

of any such government or department, agency,

or instrumentality, or for or on behalf of any such

public international organization.

For purposes of subparagraph (A), the term

“public international organization” means—

(i) an organization that has been designated

by Executive order pursuant to section 288 of title

22; or

(ii) any other international organization that is

designated by the President by Executive order for

the purposes of this section, eective as of the date

of publication of such order in the Federal Register.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

(3)(A) A person’s state of mind is knowing with

respect to conduct, a circumstance, or a result if—

(i) such person is aware that such person is

engaging in such conduct, that such circumstance

exists, or that such result is substantially certain to

occur; or

(ii) such person has a rm belief that

such circumstance exists or that such result is

substantially certain to occur.

(B) When knowledge of the existence of a

particular circumstance is required for an oense,

such knowledge is established if a person is aware

of a high probability of the existence of such

circumstance, unless the person actually believes

that such circumstance does not exist.

(4)(A) The term “routine governmental action”

means only an action which is ordinarily and

commonly performed by a foreign ocial in—

(i) obtaining permits, licenses, or other ocial

documents to qualify a person to do business in a

foreign country;

(ii) processing governmental papers, such as

visas and work orders;

(iii) providing police protection, mail pick-up

and delivery, or scheduling inspections associated

with contract performance or inspections related

to transit of goods across country;

(iv) providing phone service, power and water

supply, loading and unloading cargo, or protecting

perishable products or commodities from

deterioration; or

(v) actions of a similar nature.

(B) The term “routine governmental action”

does not include any decision by a foreign ocial

whether, or on what terms, to award new business

to or to continue business with a particular party,

or any action taken by a foreign ocial involved

in the decision-making process to encourage a

decision to award new business to or continue

business with a particular party.

(5) The term “interstate commerce” means

trade, commerce, transportation, or communication

among the several States, or between any foreign

country and any State or between any State and

any place or ship outside thereof, and such term

includes the intrastate use of—

(A) a telephone or other interstate means of

communication, or

(B) any other interstate instrumentality.

* * *

15 U.S.C. § 78m Periodical and other reports

[Section 13 of the Securities Exchange Act of

1934]

(a) Reports by issuer of security; contents

Every issuer of a security registered pursuant to

section 78l of this title shall le with the Commission,

in accordance with such rules and regulations as

the Commission may prescribe as necessary or

appropriate for the proper protection of investors

and to insure fair dealing in the security—

(1) such information and documents (and such

copies thereof) as the Commission shall require

to keep reasonably current the information and

documents required to be included in or led

with an application or registration statement led

pursuant to section 78l of this title, except that

the Commission may not require the ling of any

material contract wholly executed before July 1,

1962.

(2) such annual reports (and such copies

thereof), certied if required by the rules and

regulations of the Commission by independent

public accountants, and such quarterly reports

(and such copies thereof), as the Commission may

prescribe.

Every issuer of a security registered on a

national securities exchange shall also le a

duplicate original of such information, documents,

and reports with the exchange. In any registration

statement, periodic report, or other reports to be

led with the Commission, an emerging growth

company need not present selected nancial data

in accordance with section 229.301 of title 17, Code

of Federal Regulations, for any period prior to the

earliest audited period presented in connection

with its rst registration statement that became

eective under this chapter or the Securities Act

of 1933 [15 U.S.C. §§ 77a, et seq.] and, with respect

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

to any such statement or reports, an emerging

growth company may not be required to comply

with any new or revised financial accounting

standard until such date that a company that is

not an issuer (as defined under section 7201 of

this title) is required to comply with such new or

revised accounting standard, if such standard

applies to companies that are not issuers.

(b) Form of report; books, records, and internal

accounting; directives

(1) The Commission may prescribe, in regard

to reports made pursuant to this chapter, the form

or forms in which the required information shall

be set forth, the items or details to be shown in

the balance sheet and the earnings statement,

and the methods to be followed in the preparation

of reports, in the appraisal or valuation of assets

and liabilities, in the determination of depreciation

and depletion, in the dierentiation of recurring

and nonrecurring income, in the dierentiation

of investment and operating income, and in

the preparation, where the Commission deems

it necessary or desirable, of separate and/or

consolidated balance sheets or income accounts

of any person directly or indirectly controlling

or controlled by the issuer, or any person under

direct or indirect common control with the issuer;

but in the case of the reports of any person

whose methods of accounting are prescribed

under the provisions of any law of the United

States, or any rule or regulation thereunder, the

rules and regulations of the Commission with

respect to reports shall not be inconsistent with

the requirements imposed by such law or rule

or regulation in respect of the same subject

matter (except that such rules and regulations of

the Commission may be inconsistent with such

requirements to the extent that the Commission

determines that the public interest or the

protection of investors so requires).

(2) Every issuer which has a class of securities

registered pursuant to section 78l of this title

and every issuer which is required to le reports

pursuant to section 78o(d) of this title shall—

(A) make and keep books, records, and

accounts, which, in reasonable detail, accurately

and fairly reect the transactions and dispositions

of the assets of the issuer;

(B) devise and maintain a system of internal

accounting controls sucient to provide reasonable

assurances that—

(i) transactions are executed in accordance

with management’s general or specic

authorization;

(ii) transactions are recorded as necessary

(I) to permit preparation of nancial statements

in conformity with generally accepted accounting

principles or any other criteria applicable to such

statements, and (II) to maintain accountability for

assets;

(iii) access to assets is permitted only in

accordance with management’s general or specic

authorization; and

(iv) the recorded accountability for assets is

compared with the existing assets at reasonable

intervals and appropriate action is taken with

respect to any dierences; and

law, pay the allocable share of such issuer of a

reasonable annual accounting support fee or fees,

determined in accordance with section 7219 of this

title.

(3)(A) With respect to matters concerning

the national security of the United States, no

duty or liability under paragraph (2) of this

subsection shall be imposed upon any person

acting in cooperation with the head of any

Federal department or agency responsible for

such matters if such act in cooperation with such

head of a department or agency was done upon

the specic, written directive of the head of such

department or agency pursuant to Presidential

authority to issue such directives. Each directive

issued under this paragraph shall set forth the

specic facts and circumstances with respect

to which the provisions of this paragraph are

to be invoked. Each such directive shall, unless

renewed in writing, expire one year after the date

of issuance.

(B) Each head of a Federal department or

agency of the United States who issues such a

directive pursuant to this paragraph shall maintain

a complete le of all such directives and shall, on

October 1 of each year, transmit a summary of

matters covered by such directives in force at any

time during the previous year to the Permanent

Select Committee on Intelligence of the House

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

of Representatives and the Select Committee on

Intelligence of the Senate.

(4) No criminal liability shall be imposed

for failing to comply with the requirements of

paragraph (2) of this subsection except as provided

in paragraph (5) of this subsection.

(5) No person shall knowingly circumvent or

knowingly fail to implement a system of internal

accounting controls or knowingly falsify any book,

record, or account described in paragraph (2).

(6) Where an issuer which has a class of

securities registered pursuant to section 78l of

this title or an issuer which is required to le

reports pursuant to section 78o(d) of this title

holds 50 per centum or less of the voting power

with respect to a domestic or foreign rm, the

provisions of paragraph (2) require only that the

issuer proceed in good faith to use its inuence,

to the extent reasonable under the issuer’s

circumstances, to cause such domestic or foreign

rm to devise and maintain a system of internal

accounting controls consistent with paragraph (2).

Such circumstances include the relative degree of

the issuer’s ownership of the domestic or foreign

rm and the laws and practices governing the

business operations of the country in which such

rm is located. An issuer which demonstrates

good faith eorts to use such inuence shall be

conclusively presumed to have complied with the

requirements of paragraph (2).

(7) For the purpose of paragraph (2) of this

subsection, the terms “reasonable assurances”

and “reasonable detail” mean such level of detail

and degree of assurance as would satisfy prudent

ocials in the conduct of their own aairs.

[Reminder of the statute omitted]

* * *

15 U.S.C. § 78 Penalties [Section 32 of the

Securities Exchange Act of 1934]

(a) Willful violations; false and misleading

statements

Any person who willfully violates any provision

of this chapter (other than section 78dd-1 of

this title [Section 30A of the Exchange Act]), or

any rule or regulation thereunder the violation

of which is made unlawful or the observance of

which is required under the terms of this chapter,

or any person who willfully and knowingly makes,

or causes to be made, any statement in any

application, report, or document required to be

led under this chapter or any rule or regulation

thereunder or any undertaking contained in a

registration statement as provided in subsection

(d) of section 78o of this title, or by any self-

regulatory organization in connection with an

application for membership or participation

therein or to become associated with a member

thereof which statement was false or misleading

with respect to any material fact, shall upon

conviction be ned not more than $5,000,000,

or imprisoned not more than 20 years, or both,

except that when such person is a person other

than a natural person, a ne not exceeding

$25,000,000 may be imposed; but no person shall

be subject to imprisonment under this section

for the violation of any rule or regulation if he

proves that he had no knowledge of such rule or

regulation.

(b) Failure to le information, documents, or

reports

Any issuer which fails to le information,

documents, or reports required to be led under

subsection (d) of section 78o of this title or any rule

or regulation thereunder shall forfeit to the United

States the sum of $100 for each and every day

such failure to le shall continue. Such forfeiture,

which shall be in lieu of any criminal penalty for

such failure to le which might be deemed to

arise under subsection (a) of this section, shall be

payable into the Treasury of the United States and

shall be recoverable in a civil suit in the name of

the United States.

stockholders, employees, or agents of issuers

(1)(A) Any issuer that violates subsection (a) or

(g) of section 78dd-1 [Section 30A of the Exchange

Act] of this title shall be ned not more than

$2,000,000.

(B) Any issuer that violates subsection (a) or (g)

of section 78dd-1 [Section 30A of the Exchange Act]

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

100

of this title shall be subject to a civil penalty of not

more than $10,000 imposed in an action brought

by the Commission.

(2)(A) Any ocer, director, employee, or agent

of an issuer, or stockholder acting on behalf of such

issuer, who willfully violates subsection (a) or (g) of

section 78dd-1 [Section 30A of the Exchange Act] of

this title shall be ned not more than $100,000, or

imprisoned not more than 5 years, or both.

(B) Any ocer, director, employee, or agent of

an issuer, or stockholder acting on behalf of such

issuer, who violates subsection (a) or (g) of section

78dd-1 [Section 30A of the Exchange Act] of this

title shall be subject to a civil penalty of not more

than $10,000 imposed in an action brought by the

Commission.

(3) Whenever a ne is imposed under

paragraph (2) upon any ocer, director, employee,

agent, or stockholder of an issuer, such ne may

not be paid, directly or indirectly, by such issuer.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

101

1 H. R. Rep. No. 95-640, at 4-5 (1977) [hereinafter

H.R. Rep. No. 95-640], available at https://www.justice.

gov/sites/default/files/criminal-fraud/legacy/2010/04/11/

houseprt-95-640.pdf.

2 S. Rep. No. 95-114, at 4 (1977) [hereinafter S. Rep.

No. 95-114], available at http://www.justice.gov/criminal/

fraud/fcpa/history/1977/senaterpt-95-114.pdf.

3 Id.; H.R. Rep. No. 95-640, at 4-5. The House Report

made clear Congress’ concerns: “The payment of bribes to

inuence the acts or decisions of foreign ocials, foreign

political parties or candidates for foreign political oce is

unethical. It is counter to the moral expectations and values

of the American public. But not only is it unethical, it is bad

business as well. It erodes public condence in the integrity

of the free market system. It short-circuits the marketplace

by directing business to those companies too inecient to

compete in terms of price, quality or service, or too lazy to

engage in honest salesmanship, or too intent upon unloading

marginal products. In short, it rewards corruption instead of

eciency and puts pressure on ethical enterprises to lower

their standards or risk losing business.” Id.

4 See, e.g., U.S. Agency for Int’l Dev., USAID

Anticorruption Strategy 5-6 (2005), available at https://www.

usaid.gov/sites/default/files/documents/1868/200mbo.

pdf. The growing recognition that corruption poses a severe

threat to domestic and international security has galvanized

eorts to combat it in the United States and abroad. See, e.g.,

Int’l Anti-Corruption and Good Governance Act of 2000, Pub.

L. No. 106-309, § 202, 114 Stat. 1090 (codied as amended

at 22 U.S.C. §§ 2151-2152 (2000)) (noting that “[w]idespread

corruption endangers the stability and security of societies,

undermines democracy, and jeopardizes the social, political,

and economic development of a society. . . . [and that]

[c]orruption facilitates criminal activities, such as money

laundering, hinders economic development, inates the

costs of doing business, and undermines the legitimacy of

the government and public trust”).

5 See Maryse Tremblay & Camille Karbassi,

Corruption and Human Tracking 4 (Transparency

Int’l, Working Paper No. 3, 2011), available at

https://issuu.com/transparencyinternational/

docs/ti-working_paper_human_trafficking_28_

jun_2011?mode=window&backgroundColor=%23222222;

U.S. Agency for Int’l Dev., Foreign Aid in the National Interest

40 (2002), available at http://pdf.usaid.gov/pdf_docs/

PDABW900.pdf (“No problem does more to alienate citizens

from their political leaders and institutions, and to undermine

political stability and economic development, than endemic

corruption among the government, political party leaders,

judges, and bureaucrats. The more endemic the corruption

is, the more likely it is to be accompanied by other serious

deciencies in the rule of law: smuggling, drug tracking,

criminal violence, human rights abuses, and personalization

of power.”).

6 President George W. Bush observed in 2006 that “the

culture of corruption has undercut development and good

governance and . . . impedes our eorts to promote freedom

and democracy, end poverty, and combat international crime

and terrorism.” President’s Statement on Kleptocracy, 2 Pub.

Papers 1504 (Aug. 10, 2006), available at http://georgewbush-

whitehouse.archives.gov/news/releases/2006/08/20060810.

html. The administrations of former President George W.

Bush and former President Barack Obama both recognized

the threats posed to security and stability by corruption.

For instance, in issuing a proclamation restricting the entry

of certain corrupt foreign public ocials, former President

George W. Bush recognized “the serious negative eects that

corruption of public institutions has on the United States’

eorts to promote security and to strengthen democratic

institutions and free market systems. . .” Proclamation

No. 7750, 69 Fed. Reg. 2287 (Jan. 14, 2004). Similarly, former

President Barack Obama’s National Security Strategy paper,

released in May 2010, expressed the administration’s eorts

and commitment to promote the recognition that “pervasive

corruption is a violation of basic human rights and a severe

impediment to development and global security.” The White

ENDNOTES

APPENDIX

Endnotes

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

102

House, National Security Strategy 38 (2010), available at

https://obamawhitehouse.archives.gov/sites/default/files/

rss_viewer/national_security_strategy.pdf.

7 See, e.g., Int’l Chamber of Commerce, et al., Clean

Business Is Good Business: The Business Case Against

Corruption (2008), available at https://d306pr3pise04h.

cloudfront.net/docs/news_events%2F8.1%2Fclean_business_

is_good_business.pdf; World Health Org., Reinforcing the

Focus on Anti-corruption, Transparency and Accountability

in National Health Policies, Strategies and Plans (2019),

available at https://apps.who.int/iris/bitstream/hand

le/10665/326229/9789241515689-eng.pdf?ua=1.

8 See, e.g., The Corruption Eruption, Economist

(Apr. 29, 2010), available at http://www.economist.com/

node/16005114 (“The hidden costs of corruption are almost

always much higher than companies imagine. Corruption

inevitably begets ever more corruption: bribe-takers keep

returning to the trough and bribe-givers open themselves

up to blackmail.”); Daniel Kaufmann and Shang-Jin Wei,

Does “Grease Money” Speed Up the Wheels of Commerce? 2

(Nat’l Bureau of Econ. Research, Working Paper No. 7093,

1999), available at http://www.nber.org/papers/w7093.pdf

(“Contrary to the ‘ecient grease’ theory, we nd that rms

that pay more bribes are also likely to spend more, not less,

management time with bureaucrats negotiating regulations,

and face higher, not lower, cost of capital.”).

9 For example, in a number of recent enforcement

actions, the same employees who were directing or controlling

the bribe payments were also enriching themselves at the

expense of the company. See, e.g., Criminal Information,

United States v. Cyrus Allen Ahsani, et al., No. 19-cr-147 (S.D. Tex.

Mar. 4, 2019), ECF No. 1 [hereinafter United States v. Ahsani]

(paying kickbacks to executives who were involved in bribe

payments), available at https://www.justice.gov/criminal-

fraud/case/le/1266861/download; Criminal Information,

United States v. Colin Steven, No. 17-cr-788 (S.D.N.Y. Dec. 21,

2017), ECF No. 2 [hereinafter United States v. Steven] (receiving

kickbacks related to certain corrupt payments made by

Embraer, S.A.), available at https://www.justice.gov/criminal-

fraud/le/1021856/download; Criminal Information, United

States v. Robert Zubiate, No. 17-cr-591 (S.D. Tex. Oct. 6, 2017),

ECF No. 1 [hereinafter United States v. Zubiate] (receiving

kickbacks related to certain corrupt payments made by SBM

Oshore, N.V. in Brazil), available at https://www.justice.gov/

criminal-fraud/file/1017281/download; Complaint, SEC v.

Peterson, No. 12-cv-2033 (E.D.N.Y. 2012), ECF No. 1, available

at http://www.sec.gov/litigation/complaints/2012/comp-

pr2012-78.pdf; Criminal Information, United States v. Peterson,

No. 12-cr-224 (E.D.N.Y. 2012), ECF No. 7 [hereinafter United

States v. Peterson], available at https://www.justice.gov/sites/

default/files/criminal-fraud/legacy/2012/04/26/petersong-

information.pdf; Plea Agreement, United States v. Stanley,

No. 08-cr-597 (S.D. Tex. 2008), ECF No. 9 [hereinafter United

States v. Stanley], available at https://www.justice.gov/sites/

default/files/criminal-fraud/legacy/2012/03/19/09-03-

08stanley-plea-agree.pdf; Plea Agreement, United States

v. Sapsizian, No. 06-cr-20797 (S.D. Fla. 2007), ECF No. 42

[hereinafter United States v. Sapsizian], available at https://

www.justice.gov/sites/default/files/criminal-fraud/

legacy/2011/02/16/06-06-07sapsizian-plea.pdf.

10 See, e.g., Criminal Information, United States v. Société

Générale S.A., No. 18-cr-253 (E.D.N.Y. May 18, 2018), ECF

No. 4 [hereinafter United States v. Société Générale], available

at https://www.justice.gov/criminal-fraud/file/1072456/

download; Complaint, SEC v. Tyco Int’l Ltd., 06-cv-2942 (S.D.N.Y.

2006), ECF No. 1 [hereinafter SEC v. Tyco Int’l], available at

http://www.sec.gov/litigation/complaints/2006/comp19657.

pdf; Complaint, SEC v. Willbros Group, Inc., No. 08-cv-1494 (S.D.

Tex. 2008), ECF No. 1 [hereinafter SEC v. Willbros], available at

http://www.sec.gov/litigation/complaints/2008/comp20571.

pdf.

11 See United States v. Ahsani, supra note 9 (engaging

in bid-rigging); Plea Agreement, United States v. Bridgestone

Corp., No. 11-cr-651 (S.D. Tex. 2011), ECF No. 21, available

at https://www.justice.gov/sites/default/les/criminal-fraud/

legacy/2011/10/18/10-05-11bridgestone-plea.pdf.

12 See S. Rep. No. 95-114, at 6; H.R. Rep. No. 95-640,

at 4; see also A. Carl Kotchian, The Payo: Lockheed’s 70-Day

Mission to Tokyo, Saturday Rev., Jul. 9, 1977, at 7.

13 U.S. Sec. and Exchange Comm., Report of the

Securities and Exchange Commission on Questionable and

Illegal Corporate Payments and Practices 2-3 (1976).

14 See H.R. Rep. No. 95-640, at 4-5; S. Rep. No. 95-114,

at 3-4.

15 H.R. Rep. No. 95-640, at 4-5; S. Rep. No. 95-

114, at 4. The Senate Report observed, for instance, that

“[m]anagements which resort to corporate bribery and

the falsication of records to enhance their business

reveal a lack of condence about themselves,” while citing

the Secretary of the Treasury’s testimony that “‘[p]aying

bribes—apart from being morally repugnant and illegal in

most countries—is simply not necessary for the successful

conduct of business here or overseas.’” Id.

16 See S. Rep. No. 100-85, at 46 (1987) (recounting

FCPA’s historical background and explaining that “a strong

antibribery statute could help U.S. corporations resist corrupt

demands . . . .”) [hereinafter S. Rep. No. 100-85].

17 S. Rep. No. 95-114, at 7.

18 Omnibus Trade and Competitiveness Act of 1988,

Pub. L. No. 100- 418, § 5003, 102 Stat. 1107, 1415-25 (1988);

see also H.R. Rep. No. 100-576, at 916-24 (1988) (discussing

FCPA amendments, including changes to standard of liability

for acts of third parties) [hereinafter H.R. Rep. No. 100-576].

19 See Omnibus Trade and Competitiveness Act of 1988,

§ 5003(d). The amended statute included the following

directive: “It is the sense of the Congress that the President

should pursue the negotiation of an international agreement,

among the members of the Organization of Economic

Cooperation and Development, to govern persons from

those countries concerning acts prohibited with respect to

issuers and domestic concerns by the amendments made

by this section. Such international agreement should include

a process by which problems and conicts associated

with such acts could be resolved.” Id.; see also S. Rep.

No. 105-277, at 2 (1998) (describing eorts by Executive

Branch to encourage U.S. trading partners to enact legislation

similar to FCPA following 1988 amendments) [hereinafter S.

Rep. No. 105-277].

20 Convention on Combating Bribery of Foreign Public

Ocials in International Business Transactions art. 1.1, Dec.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

103

18, 1997, 37 I.L.M. 1 [hereinafter Anti-Bribery Convention].

The Anti-Bribery Convention requires member countries

to make it a criminal oense “for any person intentionally

to oer, promise or give any undue pecuniary or other

advantage, whether directly or through intermediaries,

to a foreign public ocial, for that ocial or for a third

party, in order that the ocial act or refrain from acting in

relation to the performance of ocial duties, in order to

obtain or retain business or other improper advantage in

the conduct of international business.” The Convention and

its commentaries also call on all parties (a) to ensure that

aiding and abetting and authorization of an act of bribery are

criminal oenses, (b) to assert territorial jurisdiction “broadly

so that an extensive physical connection to the bribery act

is not required,” and (c) to assert nationality jurisdiction

consistent with the general principles and conditions of each

party’s legal system. Id. at art. 1.2, cmts. 25, 26.

See International Anti-Bribery and Fair Competition

Act of 1998, Pub. L. 105-366, 112 Stat. 3302 (1998); see also

S. Rep. No. 105-277, at 2-3 (describing amendments to “the

FCPA to conform it to the requirements of and to implement

the OECD Convention”).

22 There is no private right of action under the FCPA.

See, e.g., Lamb v. Phillip Morris, Inc., 915 F.2d 1024, 1028-29

(6th Cir. 1990); McLean v. Int’l Harvester Co., 817 F.2d 1214,

1219 (5th Cir. 1987).

23 U.S. Dept. of Justice, Justice Manual § 9-47.110

(2008) [hereinafter JM], available at https://www.justice.gov/

jm/justice-manual.

24 Go to https://www.trade.gov/virtual-services

and https://2016.export.gov/worldwide_us/index.asp for

more information.

25 See International Trade Administration, Country

Commercial Guides, available at: https://www.trade.gov/ccg-

landing-page.

26 The International Company Prole reports include

a listing of the potential partner’s key ocers and senior

management; banking relationships and other nancial

information about the company; and market information,

including sales and prot gures and potential liabilities. They

are not, however, intended to substitute for a company’s own

due diligence, and the Commercial Service does not oer ICP

in countries where Dun & Bradstreet or other private sector

vendors are already performing this service. See International

Trade Administration, International Company Prole,

available at https://www.trade.gov/international-company-

prole-0.

27 See International Trade Administration, The U.S.

Commercial Service – Virtual Services, available at https://

www.trade.gov/virtual-services.

28 See https://tcc.export.gov/Report_a_Barrier/index.

asp.

29 Information about the Advocacy Center services can

be found at https://www.trade.gov/advocacy-center-services.

30 Reports on U.S. compliance with these treaties can

be found at http://www.justice.gov/criminal/fraud/fcpa/

intlagree/.

See Statement on Signing the International Anti-

Bribery and Fair Competition Act of 1998, 34 Weekly Comp.

Pres. Doc. 2290, 2291 (Nov. 10, 1998) (“U.S. companies

have had to compete on an uneven playing eld . . . . The

OECD Convention . . . is designed to change all that. Under

the Convention, our major competitors will be obligated

to criminalize the bribery of foreign public ocials in

international business transactions.”).

OECD, Country Monitoring of the OECD Anti-

Bribery Convention, available at http://www.oecd.org/

document/12/0,3746,en_2649_34859_35692940_1_1_1_1,00.

html.

33 OECD, Phase 3 Country Monitoring of the OECD

Anti-Bribery Convention, available at http://www.oecd.org/

document/31/0,3746,en_2649_34859_44684959_1_1_1_1,00.

html.

34 OECD, Country Reports on the Implementation of the

OECD Anti-Bribery Convention, available at http://www.oecd.org/

document/24/0,3746,en_2649_34859_1933144_1_1_1_1,00.html.

35 The OECD Phase 1, 2, and 3 reports on the United

States, as well as the U.S. responses to questionnaires, are

available at http://www.justice.gov/criminal/fraud/fcpa/

intlagree.

36 See OECD Working Group on Bribery, United

States: Phase 3, Report on the Application of the Convention on

Combating Bribery of Foreign Public Ocials in International

Business Transactions and the 2009 Revised Recommendation

on Combating Bribery in International Business Transactions,

Oct. 2010, at 61-62 (recommending that the United

States “[c]onsolidate and summarise publicly available

information on the application of the FCPA in relevant

sources”), available at https://www.oecd.org/unitedstates/

UnitedStatesphase3reportEN.pdf.

37 United Nations Convention Against Corruption,

Oct. 31, 2003, S. Treaty Doc. No. 109-6, 2349 U.N.T.S. 41,

available at https://www.unodc.org/documents/brussels/UN_

Convention_Against_Corruption.pdf [hereinafter UNCAC].

38 For more information about the UNCAC review

mechanism, see Mechanism for the Review of Implementation

of the United Nations Convention Against Corruption, United

Nations Oce on Drugs and Crime, available at http://

www.unodc.org/documents/treaties/UNCAC/Publications/

ReviewMechanism-BasicDocuments/Mechanism_for_the_

Review_of_Implementation_-_Basic_Documents_-_E.pdf.

39 For information about the status of UNCAC, see

United Nations Oce on Drugs and Crime, UNCAC Signature

and Ratication Status as of 6 February 2020, available at http://

www.unodc.org/unodc/en/treaties/CAC/signatories.html.

40 Organization of American States, Inter-American

Convention Against Corruption, Mar. 29, 1996, 35 I.L.M.

724, available at http://www.oas.org/juridico/english/

treaties/b-58.html. For additional information about the

status of the IACAC, see Organization of American States,

Signatories and Ratications, available at http://www.oas.org/

juridico/english/Sigs/b-58.html.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

104

41 Council of Europe, Criminal Law Convention on

Corruption, Jan. 27, 1999, 38 I.L.M. 505, available at http://

conventions.coe.int/Treaty/en/Treaties/html/173.html.

42 For additional information about GRECO, see

Council of Europe, Group of States Against Corruption, available

at http://www.coe.int/t/dghl/monitoring/greco/default_

EN.asp. The United States has not yet ratied the GRECO

convention.

43 The text of the FCPA statute is set forth in the

appendix. See also Jury Instructions at 52-64, United States

v. Mark Lambert, No. 18-cr-012 (D. Md. Nov. 14, 2019), ECF

No. 152 [hereinafter United States v. Lambert] (FCPA jury

instructions); Jury Instructions at 1259-66, United States v.

Lawrence Hoskins, No. 12-cr-238 (D. Conn. Nov. 6, 2019),

ECF No. 601 [hereinafter United States v. Hoskins] (same);

Jury Instructions at 33-37, United States v. Joseph Baptiste,

No. 17-cr-10305 (D. Mass. June 19, 2019), ECF

No. 195 [hereinafter United States v. Baptiste] (same);

Jury Instructions at 1081-89, United States v. Chi Ping

Patrick Ho, No. 17-cr-779 (S.D.N.Y. Dec. 4, 2018), ECF

No. 214 [hereinafter United States v. Ho] (same); Jury

Instructions at 4249-62, United States v. Ng Lap Seng,

No. 15-cr-706 (S.D.N.Y. July 26, 2017), ECF No. 609

[hereinafter United States v. Ng] (same); Jury Instructions

at 21-27, United States v. Esquenazi, No. 09-cr-21010

(S.D. Fla. Aug. 5, 2011), ECF No. 520 [hereinafter

United States v. Esquenazi] (same); Jury Instructions at

14-25, United States v. Kay, No. 01-cr-914 (S.D. Tex. Oct.

6, 2004), ECF No. 142 (same), a’d, 513 F.3d 432, 446-52

(5th Cir. 2007), reh’g denied, 513 F.3d 461 (5th Cir. 2008)

[hereinafter United States v. Kay]; Jury Instructions at

76-87, United States v. Jeerson, No. 07-cr-209 (E.D. Va. July

30, 2009), ECF No. 684 [hereinafter United States v. Jeerson]

(same); Jury Instructions at 8-10, United States v. Green,

No. 08-cr-59 (C.D. Cal. Sept. 11, 2009), ECF No. 288

[hereinafter United States v. Green] (same); Jury Instructions

at 23-29, United States v. Bourke, No. 05-cr-518 (S.D.N.Y.

July 2009) [hereinafter United States v. Bourke] (same, not

docketed); Jury Instructions at 2-8, United States v. Mead,

No. 98-cr-240 (D.N.J. Oct. 1998) [hereinafter United States

v. Mead] (same).

44 The provisions of the FCPA applying to issuers are

part of the Securities Exchange Act of 1934 [hereinafter

Exchange Act]. The anti-bribery provisions can be found at

Section 30A of the Exchange Act, 15 U.S.C. § 78dd-1.

45 15 U.S.C. § 78l.

46 15 U.S.C. § 78o(d).

47 SEC enforcement actions have involved a number

of foreign issuers. See, e.g., Complaint, SEC v. Magyar

Telekom Plc., et al., No. 11-cv-9646 (S.D.N.Y. Dec. 29, 2011),

ECF No. 1 (German and Hungarian companies), available at

http://www.sec.gov/litigation/complaints/2011/comp22213-

co.pdf; Complaint, SEC v. Alcatel-Lucent, S.A., No. 10-cv-

24620 (S.D. Fla. Dec. 27, 2010), ECF No.1 [hereinafter SEC

v. Alcatel-Lucent] (French company), available at http://

www.sec.gov/litigation/complaints/2010/comp21795.

pdf; Complaint, SEC v. ABB, Ltd., No. 10-cv-1648 (D.D.C.

Sept. 29, 2010), ECF No. 1 [hereinafter SEC v. ABB] (Swiss

company), available at http://www.sec.gov/litigation/

complaints/2010/comp-pr2010-175.pdf; Complaint,

SEC v. Daimler AG, No. 10-cv-473 (D.D.C. Apr. 1, 2010),

ECF No. 1 [hereinafter SEC v. Daimler AG] (German company),

available at http://sec.gov/litigation/complaints/2010/comp-

pr2010-51.pdf; Complaint, SEC v. Siemens Aktiengesellschaft,

No. 08- cv-2167 (D.D.C. Dec. 12, 2008), ECF No. 1 [hereinafter

SEC v. Siemens AG] (German company), available at http://

www.sec.gov/litigation/complaints/2008/comp20829.pdf.

Certain DOJ enforcement actions have likewise involved

foreign issuers. See, e.g., Criminal Information, United States

v. Telefonaktiebolaget LM Ericsson, No. 19-cr-884 (S.D.N.Y.

Dec. 6, 2019), ECF No. 3 [hereinafter United States v. Ericsson],

available at https://justice.gov/criminal-fraud/le/1226526/

download; Non-Pros. Agreement, In re Petróleo Brasileiro S.A.

(Sept. 26, 2018), available at https://www.justice.gov/criminal-

fraud/le/1097256/download; Criminal Information, United

States v. Teva LLC, No. 16-cr-20967 (S.D. Fla. Dec. 22, 2016),

ECF No. 1, available at https://www.justice.gov/criminal-

fraud/le/920421/download; Criminal Information, United

States v. Braskem S.A., No. 16-cr-709 (E.D.N.Y. Dec. 21, 2016),

ECF No. 6, available at https://www.justice.gov/criminal-

fraud/le/920086/download.

48 See http://www.sec.gov/divisions/corpn/internatl/

companies.html.

49 See, e.g., Criminal Information, United States v.

Ericsson, supra note 47 (charging issuer company with

violating FCPA for paying bribes to foreign ocials in Djibouti,

China, Vietnam, Indonesia, and Kuwait); Criminal Information,

United States v. Tim Leissner, No. 18-cr-439 (E.D.N.Y. Aug. 28,

2018), ECF No. 16 (charging an employee and agent of U.S.

publicly traded company with violating FCPA for bribery of

ocial in Malaysia), available at https://www.justice.gov/

criminal-fraud/le/1231346/download; United States v. Steven,

supra note 9 (charging a UK employee of U.S. publicly traded

company with violating FCPA for bribery of ocials in Saudi

Arabia).

50 15 U.S.C. § 78dd-2.

51 15 U.S.C. § 78dd-2(h)(1).

52 See, e.g., Indictment, United States v. Lambert, supra

note 43, ECF No. 1 (employee of domestic concern charged

with violating FCPA for bribes paid to a Russian government

ocial), available at https://www.justice.gov/criminal-fraud/

le/1044676/download; Criminal Information, United States

v. James Finley, No. 17-cr-160 (S.D. Ohio July 21, 2017),

ECF No. 3 (executive of foreign parent company charged as

an agent of a domestic concern in directing bribes to Kazakh

ocial on behalf of U.S.-based subsidiary), available at https://

www.justice.gov/criminal-fraud/file/1009596/download;

Superseding Indictment, United States v. Dmitrij Harder,

No. 15-cr-001 (E.D. Pa. Dec. 15, 2015), ECF No. 62 [hereinafter

United States v. Harder] (owner of U.S. corporation charged

for bribes paid to an ocial at the European Bank for

Reconstruction and Development), available at https://www.

justice.gov/criminal-fraud/le/843621/download.

53 15 U.S.C. § 78dd-3(a). As discussed above,

foreign companies that have securities registered in

the United States or that are required to le periodic

reports with SEC, including certain foreign companies

with American Depository Receipts, are covered by the

FCPA’s anti-bribery provisions governing “issuers” under

15 U.S.C. § 78dd-1.

54 See International Anti-Bribery and Fair Competition

Act of 1998, Pub. L. 105-366, 112 Stat. 3302 (1998); 15 U.S.C.

§ 78dd-3(a); see also U.S. Dept. of Justice, Criminal Resource

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

105

Manual § 9-1018 (Nov. 2000) (the Department “interprets

[Section 78dd-3(a)] as conferring jurisdiction whenever a

foreign company or national causes an act to be done within

the territory of the United States by any person acting as

that company’s or national’s agent.”). This interpretation

is consistent with U.S. treaty obligations. See S. Rep.

No. 105-2177 (1998) (expressing Congress’ intention that

the 1998 amendments to the FCPA “conform it to the

requirements of and to implement the OECD Convention”);

Anti-Bribery Convention at art. 4.1, supra note 20 (“Each Party

shall take such measures as may be necessary to establish its

jurisdiction over the bribery of a foreign public ocial when

the oence is committed in whole or in part in its territory.”).

55 See, e.g., Criminal Information, United States v.

Airbus SE, No. 20-cr-021 (D.D.C. Jan. 28, 2020), ECF No. 1

(Netherlands-headquartered company with main oces

in France convicted of FCPA violations for paying bribes to

Chinese ocials in order to obtain contracts to sell aircraft)

[hereinafter United States v. Airbus], available at https://

www.justice.gov/criminal-fraud/file/1242046/download;

Superseding Indictment, United States v. Ng, supra note 43,

ECF No. 322 (Chinese businessman convicted of paying

bribes to former United Nations (U.N.) Ambassador from the

Dominican Republic and former Permanent Representative

of Antigua and Barbuda to the U.N. in exchange for corrupt

assistance in obtaining formal U.N. support for defendant’s

conference center in Macau), available at https://www.

justice.gov/criminal-fraud/le/913286/download; Criminal

Information, United States v. Samuel Mebiame, No.16-cr-627

(E.D.N.Y. Dec. 9, 2016), ECF No. 19 (Gabonese consultant who

worked on behalf of a British Virgin Islands company and a

joint venture between a U.S. company and a Turks and Caicos

company convicted of FCPA violations for paying bribes to

ocials in Niger, Chad, and Guinea), available at https://www.

justice.gov/criminal-fraud/le/943121/download.

56 See 15 U.S.C. §§ 78dd-2(h)(5) (dening “interstate

commerce”), 78dd-3(f)(5) (same); see also 15 U.S.C.

§ 78c(a)(17).

57 15 U.S.C. §§ 78dd-2(h)(5), 78dd-3(f)(5).

58 See 15 U.S.C. § 78dd-3.

59 See, e.g., Superseding Indictment, United States v.

Nervis G. Villalobos-Cardenas, et al., No. 17-cr-514 (S.D. Tex.

Apr. 24, 2019) (establishing jurisdiction under 15 U.S.C.

§ 78dd-3 based on meetings in the U.S.), available at https://

www.justice.gov/criminal-fraud/file/1267066/download;

Criminal Information, United States v. Steven Hunter,

No. 18-cr-415 (S.D. Tex. Sept. 17, 2018) (same),

available at https://www.justice.gov/criminal-fraud/

file/1266876/download; United States v. Ramiro Andres

Luque Flores, No. 17-cr-537 (E.D.N.Y. Oct. 6, 2017) (same);

see also United States v. Société Générale, supra note 10

(establishing corporate jurisdiction under 15 U.S.C.

§ 78dd-3 based on, among other things, meetings in the U.S.).

60 See 15 U.S.C. §§ 78dd-1(g) (“irrespective of whether

such issuer or such ocer, director, employee, agent,

or stockholder makes use of the mails or any means or

instrumentality of interstate commerce in furtherance

of such oer, gift, payment, promise, or authorization”),

78dd-2(i)(1) (“irrespective of whether such United States

person makes use of the mails or any means or instrumentality

of interstate commerce in furtherance of such oer, gift,

payment, promise, or authorization”).

61 S. Rep. No. 105-277 at 2 (“[T]he OECD Convention

calls on parties to assert nationality jurisdiction when

consistent with national legal and constitutional principles.

Accordingly, the Act amends the FCPA to provide for

jurisdiction over the acts of U.S. businesses and nationals

in furtherance of unlawful payments that take place wholly

outside the United States. This exercise of jurisdiction over

U.S. businesses and nationals for unlawful conduct abroad is

consistent with U.S. legal and constitutional principles and is

essential to protect U.S. interests abroad.”).

Id. at 2-3.

15 U.S.C. § 78dd-1(a), 78dd-2(a), 78dd-3(a).

64 Id.

65 See H.R. Rep. No. 95-831 at 12 (referring to “business

purpose” test).

66 See, e.g., Complaint, SEC v. Telefonaktiebolaget LM

Ericsson, No. 19-cv-11214 (S.D.N.Y. Dec. 6, 2019), ECF No. 1

[hereinafter SEC v. Ericsson], available at https://www.sec.gov/

litigation/complaints/2019/comp-pr2019-254.pdf; Criminal

Information, United States v. Ericsson, supra note 47; SEC v.

Ericsson, https://www.sec.gov/news/press-release/2019-254.

67 In amending the FCPA in 1988, Congress made

clear that the business purpose element, and specically

the “retaining business” prong, was meant to be interpreted

broadly: “The Conferees wish to make clear that the reference

to corrupt payments for ‘retaining business’ in present law is

not limited to the renewal of contracts or other business, but

also includes a prohibition against corrupt payments related

to the execution or performance of contracts or the carrying

out of existing business, such as a payment to a foreign ocial

for the purpose of obtaining more favorable tax treatment.

The term should not, however, be construed so broadly

as to include lobbying or other normal representations to

government ocials.” H.R. Rep. No. 100-576, at 1951-52

(internal citations omitted).

68 See, e.g., Non-Pros. Agreement, In re: Wal-Mart,

Inc. (June 20, 2019) (holding company liable for internal

controls failures resulting in corrupt payments related to

obtaining permits and licenses), available at https://www.

justice.gov/criminal-fraud/page/file/1177596/download;

Non-Pros. Agreement, In re: Archer Daniels Midland Company

(Dec. 20, 2013) (favorable tax treatment), available at

https://www.justice.gov/sites/default/files/criminal-fraud/

legacy/2014/01/03/adm-npa.pdf; Non-Pros. Agreement,

In re Ralph Lauren Corporation (Apr. 22, 2013) (customs

clearance), available at https://www.justice.gov/sites/default/

les/criminal-fraud/legacy/2013/04/23/Ralph-Lauren.-NPA-

Executed.pdf.

69 United States v. Kay, 359 F.3d 738, 755-56

(5th Cir. 2004).

70 Id. at 749. Indeed, the Kay court found that Congress’

explicit exclusion of facilitation payments from the scope

of the FCPA was evidence that “Congress intended for the

FCPA to prohibit all other illicit payments that are intended

to inuence non-trivial ocial foreign action in an eort to

aid in obtaining or retaining business for some person.” Id. at

749-50 (emphasis added).

71 Id. at 750.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

106

72 Id. at 749-55.

Id. at 756 (“It still must be shown that the bribery was

intended to produce an eect—here, through tax savings—

that would ‘assist in obtaining or retaining business.’”).

74 The FCPA does not explicitly dene “corruptly,”

but in drafting the statute Congress adopted the meaning

ascribed to the same term in the domestic bribery statute,

18 U.S.C. § 201(b). See H.R. Rep. No. 95-640 at 7.

75 The House Report states in full: “The word ‘corruptly’

is used in order to make clear that the oer, payment,

promise, or gift, must be intended to induce the recipient to

misuse his ocial position; for example, wrongfully to direct

business to the payor or his client, to obtain preferential

legislation or regulations, or to induce a foreign ocial to

fail to perform an ocial function. The word ‘corruptly’

connotes an evil motive or purpose such as that required

under 18 U.S.C. 201(b) which prohibits domestic bribery. As

in 18 U.S.C. 201(b), the word ‘corruptly’ indicates an intent

or desire wrongfully to inuence the recipient. It does not

require that the act [be] fully consummated or succeed

in producing the desired outcome.” Id. The Senate Report

provides a nearly identical explanation of the meaning of

the term: “The word ‘corruptly’ is used in order to make clear

that the oer, payment, promise, or gift, must be intended

to induce the recipient to misuse his ocial position in order

to wrongfully direct business to the payor or his client, or to

obtain preferential legislation or a favorable regulation. The

word ‘corruptly’ connotes an evil motive or purpose, an intent

to wrongfully inuence the recipient.” S. Rep. No. 95-114, at

10.

See 15 U.S.C. §§ 78dd-1(a), 78dd-2(a), 78dd-3(a).

77 See, e.g., Complaint, SEC v. Monsanto Co., No. 05-cv-14

(D.D.C. Jan. 6, 2005) (among other things, the company paid

a $50,000 bribe to inuence an Indonesian ocial to repeal

an unfavorable law, which was not repealed despite the

bribe), available at http://www.sec.gov/litigation/complaints/

comp19023.pdf; Criminal Information, United States v.

Monsanto Co., No. 05-cr-8 (D.D.C. Jan. 6, 2005), available at

http://www.justice.gov/criminal/fraud/fcpa/cases/monsanto-

co/01-06-05monsanto-info.pdf.

78 Jury instructions in FCPA cases have dened

“corruptly” consistent with the denition found in the

legislative history. See, e.g., Jury Instructions at 56, United States

v. Lambert, supra note 43; Jury Instructions at 34, United States

v. Baptiste, supra note 43; Jury Instructions at 1261, United

States v. Hoskins, supra note 43; Jury Instructions at 1084-85,

United States v. Ho, supra note 43; Jury Instructions at 4242,

United States v. Ng, supra note 43; Jury Instructions at 22-23,

United States v. Esquenazi, supra note 43; Jury Instructions at

10, United States v. Green, supra note 43; Jury Instructions at

35, United States v. Jeerson, supra note 43; Jury Instructions

at 25, United States v. Bourke, supra note 43; Jury Instructions

at 17, United States v. Kay, supra note 43; Jury Instructions at 5,

United States v. Mead, supra note 43.

79 See Indictment, United States v. Joo Hyun Bahn, et al.,

No. 16-cr-831 (S.D.N.Y. Dec. 15, 2016), ECF No. 1, available

at https://www.justice.gov/criminal-fraud/case/le/942226/

download; see also, In the Matter of JooHyun Bahn, available at

https://www.sec.gov/news/press-release/2018-181.

80 See Complaint, SEC v. Innospec, Inc., No. 10-cv-448

(D.D.C. Mar. 18, 2010), ECF No. 1 [hereinafter SEC v. Innospec],

available at http://www.sec.gov/litigation/complaints/2010/

comp21454.pdf; Criminal Information at 8, United States

v. Innospec Inc., No. 10-cr-61 (D.D.C. Mar. 17, 2010), ECF

No. 1 [hereinafter United States v. Innospec], available at

https://www.justice.gov/sites/default/files/criminal-fraud/

legacy/2011/02/16/03-17-10innospec-info.pdf.

81 See 15 U.S.C. §§ 78dd-2(g)(2)(A), 78dd-3(e)(2)(A),

78(c)(2)(A).

82 Compare 15 U.S.C. § 78(c)(1)(A) (corporate

criminal liability under issuer provision) with § 78(c)(2)(A)

(individual criminal liability under issuer provision); compare

15 U.S.C. § 78dd-2(g)(1)(A) (corporate criminal liability under

domestic concern provision) with § 78dd-2(g)(2)(A) (individual

criminal liability under issuer provision); compare 15 U.S.C.

§ 78dd-3(e)(1)(A) (corporate criminal liability under territorial

provision) with § 78dd-3(e)(2)(A) (individual criminal liability

under territorial provision). However, companies still must

act corruptly. See Section 30A(a), 15 U.S.C. § 78dd-1(a);

15 U.S.C. §§ 78dd-2(a), 78dd-3(a).

83 United States v. Kay, 513 F.3d 432, 448 (5th Cir. 2007);

see also Jury Instructions at 56-57, United States v. Lambert,

supra note 43; Jury Instructions at 34-35, United States v.

Baptiste, supra note 43; Jury Instructions at 1261, United States

v. Hoskins, supra note 43; Jury Instructions at 1084-85, United

States v. Ho, supra note 43; Jury Instructions at 4242, United

States v. Ng, supra note 43; Jury Instructions at 38, United

States v. Esquenazi, supra note 43; Jury Instructions at 10,

United States v. Green, supra note 43; Jury Instructions at 35,

United States v. Jeerson, supra note 43; Jury Instructions at 25,

United States v. Bourke, supra note 43; Jury Instructions at 5,

United States v. Mead, supra note 43.

84 Bryan v. United States, 524 U.S. 184, 191-92 (1998)

(construing “willfully” in the context of 18 U.S.C. § 924(a)(1)

(A)) (quoting Ratzlaf v. United States, 510 U.S. 135, 137 (1994));

see also Kay, 513 F.3d at 446-51 (discussing Bryan and term

“willfully” under the FCPA).

85 Kay, 513 F.3d at 447-48; Stichting Ter Behartiging

Van de Belangen Van Oudaandeelhouders In Het Kapitaal Van

Saybolt Int’l B.V. v. Schreiber, 327 F.3d 173, 181 (2d Cir. 2003).

86 The phrase “anything of value” is not dened in the

FCPA, but the identical phrase under the domestic bribery

statute has been broadly construed to include both tangible

and intangible benets. See, e.g., United States v. Moore, 525

F.3d 1033, 1048 (11th Cir. 2008) (rejecting defendant’s

objection to instruction dening sex as a “thing of value,”

which “unambiguously covers intangible considerations”);

United States v. Gorman, 807 F.2d 1299, 1304-05 (6th Cir.

1986) (holding that loans and promises of future employment

are “things of value”); United States v. Williams, 705 F.2d 603,

622-23 (2d Cir. 1983) (approving jury instruction that stock

could be a “thing of value” if defendant believed it had value,

even though the shares had no commercial value, and noting

that “[t]he phrase ‘anything of value’ in bribery and related

statutes has consistently been given a broad meaning”).

87 Section 30A(a), 15 U.S.C. § 78dd-1(a); 15 U.S.C.

§§ 78dd-2(a), 78dd- 3(a) (emphasis added).

88 Like the FCPA, the domestic bribery statute, 18 U.S.C.

§ 201, prohibits giving, oering, or promising “anything of

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

107

value.” Numerous domestic bribery cases under Section 201

have involved “small” dollar bribes. See, e.g., United States v.

Franco, 632 F.3d 880, 882-84 (5th Cir. 2011) (arming bribery

convictions of inmate for paying correctional ocer $325

to obtain cell phone, food, and marijuana, and noting that

18 U.S.C. § 201 does not contain minimum monetary

threshold); United States v. Williams, 216 F.3d 1099, 1103 (D.C.

Cir. 2000) (arming bribery conviction for $70 bribe to vehicle

inspector); United States v. Traitz, 871 F.2d 368, 396 (3rd Cir.

1989) (arming bribery conviction for $100 bribe paid to

ocial of Occupational Health and Safety Administration);

United States v. Hsieh Hui Mei Chen, 754 F.2d 817, 822 (9th Cir.

1985) (arming bribery convictions including $100 bribe to

immigration ocial); United States v. Bishton, 463 F.2d 887, 889

(D.C. Cir. 1972) (arming bribery conviction for $100 bribe

to division chief of District of Columbia Sewer Operations

Division).

89 See Criminal Information, United States v. Odebrecht

S.A., No. 16-CR-643 (E.D.N.Y. Dec. 21, 2016), ECF No. 8,

available at https://www.justice.gov/criminal-fraud/

file/920096/download.

90 Complaint, SEC v. Halliburton Company and KBR, Inc.,

No. 09-cv-399 (S.D. Tex. Feb. 11, 2009), ECF No 1 [hereinafter

SEC v. Halliburton and KBR], available at http://www.sec.

gov/litigation/complaints/2009/comp20897.pdf; Criminal

Information, United States v. Kellogg Brown & Root LLC,

No. 09-cr-71, ECF No. 1 (S.D. Tex. Feb. 6, 2009) [hereinafter

United States v. KBR], available at https://www.justice.gov/

sites/default/les/criminal-fraud/legacy/2011/02/16/02-06-

09kbr-info.pdf.

91 Complaint, SEC v. Halliburton and KBR, supra note 90;

Criminal Information, United States v. KBR, supra note 90.

92 See, e.g., Complaint, SEC v. RAE Sys. Inc.,

No. 10-cv-2093 (D.D.C. Dec. 10, 2010), ECF No. 1 [hereinafter

SEC v. RAE Sys., Inc.] (fur coat, among other extravagant gifts),

available at http://www.sec.gov/litigation/complaints/2010/

comp21770.pdf; Non-Pros. Agreement, In re RAE Sys. Inc.

(Dec. 10, 2010) [hereinafter In re RAE Sys. Inc.] (same), available

at https://www.justice.gov/sites/default/les/criminal-fraud/

legacy/2011/02/16/12-10-10rae-systems.pdf; Complaint, SEC

v. Daimler AG, supra note 47 (armored Mercedes Benz worth

€300,000); Criminal Information, United States v. Daimler AG,

supra note 47 (same).

93 See Criminal Information, United States v. SBM

Oshore, N.V., No. 17-cr-686 (S.D. Tex. Nov. 21, 2017), ECF

No. 1 [hereinafter United States v. SBM], available at https://

www.justice.gov/criminal-fraud/le/1017351/download.

94 See Complaint, SEC v. ABB Ltd, No. 04-cv-1141 (D.D.C.

July 6, 2004), ECF No. 1, available at http://www.sec.gov/

litigation/complaints/comp18775.pdf; Criminal Information,

United States v. ABB Vetco Gray Inc., et al., No. 04-cr-279 (S.D.

Tex. June 22, 2004), ECF No. 1 [hereinafter United States v. ABB

Vetco Gray], available at https://www.justice.gov/sites/default/

files/criminal-fraud/legacy/2014/11/07/06-22-04abbvetco-

info.pdf.

95 Criminal Information, United States v. Ericsson, supra

note 47.

96 Complaint, SEC v. Lucent Technologies Inc.,

No. 07-cv-2301 (D.D.C. Dec. 21, 2007), ECF No.1 [hereinafter

SEC v. Lucent], available at http://www.sec.gov/litigation/

complaints/2007/comp20414.pdf; Non-Pros. Agreement,

In re Lucent Technologies (Nov. 14, 2007) [hereinafter In re

Lucent], available at https://www.justice.gov/sites/default/

files/criminal-fraud/legacy/2011/02/16/11-14-07lucent-

agree.pdf.

Complaint, SEC v. Lucent, supra note 96; Non-Pros.

Agreement, In re Lucent, supra note 96.

The company consented to the entry of a nal

judgment permanently enjoining it from future violations of

the books and records and internal controls provisions and

paid a civil penalty of $1,500,000. Complaint, SEC v. Lucent,

supra note 96. Additionally, the company entered into a

non-prosecution agreement with DOJ and paid a $1,000,000

monetary penalty. Non-Pros. Agreement, In re Lucent, supra

note 96.

99 United States v. Liebo, 923 F.2d 1308, 1311

(8th Cir. 1991).

100 Judgment, United States v. Liebo, No. 89-cr-76

(D. Minn. Jan. 31, 1992), available at http://www.justice.

gov/criminal/fraud/fcpa/cases/liebor/1992-01-31-liebor-

judgment.pdf.

101 Non-Pros. Agreement, In re Credit Suisse

(May 30, 2018), available at https://www.justice.gov/criminal-

fraud/le/1079596/download; In the Matter of Credit Suisse

Group AG, available at https://www.sec.gov/news/press-

release/2018-128.

102 Complaint, SEC v. Schering-Plough Corp.,

No. 04-cv-945 (D.D.C. June 9, 2004), ECF No. 1, available at

http://www.sec.gov/litigation/complaints/comp18740.pdf;

Admin. Proc. Order, In the Matter of Schering-Plough Corp.,

Exchange Act Release No. 49838 (June 9, 2004) (nding that

company violated FCPA accounting provisions and imposing

$500,000 civil monetary penalty), available at http://www.sec.

gov/litigation/admin/34-49838.htm.

103 FCPA opinion procedure releases can be found at

https://www.justice.gov/criminal-fraud/opinion-procedure-

releases. In the case of the company seeking to contribute

the $1.42 million grant to a local MFI, DOJ noted that it had

undertaken each of these due diligence steps and controls,

in addition to others, that would minimize the likelihood

that anything of value would be given to any ocials of the

Eurasian country. U.S. Dept. of Justice, FCPA Op. Release

10-02 (July 16, 2010), available at http://www.justice.gov/

criminal/fraud/fcpa/opinion/2010/1002.pdf.

104 U.S. Dept. of Justice, FCPA Op. Release 95-01 (Jan.

11, 1995), available at http://www.justice.gov/criminal/fraud/

fcpa/opinion/1995/9501.pdf.

105 Id.

106 Id.

107 U.S. Dept. of Justice, FCPA Op. Release

97-02 (Nov. 5, 1997), available at http://www.justice.gov/

criminal/fraud/fcpa/opinion/1997/9702.pdf; U.S. Dept. of

Justice, FCPA Op. Release 06-01 (Oct. 16, 2006), available at

https://www.justice.gov/sites/default/files/criminal-fraud/

legacy/2010/04/11/0601.pdf.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

108

108 U.S. Dept. of Justice, FCPA Op. Release 06-01

(Oct. 16, 2006), supra note 107.

109 Id.

110 Id.

111

See Section 30A(a)(1)-(3) of the Exchange Act, 15 U.S.C.

§ 78dd-1(a)(1)-(3); 15 U.S.C. §§ 78dd-2(a)(1)-(3), 78dd-3(a)(1)-(3).

112

Section 30A(f)(1)(A) of the Exchange Act, 15 U.S.C.

§ 78dd-1(f)(1)(A); 15 U.S.C. §§ 78dd-2(h)(2)(A), 78dd-3(f)(2)(A).

113 Under the FCPA, any person “acting in an ocial

capacity for or on behalf of” a foreign government, a

department, agency, or instrumentality thereof, or a public

international organization, is a foreign ocial. Section 30A(f)

(1)(A), 15 U.S.C. § 78dd-1(f)(1)(A); 15 U.S.C. §§ 78dd-2(h)(2)

(A), 78dd-2(f)(2)(A). See also U.S. Dept. of Justice, FCPA Op.

Release No. 10-03, at 2 (Sept. 1, 2010), available at http://

www.justice.gov/criminal/fraud/fcpa/opinion/2010/1003.pdf

(listing safeguards to ensure that consultant was not acting

on behalf of foreign government).

114 But see Sections 30A(b) and f(3)(A) of the Exchange

Act, 15 U.S.C. § 78dd-1(b) & (f)(3); 15 U.S.C. §§ 78dd-2(b) & (h)

(4), 78dd-3(b) & (f)(4) (facilitating payments exception). Even

though payments to a foreign government may not violate

the anti-bribery provisions of the FCPA, such payments

may violate other U.S. laws, including wire fraud, money

laundering, and the FCPA’s accounting provisions. This was

the case in a series of matters brought by DOJ and SEC

involving kickbacks to the Iraqi government through the

United Nations Oil-for-Food Programme. See, e.g., Complaint,

SEC v. Innospec, supra note 80; Complaint, SEC v. Novo

Nordisk A/S, No. 09-cv-862 (D.D.C. May 11, 2009), ECF No. 1,

available at http://www.sec.gov/litigation/complaints/2009/

comp21033.pdf; Criminal Information, United States v.

Novo Nordisk A/S, No. 09-cr-126 (D.D.C. May 11, 2009), ECF

No. 1, available at http://www.justice.gov/criminal/fraud/

fcpa/cases/nordiskn/05-11-09novo-info.pdf; Complaint, SEC

v. Ingersoll-Rand Company Ltd., No. 07-cv-1955 (D.D.C. Oct. 31,

2007), ECF No. 1, available at http://www.sec.gov/litigation/

complaints/2007/comp20353.pdf; Criminal Information,

United States v. Ingersoll-Rand Italiana SpA, No. 07-cr-294

(D.D.C. Oct. 31, 2007), ECF No. 1, available at http://www.

justice.gov/criminal/fraud/fcpa/cases/ingerand-italiana/10-

31-07ingersollrand-info.pdf; Complaint, SEC v. York Int’l Corp.,

No. 07-cv-1750 (D.D.C. Oct. 1, 2007), ECF No. 1 [hereinafter SEC

v. York Int’l Corp.], available at https://www.sec.gov/litigation/

complaints/2007/comp20319.pdf; Criminal Information,

United States v. York Int’l Corp., No. 07-cr-253 (D.D.C. Oct. 1,

2007), ECF No. 1 [hereinafter United States v. York Int’l Corp.],

available at https://www.justice.gov/sites/default/files/

criminal-fraud/legacy/2012/03/19/10-01-07york-info.pdf;

Complaint, SEC v. Textron Inc., No. 07-cv-1505 (D.D.C. Aug.

23, 2007), ECF No. 1 [hereinafter SEC v. Textron], available at

https://www.sec.gov/litigation/complaints/2007/comp20251.

pdf; Non-Pros. Agreement, In re Textron Inc. (Aug. 22, 2007),

available at https://www.justice.gov/sites/default/files/

criminal-fraud/legacy/2011/02/16/08-21-07textron-agree.

pdf. DOJ has issued opinion procedure releases concerning

payments (that were, in essence, donations) to government

agencies or departments. See U.S. Dept. of Justice, FCPA Op.

Release 09-01 (Aug. 3, 2009) (involving donation of 100 medical

devices to foreign government), available at http://www.justice.

gov/criminal/fraud/fcpa/opinion/2009/0901.pdf; U.S. Dept. of

Justice, FCPA Op. Release 06-01 (Oct. 16, 2006) (involving

contribution of $25,000 to regional customs department to

pay incentive rewards to improve local enforcement of anti-

counterfeiting laws), available at http://www.justice.gov/sites/

default/les/criminal-fraud/legacy/2010/04/11/0601.pdf.

115

Exhibit I, United States v. Carson, infra note 118, ECF

No. 335 (list of examples of enforcement actions based on

foreign ocials of state-owned entities).

116

The United States has some state-owned entities,

like the Tennessee Valley Authority, that are instrumentalities

of the government. McCarthy v. Middle Tenn. Elec. Membership

Corp., 466 F.3d 399, 411 n.18 (6th Cir. 2006) (“[T]here is no

question that TVA is an agency and instrumentality of the

United States.”) (internal quotes omitted).

117 During the period surrounding the FCPA’s

adoption, state-owned entities held virtual monopolies

and operated under state-controlled price-setting in many

national industries around the world. See generally World

Bank, Bureaucrats in Business: The Economics 1997),

and Politics of Government Ownership, World Bank

Policy Research Report at 78 (1995); Sunita Kikeri and

Aishetu Kolo, State Enterprises, The World Bank Group

(Feb. 2006), available at http://documents.worldbank.

org/curated/en/169041468768316446/

pdf/353300PAPER0VP0304Kikeri1Kolo.pdf.

118 Id. at 1 (“[A]fter more than two decades of

privatization, government ownership and control remains

widespread in many regions—and in many parts of the world

still dominates certain sectors.”).

119 To date, consistent with the approach taken by

DOJ and SEC, all district courts that have considered this

issue have concluded that this is an issue of fact for a jury to

decide. See Order, United States v. Carson, 2011 WL 5101701,

No. 09-cr-77 (C.D. Cal. May 18, 2011), ECF No. 373

[hereinafter United States v. Carson]; United States v. Aguilar,

783 F. Supp. 2d 1108 (C.D. Cal. 2011); Order, United States v.

Esquenazi, supra note 43, ECF No. 309; see also Order, United

States v. O’Shea, No. 09-cr-629 (S.D. Tex. Jan. 3, 2012), ECF

No. 142; Order, United States v. Nguyen, No. 08-cr-522 (E.D. Pa.

Dec. 30, 2009), ECF No. 144. These district court decisions are

consistent with the acceptance by district courts around the

country of over 35 guilty pleas by individuals who admitted

to violating the FCPA by bribing ocials of state-owned

or state-controlled entities. See Government’s Opposition

to Defendants’ Amended Motion to Dismiss Counts One

Through Ten of the Indictment at 18, United States v. Carson,

ECF No. 332.

120 United States v. Esquenazi, 752 F.3d 912, 920-33

(11th Cir. 2014).

121 Id. at 925.

122 Id.

123 Id. at 926.

124 See Jury Instructions at 60-61, United States v.

Lambert, supra note 43; Jury Instructions at 1264, United States

v. Hoskins, supra note 43; Order at 5 and Jury Instructions,

United States v. Carson, supra note 119, ECF No. 373 and ECF

No. 549; Aguilar, 783 F. Supp. 2d at 1115.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

109

125 Criminal Information, United States v. C.E. Miller

Corp., et al., No. 82-cr-788 (C.D. Cal. Sept. 17, 1982), available

at https://www.justice.gov/sites/default/les/criminal-

fraud/legacy/2012/06/22/1982-09-17-ce-miller-information.

pdf.

126

See Complaint, SEC v. Sam P. Wallace Co., Inc., et al.,

No. 81-cv-1915 (D.D.C. Aug. 31, 1982); Criminal Information,

United States v. Sam P. Wallace Co., Inc., No. 83-cr-34 (D.P.R.

Feb. 23, 1983), available at http://www.justice.gov/criminal/

fraud/fcpa/cases/sam-wallace-company/1983-02-23-

sam-wallace-company-information.pdf; see also Criminal

Information, United States v. Goodyear Int’l Corp., No. 89-cr-

156 (D.D.C. May 11, 1989) (Iraqi Trading Company identied

as “instrumentality of the Government of the Republic of

Iraq”), available at http://www.justice.gov/criminal/fraud/

fcpa/cases/goodyear/1989-05-11-goodyear-information.pdf.

127

See Complaint, SEC v. ABB, supra note 47; Criminal

Information at 3, United States v. ABB Inc., No. 10-cr-664 (S.D.

Tex. Sept. 29, 2010), ECF No. 1 [hereinafter United States v.

ABB], available at https://www.justice.gov/sites/default/les/

criminal-fraud/legacy/2014/11/07/09-20-10abbinc-info.pdf;

Constitución Política de los Estados Unidos Mexicanos [C.P.],

as amended, art. 27, Diario Ocial de la Federación [DO],

5 de Febrero de 1917 (Mex.); Ley Del Servicio Publico de

Energia Electrica, as amended, art. 1-3, 10, Diario Ocial de la

Federación [DO], 22 de Diciembre de 1975 (Mex.).

128 See Esquenazi, 752 F.3d at 928-29, supra note 120;

Indictment at 2, United States v. Esquenazi, supra note 43, ECF

No. 3; Adavit of Mr. Louis Gary Lissade at 1-9, id., ECF No.

417-2.

129 Criminal Information at 30-31, United States v.

Alcatel-Lucent France, S.A., No. 10-cr-20906 (S.D. Fla. Dec. 27,

2010), ECF No. 1 [hereinafter United States v. Alcatel-Lucent

France], available at https://www.justice.gov/sites/default/

files/criminal-fraud/legacy/2011/07/29/12-27-10alcatel-

et-al-info.pdf.

130 Id.

131 See International Anti-Bribery and Fair Competition

Act of 1998, Pub. L. 105-366 § 2, 112 Stat. 3302, 3303, 3305,

3308 (1998).

132 Section 30A(F)(1)(B) of the Exchange Act, 15 U.S.C.

§ 78dd-1(f)(1)(B); 15 U.S.C. §§ 78dd-2(h)(2)(B), 78dd-3(f)(2)(B).

133 See, e.g., Superseding Indictment, United States v. Ng,

supra note 43 (charging violations of the FCPA for payment of

bribes to ambassadors to the United Nations); Superseding

Indictment, United States v. Harder, supra note 52 (charging

FCPA violations for bribes paid to an ocial at the European

Bank for Reconstruction and Development).

134 Third parties and intermediaries themselves are also

liable for FCPA violations. Section 30A(a) of the Exchange Act,

15 U.S.C. § 78dd-1(a); 15 U.S.C. §§ 78dd-2(a), and 78dd-3(a).

135 Section 30A(a)(3) of the Exchange Act, 15 U.S.C.

§ 78dd-1(a)(3); 15 U.S.C. §§ 78dd-2(a)(3), 78dd-3(a)(3).

136 See, e.g., Complaint, SEC v. Johnson & Johnson,

No. 11-cv-686 (D.D.C. Apr. 8, 2011) [hereinafter SEC v. Johnson

& Johnson] (bribes paid through Greek and Romanian agents),

available at https://www.sec.gov/litigation/complaints/2011/

comp21922.pdf; Criminal Information, United States v. DePuy,

Inc., No. 11-cr-99 (D.D.C. Apr. 8, 2011), ECF No. 1 [hereinafter

United States v. DePuy] (bribes paid through Greek agents),

available at https://www.justice.gov/sites/default/files/

criminal-fraud/legacy/2011/04/27/04-08-11depuy-info.pdf;

Complaint, SEC v. ABB, supra note 47 (bribes paid through

Mexican agents); Criminal Information, United States v.

ABB, supra note 127 (same); Criminal Information, United

States v. Int’l Harvester Co., No. 82-cr-244 (S.D. Tex. Nov. 17,

1982) (bribes paid through Mexican agent), available at

https://www.justice.gov/sites/default/files/criminal-fraud/

legacy/2012/06/22/1982-11-17-international-harvester-

information.pdf.

137 See United States v. Société Générale; Information,

United States v. SGA Société Générale Acceptance, N.V.,

No. 18-cr-274 (E.D.N.Y. May 30, 2018), ECF No. 4, available

at https://www.justice.gov/criminal-fraud/file/1072436/

download; Non-Pros. Agreement, In re Legg Mason (June 4,

2018), available at https://www.justice.gov/criminal-fraud/

le/1072461/download; In the Matter of Legg Mason, Inc.,

https://www.sec.gov/news/press-release/2018-168.

138 See United States v. SBM, supra note 93; Criminal

Information, United States v. SBM Oshore USA, Inc.,

No. 17-cr-685 (S.D. Tex. Nov. 21, 2017), ECF No. 1, available

at https://www.justice.gov/criminal-fraud/file/1017336/

download; Criminal Information, United States v. Anthony

Mace, No. 17-cr-618 (S.D. Tex. Oct. 19, 2017), ECF No. 1

[hereinafter United States v. Mace], available at https://www.

justice.gov/criminal-fraud/le/1017326/download; United

States v. Zubiate, supra note 9.

139 Section 30A(a)(3) of the Exchange Act, 15 U.S.C.

§ 78dd-1(a)(3); 15 U.S.C. §§ 78dd-2(a)(3), 78dd-3(a)(3).

140 See Section 30A(f)(2)(A) of the Exchange Act, 15 U.S.C.

§ 78dd-1(f)(2)(A); 15 U.S.C. §§ 78dd-2(h)(3)(A), 78dd-3(f)(3)(A).

141 See Section 30A(f)(2)(B) of the Exchange Act,

15 U.S.C. § 78dd-1(f)(2)(B); 15 U.S.C. §§ 78dd-2(h)(3)(B),

78dd-3(f)(3)(B). The “knowing” standard was intended to

cover “both prohibited actions that are taken with ‘actual

knowledge’ of intended results as well as other actions

that, while falling short of what the law terms ‘positive

knowledge,’ nevertheless evidence a conscious disregard or

deliberate ignorance of known circumstances that should

reasonably alert one to the high probability of violations of

the Act.” H.R. Rep. No. 100-576, at 920; see also Omnibus

Trade and Competitiveness Act of 1988, Pub. L. No. 100- 418,

§ 5003, 102 Stat. 1107, 1423-24 (1988). Cf. Plea Agreement,

United States v. Mace, supra note 138, ECF No. 18, available

at https://www.justice.gov/criminal-fraud/file/1017331/

download (former CEO admitting he was guilty of FCPA

violation by “continuing to make payments that furthered

[a] bribery scheme and deliberately avoiding learning that

certain payments, including payments Defendant authorized

and approved, were in fact bribes paid to foreign ocials”).

142 H.R. Rep. No. 100-576, at 920 (1988).

143 Section 30A(c)(1) of the Exchange Act, 15 U.S.C.

§ 78dd-1(c)(1); 15 U.S.C. §§ 78dd-2(c)(1), 78dd-3(c)(1).

144 H.R. Rep. No. 100-576, at 922. The conferees also

noted that “[i]n interpreting what is ‘lawful under the written

laws and regulations’ . . . the normal rules of legal construction

would apply.” Id.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

110

145 See United States v. Kozeny, 582 F. Supp. 2d 535,

537-40 (S.D.N.Y. 2008). Likewise, the court found that a

provision under Azeri law that relieved bribe payors of

criminal liability if they were extorted did not make the bribe

payments legal. Azeri extortion law precludes the prosecution

of the payor of the bribes for the illegal payments, but it does

not make the payments legal. Id. at 540-41.

146 See Trial Transcript 715-18, United States v. Ng, supra

note 43.

147

Id.

148

Id.

149 Section 30A(c)(2)(A), (B) of the Exchange Act, 15 U.S.C.

§ 78dd-1(c)(2); 15 U.S.C. §§ 78dd-2(c)(2), 78dd-3(c)(2).

150 For example, the Eighth Circuit Court of Appeals

found that providing airline tickets to a government ocial in

order to corruptly inuence that ocial may form the basis

for a violation of the FCPA’s anti-bribery provisions. See Liebo,

923 F. 2d at 1311-12.

151 See generally, U.S. Dept. of Justice, FCPA Op. Release

11-01 (June 30, 2011) (travel, lodging, and meal expenses

of two foreign ocials for two-day trip to United States to

learn about services of U.S. adoption service provider),

available at http://www.justice.gov/criminal/fraud/fcpa/

opinion/2011/11-01.pdf; U.S. Dept. of Justice, FCPA Op.

Release 08-03 (July 11, 2008) (stipends to reimburse minimal

travel expenses of local, government-aliated journalists

attending press conference in foreign country), available at

https://www.justice.gov/sites/default/files/criminal-fraud/

legacy/2010/04/11/0803.pdf; U.S. Dept. of Justice, FCPA Op.

Release 07-02 (Sept. 11, 2007) (domestic travel, lodging, and

meal expenses of six foreign ocials for six-week educational

program), available at https://www.justice.gov/sites/default/

les/criminal-fraud/legacy/2010/04/11/0702.pdf; U.S. Dept.

of Justice, FCPA Op. Release 07-01 (July 24, 2007) (domestic

travel, lodging, and meal expenses of six foreign ocials for

four-day educational and promotional tour of U.S. company’s

operations sites), available at https://www.justice.gov/sites/

default/files/criminal-fraud/legacy/2010/04/11/0701.pdf;

U.S. Dept. of Justice, FCPA Op. Release 04-04 (Sept. 3, 2004)

(travel, lodging, and modest per diem expenses of ve foreign

ocials to participate in nine-day study tour of mutual

insurance companies), available at https://www.justice.gov/

sites/default/files/criminal-fraud/legacy/2010/04/11/0404.

pdf; U.S. Dept. of Justice, FCPA Op. Release 04-03 (June 14,

2004) (travel, lodging, meal, and insurance expenses for

twelve foreign ocials and one translator on ten-day trip

to three U.S. cities to meet with U.S. public sector ocials),

available at https://www.justice.gov/sites/default/files/

criminal-fraud/legacy/2010/04/11/0403.pdf; U.S. Dept.

of Justice, FCPA Op. Release 04-01 (Jan. 6, 2004) (seminar

expenses, including receptions, meals, transportation and

lodging costs, for one-and-a-half day comparative law seminar

on labor and employment law in foreign country), available

at https://www.justice.gov/sites/default/les/criminal-fraud/

legacy/2010/04/11/0401.pdf; U.S. Dept. of Justice, FCPA Op.

Release 96-01 (Nov. 25, 1996) (travel, lodging, and meal

expenses of regional government representatives to attend

training courses in United States), available at http://www.

justice.gov/criminal/fraud/fcpa/opinion/1996/9601.pdf; U.S.

Dept. of Justice, FCPA Op. Release 92-01 (Feb. 1992) (training

expenses so that foreign ocials could eectively perform

duties related to execution and performance of joint-venture

agreement, including seminar fees, airfare, lodging, meals,

and ground transportation), available at http://www.justice.

gov/criminal/fraud/fcpa/review/1992/r9201.pdf.

152 U.S. Dept. of Justice, FCPA Op. Release 11-01

(June 30, 2011); U.S. Dept. of Justice, FCPA Op. Release 07-02

(Sept. 11, 2007); U.S. Dept. of Justice, FCPA Op. Release 07-01

(July 24, 2007); U.S. Dept. of Justice, FCPA Op. Release 04-04

(Sept. 3, 2004); U.S. Dept. of Justice, FCPA Op. Release 04-03

(June 14, 2004); U.S. Dept of Justice, FCPA Op. Release 04-01

(Jan. 6, 2004).

153 U.S. Dept. of Justice, FCPA Op. Release 96-01

(Nov. 25, 1996).

154 U.S. Dept. of Justice, FCPA Op. Release 11-01

(June 30, 2011); U.S. Dept. of Justice, FCPA Op. Release 07-02

(Sept. 11, 2007); U.S. Dept. of Justice, FCPA Op. Release 07-01

(July 24, 2007); U.S. Dept. of Justice, FCPA Op. Release 04-04

(Sept. 3, 2004); U.S. Dept. of Justice, FCPA Op. Release 04-01

(Jan. 6, 2004).

155 U.S. Dept. of Justice, FCPA Op. Release 04-01

(Jan. 6, 2004).

156 U.S. Dept. of Justice, FCPA Op. Release 08-03

(July 11, 2008).

157 U.S. Dept. of Justice, FCPA Op. Release 11-01

(June 30, 2011); U.S. Dept. of Justice, FCPA Op. Release 92-01

(Feb. 1992).

158 U.S. Dept. of Justice, FCPA Op. Release 08-03

(July 11, 2008).

159 Id.

160 Id.; U.S. Dept. of Justice, FCPA Op. Release 04-03

(June 14, 2004); U.S. Dept. of Justice, FCPA Op. Release 04-01

(Jan. 6, 2004); U.S. Dept. of Justice, FCPA Op. Release 07-01

(July 24, 2007).

161 U.S. Dept. of Justice, FCPA Op. Release 11-01

(June 30, 2011); Admin. Proc. Order, In the Matter of Helmerich

& Payne, Inc., Exchange Act Release No. 60400 (July 30, 2009)

[hereinafter In the Matter of Helmerich & Payne], available at

http://www.sec.gov/litigation/admin/2009/34-60400.pdf.

162 U.S. Dept. of Justice, FCPA Op. Release 07-01

(July 24, 2007); U.S. Dept. of Justice, FCPA Op. Release 08-03

(July 11, 2008).

163 For example, DOJ has previously approved

expenditures on behalf of family members or for

entertainment purposes under certain, limited circumstances.

See, e.g., U.S. Dept. of Justice, FCPA Rev. P. Release 83-02

(July 26, 1983) (declining to take enforcement action against

company seeking to provide promotional tour for foreign

ocial and wife, where both had already planned a trip to the

United States at their own expense and company proposed

to pay only for all reasonable and necessary actual domestic

expenses for the extension of their travel to allow the

promotional tour, which would not exceed $5,000), available

at http://www.justice.gov/criminal/fraud/fcpa/review/1983/

r8302.pdf.

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111

164 Unlike the local law and bona de expenditures

defenses, the facilitating payments exception is not an

armative defense to the FCPA. Rather, payments of this

kind fall outside the scope of the FCPA’s bribery prohibition.

Prior to 1988, the “facilitating payments” exception was

incorporated into the denition of “foreign ocial,” which

excluded from the statute’s purview ocials whose duties

were primarily ministerial or clerical. See Foreign Corrupt

Practices Act of 1977, Pub. L. No. 95-213, § 104(d)(2), 91 Stat.

1494, 1498 (1977) (providing that the term foreign ocial

“does not include any employee of a foreign government or

any department, agency, or instrumentality thereof whose

duties are essentially ministerial or clerical”). The original

exception thus focused on the duties of the recipient, rather

than the purpose of the payment. In practice, however, it

proved dicult to determine whether a foreign ocial’s

duties were “ministerial or clerical.” S. Rep. No. 100-85, at 53.

Responding to criticism that the statutory language “does not

clearly reect Congressional intent and the boundaries of the

prohibited conduct,” Congress revised the FCPA to dene the

exception in terms of the purpose of the payment. H. Rep.

No. 100-40, pt. 2, at 77. In doing so, Congress reiterated that

while its policy to exclude facilitating payments reected

practical considerations of enforcement, “such payments

should not be condoned.” Id. The enacted language reects

this narrow purpose.

165 In exempting facilitating payments, Congress

sought to distinguish them as “payments which merely move

a particular matter toward an eventual act or decision or

which do not involve any discretionary action,” giving the

examples of “a gratuity paid to a customs ocial to speed

the processing of a customs document” or “payments made

to secure permits, licenses, or the expeditious performance

of similar duties of an essentially ministerial or clerical nature

which must of necessity be performed in any event.” H.R.

Rep. No. 95-640, at 8.

166 Section 30A(f)(3)(B) of the Exchange Act, 15 U.S.C.

§ 78dd-1(f)(3)(B); 15 U.S.C. §§ 78dd-2(h)(4)(B), 78dd-3(f)(4)(B).

167 In a 2004 decision, the Fifth Circuit emphasized

this precise point, commenting on the limited nature of the

facilitating payments exception:

A brief review of the types of routine governmental

actions enumerated by Congress shows how limited

Congress wanted to make the grease exceptions.

Routine governmental action, for instance, includes

“obtaining permits, licenses, or other ocial documents

to qualify a person to do business in a foreign country,”

and “scheduling inspections associated with contract

performance or inspections related to transit of goods

across country.” Therefore, routine governmental action

does not include the issuance of every ocial document

or every inspection, but only (1) documentation that

qualies a party to do business and (2) scheduling

an inspection—very narrow categories of largely non-

discretionary, ministerial activities performed by mid-

or low-level foreign functionaries.

United States v. Kay, 359 F.3d 738, 750-51 (5th Cir. 2004)

(internal footnote omitted) (emphasis in original).

168 Non-Pros. Agreement, In re Helmerich & Payne, Inc.

(July 29, 2009) [hereinafter In re Helmerich & Payne], available

at https://www.justice.gov/sites/default/les/criminal-

fraud/legacy/2011/02/16/06-29-09helmerich-agree.pdf.

169 Criminal Information, Vetco Gray Controls Inc., et al.,

No. 07-cr-4 No. (S.D. Tex. Jan. 5, 2007), ECF Nos. 1-2, available

at http://www.justice.gov/criminal/fraud/fcpa/cases/vetco-

controls/02-06-07vetcogray-info.pdf.

170 Complaint, SEC v. Noble Corp., No. 10-cv-4336 (S.D.

Tex. Nov. 4, 2010), ECF No. 1, available at http://www.sec.

gov/litigation/complaints/2010/comp21728.pdf; Non-Pros.

Agreement, In re Noble Corp. (Nov. 4, 2010), available at

https://www.justice.gov/sites/default/les/criminal-fraud/

legacy/2011/02/16/11-04-10noble-corp-npa.pdf; see also

sources cited supra note 68.

171 Working Group on Bribery, 2009 Recommendation

of the Council for Further Combating Bribery of Foreign

Public Ocials in International Business Transactions, at § VI

(recommending countries should periodically review their

policies and approach to facilitation payments and should

encourage companies to prohibit or discourage facilitation

payments “in view of the corrosive eect of small facilitation

payments, particularly on sustainable economic development

and the rule of law”); Working Group on Bribery, United States:

Phase 3, at 24 (Oct. 15, 2010), available at https://www.oecd.

org/daf/anti-bribery/44176910.pdf (commending United

States for steps taken in line with 2009 recommendation to

encourage companies to prohibit or discourage facilitation

payments).

172 Facilitating payments are illegal under the U.K.

Bribery Act 2010, which came into force on July 1, 2011, and

were also illegal under prior U.K. legislation. See Bribery Act

2010, c.23 (Eng.), available at http://www.legislation.gov.uk/

ukpga/2010/23/contents; see also U.K. Ministry of Justice, The

Bribery Act 2010: Guidance About Procedures Which Relevant

Commercial Organisations Can Put into Place to Prevent Persons

Associated with Them from Bribing (Section 9 of the Bribery Act

2010), at 18 (2011), available at http://www.justice.gov.uk/

guidance/docs/bribery-act-2010-guidance.pdf.

173 See, e.g., Non-Pros. Agreement, In re Helmerich &

Payne, supra note 168; Admin. Proc. Order, In the Matter of

Helmerich & Payne, supra note 161.

174 In order to establish duress or coercion, a defendant

must demonstrate that the defendant was under unlawful,

present, immediate, and impending threat of death or

serious bodily injury; that the defendant did not negligently

or recklessly create a situation where he would be forced to

engage in criminal conduct (e.g., had been making payments

as part of an ongoing bribery scheme); that the defendant

had no reasonable legal alternative to violating the law;

and that there was a direct causal relationship between the

criminal action and the avoidance of the threatened harm.

See Eleventh Circuit Pattern Jury Instr., Special Instr. No. 16

(2020); see also Fifth Circuit Pattern Jury Instr. No. 1.38 (2019);

Sixth Circuit Pattern Jury Instr. No. 6.05 (2019); Seventh Circuit

Pattern Jury Instr. No. 6.08 (2012); Ninth Circuit Pattern Jury

Instr. No. 6.5 (2010); 1A Kevin F. O’Malley, Jay E. Grenig, Hon.

William C. Lee, Federal Jury Practice and Instructions § 19.02

(6th ed. 2008 & Supp. 2012).

175 S. Rep. No. 95-114, at 11.

176 Id. at 10.

177 Id. at 11.

178 United States v. Kozeny, 582 F. Supp. 2d 535, 540 n.31

(S.D.N.Y. 2008).

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

112

179 Id. at 540 (citing S. Rep. No. 95-114, at 10-11).

180

Id.

181

These payments, however, must be accurately

reected in the company’s books and records so that the

company and its management are aware of the payments

and can assure that the payments were properly made under

the circumstances. For example, in one instance, a Kazakh

immigration prosecutor threatened to ne, jail, or deport

employees of a U.S. company’s subsidiary. Believing the

threats to be genuine, the employees in Kazahkstan sought

guidance from senior management of the U.S. subsidiary and

were authorized to make the payments. The employees then

paid the government ocial a total of $45,000 using personal

funds. The subsidiary reimbursed the employees, but it falsely

recorded the reimbursements as “salary advances” or “visa

nes.” The parent company, which eventually discovered

these payments, as well as other improperly booked cash

payments made to a Kazakh consultant to obtain visas, was

charged with civil violations of the accounting provisions.

Admin. Proc. Order, In the Matter of NATCO Group Inc.,

Exchange Act Release No. 61325 (Jan. 11, 2010), available

at http://www.sec.gov/litigation/admin/2010/34-61325.pdf

(imposing cease-and-desist order and $65,000 civil monetary

penalty).

182 See Jury Instructions at 21, United States v. Aguilar,

No. 10-cr-1031 (C.D. Cal. May 16, 2011), ECF No. 511.

183 See, e.g., Pacic Can Co. v. Hewes, 95 F.2d 42, 46 (9th

Cir. 1938) (“Where one corporation is controlled by another,

the former acts not for itself but as directed by the latter, the

same as an agent, and the principal is liable for the acts of

its agent within the scope of the agent’s authority.”); United

States v. NYNEX Corp., 788 F. Supp. 16, 18 n.3 (D.D.C. 1992)

(holding that “[a] corporation can of course be held criminally

liable for the acts of its agents,” including “the conduct of its

subsidiaries”).

184 Pacic Can Co., 95 F.2d at 46; NYNEX Corp., 788 F.

Supp. at 18 n.3.

185 See, e.g., Standard Oil Co. v. United States, 307 F.2d

120, 127 (5th Cir. 1962).

186 Admin. Proc. Order, In the Matter of United Industrial

Corp., Exchange Act Release No. 60005 (May 29, 2009), available

at http://www.sec.gov/litigation/admin/2009/34-60005.pdf;

see also Lit. Release No. 21063, SEC v. Wurzel (May 29, 2009),

available at http://www.sec.gov/litigation/litreleases/2009/

lr21063.htm.

187 See, e.g., Philip Urofksy, What You Don’t Know Can Hurt

You: Successor Liability Resulting From Inadequate FCPA Due

Diligence in M&A Transactions, 1763 PLI/Corp. 631, 637 (2009)

(“As a legal matter, when one corporation acquires another, it

assumes any existing liabilities of that corporation, including

liability for unlawful payments, regardless of whether it

knows of them.”). Whether or not successor liability applies

to a particular corporate transaction depends on the facts

involved and state, federal, and, potentially, foreign law.

188 See, e.g., Carolyn Lindsey, More Than You Bargained

for: Successor Liability Under the U.S. Foreign Corrupt Practices

Act, 35 Ohio N.U.L. Rev. 959, 966 (2009) (“Allowing a company

to escape its debts and liabilities by merging with another

entity is considered to lead to an unjust result.”).

189 See, e.g., Melrose Distillers, Inc. v. United States, 359

U.S. 271, 274 (1959) (arming criminal successor liability for

antitrust violations); United States v. Alamo Bank of Texas, 880

F.2d 828, 830 (5th Cir. 1989) (arming criminal successor

liability for Bank Secrecy Act violations); United States v.

Polizzi, 500 F.2d 856, 907 (9th Cir. 1974) (arming criminal

successor liability for conspiracy and Travel Act violations);

United States v. Shields Rubber Corp., 732 F. Supp. 569, 571-

72 (W.D. Pa. 1989) (permitting criminal successor liability for

customs violations); see also United States v. Mobile Materials,

Inc., 776 F.2d 1476, 1477 (10th Cir. 1985) (allowing criminal

post-dissolution liability for antitrust, mail fraud, and false

statement violations).

190 Complaint, SEC v. The Titan Corp., No. 05-cv-411

(D.D.C. Mar. 1, 2005) (discovery of FCPA violations during

pre-acquisition due diligence protected potential acquiring

company and led to termination of merger agreement),

available at https://www.sec.gov/litigation/complaints/

comp19107.pdf; Criminal Information, United States v. Titan

Corp., No. 05-cr-314 (S.D. Cal. Mar. 1, 2005) (same) [hereinafter

United States v. Titan Corp.], available at https://www.justice.

gov/sites/default/les/criminal-fraud/legacy/2011/02/16/03-

01-05titan-info.pdf.

191 For a discussion of declinations, see Chapter 7.

192 See Complaint, SEC v. El Paso Corp., No. 07-cv-

899 (S.D.N.Y. Feb. 7, 2007), ECF No. 1 [hereinafter SEC v. El

Paso Corp.] (charging company with books and records and

internal controls charges for improper payments to Iraq

under U.N. Oil-for-Food Program), available at https://www.

sec.gov/litigation/complaints/2007/comp19991.pdf.

193 Criminal Information, United States v. TechnipFMC plc,

No. 19-cr-278 (E.D.N.Y. June 25, 2019), ECF No. 5 [hereinafter

United States v. TechnipFMC], available at https://www.justice.

gov/criminal-fraud/le/1225056/download; United States

v. Technip Oshore USA, Inc., No. 19-cr-279 (E.D.N.Y. June

25, 2019), ECF No. 5, available at https://www.justice.gov/

criminal-fraud/le/1225066/download; Cease-and-Desist

Order, In the Matter of TechnipFMC plc, Admin. Proc. 3-19493

(Sept. 23, 2019), available at https://www.sec.gov/litigation/

admin/2019/34-87055.pdf.

194 See Plea Agreement, United States v. Alstom S.A.,

No. 14-cr-246 (D. Conn. Dec. 22, 2014), ECF No. 1 [hereinafter

United States v. Alstom], available at https://www.justice.gov/

sites/default/files/criminal-fraud/legacy/2015/01/09/DE-

5-Plea-Agreement-for-SA.pdf; Deferred Pros. Agreement,

United States v. Alstom Grid, Inc., No. 14-cr-247 (D. Conn. Dec.

22, 2014), ECF No. 1, available at https://www.justice.gov/

sites/default/files/criminal-fraud/legacy/2015/01/09/DE-4-

DPA-Grid.pdf; Deferred Pros. Agreement, United States v.

Alstom Power, Inc., No. 14-cr-248 (D. Conn. Dec. 22, 2014), ECF

No. 1, available at https://www.justice.gov/sites/default/les/

criminal-fraud/legacy/2015/01/09/DE-4-DPA-Power.pdf.

195 See Complaint, SEC v. York Int’l Corp., supra note 114;

Criminal Information, United States v. York Int’l Corp., supra note 114.

196 See Criminal Information, United States v. Latin

Node, Inc., No. 09-cr-20239 (S.D. Fla. Mar. 23, 2009), ECF

No. 1, available at https://www.justice.gov/sites/default/

files/criminal-fraud/legacy/2011/02/16/03-23-09latinnode-

info.pdf; eLandia Int’l Inc., Annual Report (Form 10-K), at 20

(Apr. 2, 2009), available at https://www.sec.gov/Archives/

edgar/data/1352819/000119312509070961/d10k.htm.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

113

197 See Criminal Information, United States v. Salvoch,

No. 10-cr-20893 (S.D. Fla. Dec. 17, 2010), ECF No. 3,

available at https://www.justice.gov/sites/default/files/

criminal-fraud/legacy/2013/09/05/12-17-10salvoch-

info.pdf; Criminal Information, United States v. Vasquez,

No. 10-cr-20894 (S.D. Fla. Dec. 17, 2010), ECF No. 3,

available at https://www.justice.gov/sites/default/

files/criminal-fraud/legacy/2013/09/05/12-17-10vasquez-

juan-info.pdf; Indictment, United States v. Granados, et al.,

No. 10-cr-20881, (S.D. Fla. Dec. 14, 2010), ECF No. 3, available

at https://www.justice.gov/sites/default/les/criminal-fraud/

legacy/2011/10/18/12-21-10granados-indict.pdf.

198 See Deferred Pros. Agreement, United States v.

Snamprogetti Netherlands B.V., No. 4:10-cr-00460 (S.D. Tex.

July 7, 2010), ECF No. 3 [hereinafter United States v.

Snamprogetti], available at https://www.justice.gov/criminal/

fraud/fcpa/cases/snamprogetti/07-07-10snamprogetti-dpa.pdf.

199 Compare Criminal Information, United States

v. Snamprogetti, No. 4:10-cr-00460 (S.D. Tex. July 7, 2010), ECF

No. 1, available at https://www.justice.gov/sites/default/les/

criminal-fraud/legacy/2011/02/16/07-07-10snamprogetti-

info.pdf, with Deferred Pros. Agreement, United States v.

Snamprogetti, supra note 198.

200 See Press Release, General Electric Co., General

Electric Agrees to Acquire InVision (Mar. 15, 2004), available

at https://www.ge.com/files/usa/company/investor/

downloads/sharpeye_press_release.pdf; Press Release,

U.S. Dept. of Justice, InVision Technologies, Inc. Enters into

Agreement with the United States (Dec. 6, 2004), available

at https://www.justice.gov/opa/pr/2004/December/04_

crm_780.htm; Company News; G.E. Gets InVision, a Maker of

Bomb Detectors, N.Y. Times, Dec. 7, 2004, at C4.

201 Non-Pros. Agreement, In re InVision (Dec. 3, 2004),

available at https://www.justice.gov/sites/default/files/

criminal-fraud/legacy/2011/02/16/12-03-04invisiontech-

agree.pdf; Non-Pros. Agreement, In re General Elec. Co.,

(Dec. 3, 2004), available at https://www.justice.gov/criminal/

fraud/fcpa/cases/invision-tech/12-03-04invisiontech-

agree-ge.pdf; Complaint, SEC v. GE InVision, Inc., f/k/a InVision

Technologies, Inc., No. 05-cv-660 (N.D. Cal. Feb. 14, 2005),

ECF No. 1, available at https://www.sec.gov/litigation/

complaints/comp19078.pdf.

202 See U.S. Dept. of Justice, FCPA Op. Release 08-02

(June 13, 2008), available at https://www.justice.gov/criminal/

fraud/fcpa/opinion/2008/0802.pdf; see also Press Release,

U.S. Dept. of Justice, Pzer H.C.P. Corp. Agrees to Pay $15

Million Penalty to Resolve Foreign Bribery Investigation

(Aug. 7, 2012) (“In the 18 months following its acquisition

of Wyeth, Pzer Inc., in consultation with the department,

conducted a due diligence and investigative review of the

Wyeth business operations and integrated Pzer Inc.’s

internal controls system into the former Wyeth business

entities. The department considered these extensive eorts

and SEC resolution in its determination not to pursue a

criminal resolution for the pre-acquisition improper conduct

of Wyeth subsidiaries.”), available at https://www.justice.

gov/opa/pr/2012/August/12-crm-980.html.

203 18 U.S.C. § 2.

204 In enacting the FCPA in 1977, Congress explicitly

noted that “[t]he concepts of aiding and abetting and joint

participation would apply to a violation under this bill in the

same manner in which those concepts have always applied in

both SEC civil actions and in implied private actions brought

under the securities laws generally.” H.R. Rep. No. 95-640, at 8.

205 Pinkerton held that a conspirator may be found

guilty of a substantive oense committed by a co-conspirator

in furtherance of the conspiracy if the co-conspirator’s acts

were reasonably foreseeable. See Pinkerton v. United States,

328 U.S. 640, 647-48 (1946).

206

See United States v. MacAllister, 160 F.3d 1304, 1307

(11th Cir. 1998); United States v. Winter, 509 F.2d 975, 982

(5th Cir. 1975).

207

See Criminal Information, United States v.

Marubeni Corp., No. 12- cr-22 (S.D. Tex. Jan. 17, 2012), ECF

No. 1 [hereinafter United States v. Marubeni], available at

https://www.justice.gov/sites/default/files/criminal-fraud/

legacy/2012/01/24/2012-01-17-marubeni-information.pdf;

Criminal Information, United States v. JGC Corp., supra note 60;

Criminal Information, United States v. Snamprogetti, supra note

199; see also Criminal Information, United States v. Technip,

supra note 193.

208 United State v. Hoskins, 902 F.3d 69, 76-97 (2d Cir. 2018).

209 United States v. Firtash, 392 F. Supp. 3d 872, 889

(N.D. Ill. 2019).

210 Section 20(e) of the Exchange Act, “Prosecution of

Persons Who Aid and Abet Violations,” explicitly provides that,

for purposes of a civil action seeking injunctive relief or a civil

penalty, “any person that knowingly or recklessly provides

substantial assistance to another person in violation of a

provision of this chapter, or of any rule or regulation issued

under this chapter, shall be deemed to be in violation of such

provision to the same extent as the person to whom such

assistance is provided.” Section 20(e) of the Exchange Act, 15

U.S.C. § 78t(e).

211 Under Section 21C(a) of the Exchange Act, SEC

may impose a cease-and-desist order through SEC’s

administrative proceedings upon any person who is

violating, has violated, or is about to violate any provision

of the Exchange Act or any rule or regulation thereunder,

and upon any other person that is, was, or would be a

cause of the violation, due to an act or omission the person

knew or should have known would contribute to such

violation. Section 21C(a) of the Exchange Act, 15 U.S.C.

§ 78u-3(a).

212 See Complaint, SEC v. Panalpina, Inc., No. 10-cv-4334

(S.D. Tex. Nov. 4, 2010), ECF No. 1, available at https://www.

sec.gov/litigation/complaints/2010/comp21727.pdf.

213 18 U.S.C. § 3282(a) provides: “Except as otherwise

expressly provided by law, no person shall be prosecuted,

tried, or punished for any oense, not capital, unless the

indictment is found or the information is instituted within ve

years next after such oense shall have been committed.”

214 See 18 U.S.C. § 3301(a) (“[T]he term ‘securities fraud

oense’ means a violation of, or a conspiracy or an attempt to

violate . . . section 32(a) of the Securities Exchange Act of 1934

(15 U.S.C. 78(a)))”; 18 U.S.C. § 3301(b) (“No person shall be

prosecuted, tried, or punished for a securities fraud oense,

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

114

unless the indictment is found or the information is instituted

within 6 years after the commission of the oense.”).

215 See Grunewald v. United States, 353 U.S. 391,

396-97 (1957) (holding government must prove conspiracy

still existed and at least one overt act was committed within

the statute of limitations); Fiswick v. United States, 329 U.S. 211,

216 (1946) (“The statute of limitations, unless suspended,

runs from the last overt act during the existence of the

conspiracy. The overt acts averred and proved may thus

mark the duration, as well as the scope, of the conspiracy.”)

(citation omitted); see generally Julie N. Sarno, Federal

Criminal Conspiracy, 48 Am. Crim. L. Rev. 663, 676 (Spring

2011); see also United States v. SBM, supra note 93 (charging a

single conspiracy to violate the FCPA spanning conduct from

in or around 1996 until in or around 2012).

216 18 U.S.C. § 3292.

217 Kokesh v. SEC, 137 S. Ct. 1635 (2017).

218 28 U.S.C. § 2462.

219 S. Rep. No. 95-114, at 3 (noting that, in the past,

“corporate bribery has been concealed by the falsication of

corporate books and records,” that the accounting provisions

“remove [] this avenue of coverup,” and that “[t]aken together,

the accounting requirements and criminal [anti-bribery]

prohibitions . . . should eectively deter corporate bribery of

foreign government ocials”).

220 S. Rep. No. 95-114, at 7.

221 Section 13(b)(2)(A) of the Exchange Act, 15 U.S.C.

§ 78m(b)(2)(A).

222 Section 13(b)(2)(B) of the Exchange Act, 15 U.S.C.

§ 78m(b)(2)(B).

223 The accounting provisions contain a narrow

exemption related to national security and the protection

of classied information. Under this “national security”

provision, “no duty or liability [under Section 13(b)(2) of the

Exchange Act] shall be imposed upon any person acting in

cooperation with the head of any federal department or

agency responsible for such matters if such act in cooperation

with such head of a department or agency was done upon

the specic, written directive of the head of such department

or agency pursuant to Presidential authority to issue such

directives.” Section 13(b)(3) of the Exchange Act, 15 U.S.C.

§ 78m(b)(3). As Congress made clear, however, the exception

is narrowly tailored and intended to prevent the disclosure of

classied information. H.R. Rep. 94-831, at 11 (1977), available

at https://www.justice.gov/sites/default/les/criminal-fraud/

legacy/2010/04/11/corruptrpt-94-831.pdf.

224 Section 13(b)(2)(A) of the Exchange Act, 15 U.S.C.

§ 78m(b)(2)(A).

225 H.R. Rep. No. 94-831, at 10.

226 Id.

227 Section 13(b)(7) of the Exchange Act, 15 U.S.C.

§ 78m(b)(7).

228 H.R. Rep. No. 100-576, at 917 (1988), available at

https://www.justice.gov/sites/default/files/criminal-fraud/

legacy/2010/04/11/tradeact-100-418.pdf. Congress rejected

the addition of proposed cost-benet language to the

denition “in response to concerns that such a statutory

provision might be abused and weaken the accounting

provisions at a time of increasing concern about audit

failures and nancial fraud and resultant recommendations

by experts for stronger accounting practices and audit

standards.” Id.

229

See, e.g., Complaint, SEC v. Biomet, Inc., No. 12-cv-454

(D.D.C. Mar. 26, 2012), ECF No. 1 [hereinafter SEC v. Biomet],

available at https://www.sec.gov/litigation/complaints/2012/

comp22306.pdf; Criminal Information, United States v. Biomet,

Inc., No. 12-cr-80 (D.D.C. Mar. 26, 2012) [hereinafter United

States v. Biomet], available at https://www.justice.gov/sites/

default/les/criminal-fraud/legacy/2012/03/30/2012-03-26-

biomet-information.pdf; Complaint, SEC v. Smith & Nephew

plc, No. 12-cv-187 (D.D.C. Feb. 6, 2012), ECF No. 1, available

at https://www.sec.gov/litigation/complaints/2012/

comp22252.pdf; Criminal Information, United States v.

Smith & Nephew, Inc., No. 12-cr-30 (D.D.C. Feb. 6, 2012), ECF

No. 1, available at https://www.justice.gov/sites/default/

files/criminal-fraud/legacy/2012/02/08/2012-02-06-s-n-

information.pdf; Complaint, SEC v. Johnson & Johnson, supra

note 136; Criminal Information, United States v. DePuy, supra

note 136; Complaint, SEC v. Maxwell Techs. Inc., No. 11-cv-258

(D.D.C. Jan. 31, 2011), ECF No. 1 [hereinafter SEC v. Maxwell

Technologies], available at https://www.sec.gov/litigation/

complaints/2011/comp21832.pdf; Criminal Information,

United States v. Maxwell Techs. Inc., No. 11-cr-329 (S.D. Cal.

Jan. 31, 2011), ECF No. 1, available at https://www.justice.gov/

sites/default/les/criminal-fraud/legacy/2011/04/27/01-31-

11maxwell-tech-info.pdf; Complaint, SEC v. Transocean, Inc.,

No. 10-cv-1891 (D.D.C. Nov. 4, 2010), ECF No. 1, available at

http://www.sec.gov/litigation/complaints/2010/comp21725.

pdf; Criminal Information, United States v. Transocean, Inc.,

No. 10-cr-768 (S.D. Tex. Nov. 4, 2010), ECF No. 1, available

at https://www.justice.gov/sites/default/les/criminal-fraud/

legacy/2011/02/16/11-04-10transocean-info.pdf.

230

S. Rep. No. 95-114, at 7.

231 Section 13(b)(2)(B) of the Exchange Act, 15 U.S.C.

§ 78m(b)(2)(B).

232 Section 13(b)(7) of the Exchange Act, 15 U.S.C.

§ 78m(b)(7).

233 See Complaint, SEC v. Siemens AG, supra note

47; Criminal Information, United States v. Siemens

Aktiengesellschaft, No. 08-cr-367 (D.D.C. Dec. 12, 2008),

ECF. No. 1 [hereinafter United States v. Siemens AG],

available at https://www.justice.gov/archive/opa/pr/2008/

December/08-crm-1105.html.

234 Complaint, SEC v. Siemens AG, supra note 47;

Criminal Information, United States v. Siemens AG, supra note

233; Press Release, U.S. Dept. of Justice, Siemens AG and

Three Subsidiaries Plead Guilty to Foreign Corrupt Practices

Act Violations and Agree to Pay $450 Million in Combined

Criminal Fines (Dec. 15, 2008), available at https://www.

justice.gov/archive/opa/pr/2008/December/08-crm-1105.

html.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

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235 ee, e.g., Complaint, SEC v. Biomet, supra note 229

(bribes paid to government healthcare providers in which

phony invoices were used to justify payments and bribes

were falsely recorded as “consulting fees” or “commissions”

in company’s books and records); Criminal Information,

United States v. Biomet, supra note 229 (same); SEC v. Alcatel-

Lucent, supra note 47 (bribes paid to foreign ocials to

secure telecommunications contracts where company lacked

proper internal controls and permitted books and records to

falsied); United States v. Alcatel-Lucent France, supra note 129

(same).

236 Complaint, SEC v. Daimler AG, supra note 47; Criminal

Information, United States v. Daimler AG, supra note 47.

237 Id.

238 Id.

239 Id.

240 Id.

241 Id.

242 See supra note 10.

243 See, e.g., Complaint, SEC v. Siemens AG, supra note 47;

Complaint, SEC v. York Int’l Corp., supra note 116; Complaint,

SEC v. Textron, supra note 116; Criminal Information, United

States v. Control Components, Inc., No. 09-cr-162 (C.D. Cal.

July 22, 2009), ECF No. 1 [hereinafter United States v. Control

Components], available at https://www.justice.gov/sites/

default/les/criminal-fraud/legacy/2011/02/16/07-22-09cci-

info.pdf; Criminal Information, United States v. SSI Int’l Far East,

Ltd., No. 06-cr-398, ECF No. 1 [hereinafter United States v. SSI

Int’l] (D. Or. Oct. 10, 2006), available at https://www.justice.

gov/sites/default/les/criminal-fraud/legacy/2011/02/16/10-

10-06ssi-information.pdf.

244 See, e.g., Complaint, SEC v. El Paso Corp., supra note

188; Complaint, SEC v. Innospec, supra note 80; Complaint,

SEC v. Chevron Corp., 07- cv-10299 (S.D.N.Y. Nov. 14, 2007),

ECF No. 1, available at https://www.sec.gov/litigation/

complaints/2007/comp20363.pdf.

245 See supra note 9.

246 See Complaint, SEC v. Maxwell Technologies, supra

note 229.

247 See Complaint, SEC v. Willbros Group, supra note 10.

248 15 U.S.C. § 7201 et seq.

249 Exchange Act Rule 13a-15, 17 C.F.R. § 240.13a-15;

Exchange Act Rule 15d-15, 17 C.F.R. § 240.15d-15; Item 308

of Regulation S-K, 17 C.F.R. § 229.308; Item 15, Form 20-F,

available at https://www.sec.gov/about/forms/form20-f.pdf;

General Instruction (B), Form 40-F (for foreign private issuers),

available at https://www.sec.gov/about/forms/form40-f.pdf.

250 See U.S. Sec. and Exchange Comm’n, Commission

Guidance Regarding Management’s Report on Internal

Control over Financial Reporting Under Section 13(a) or

15(d) of the Securities Exchange Act of 1934, Release No. 33-

8810 (June 27, 2007), available at https://www.sec.gov/rules/

interp/2007/33-8810.pdf.

251 Id.

252

Foreign Corrupt Practices Act of 1977, Pub. L.

No. 95-213, § 102, 91 Stat. 1494 (1977).

253

See supra note 47; In the Matter of TechnipFMC plc,

supra note 193, (French company); United States v. Technip,

supra note 193, (same); see also Admin. Proc. Order, In the

Matter of Diageo plc, Exchange Act Release No. 64978 (SEC

July 27, 2011) (UK company), available at https://www.sec.

gov/litigation/admin/2011/34-64978.pdf; Admin. Proc. Order,

In the Matter of Statoil, ASA, Exchange Act Release No. 54599

(SEC May 29, 2009) (Norwegian company), available at https://

www.sec.gov/litigation/admin/2006/34-54599.pdf; Criminal

Information, United States v. Statoil, ASA, No. 06-cr-960 (S.D.N.Y.

Oct. 13, 2006) (same), available at https://www.justice.gov/

sites/default/les/criminal-fraud/legacy/2011/02/16/10-13-

09statoil-information.pdf.

254 Although private companies are not covered by the

books and records and internal controls provisions of the

FCPA and do not fall within SEC’s jurisdiction, such companies

generally are required by federal and state tax laws and state

corporation laws to maintain accurate books and records

sucient to properly calculate taxes owed. Further, most

large private companies maintain their books and records

to facilitate the preparation of nancial statements in

conformity with GAAP to comply with nancial institutions’

lending requirements.

255 See SEC v. RAE Sys. Inc., supra note 92; In re RAE Sys.

Inc., supra note 92.

256 See Section 13(b)(6) of the Exchange Act, 15 U.S.C.

§ 78m(b)(6), which provides that where an issuer “holds 50

per centum or less of the voting power with respect to a

domestic or foreign rm,” the issuer must “proceed in good

faith to use its inuence, to the extent reasonable under the

issuer’s circumstances, to cause such domestic or foreign

rm to devise and maintain a system of internal accounting

controls consistent with [Section 13(b)(2)].”

257 See 15 U.S.C. § 78m(b)(6). Congress added the

language in sub-section 78m(b)(6) to the FCPA in 1988,

recognizing that “it is unrealistic to expect a minority owner

to exert a disproportionate degree of inuence over the

accounting practices of a subsidiary.” H.R. Rep. No. 100-576,

at 917. The Conference Report noted that, with respect to

minority owners, “the amount of inuence which an issuer

may exercise necessarily varies from case to case. While

the relative degree of ownership is obviously one factor,

other factors may also be important in determining whether

an issuer has demonstrated good-faith eorts to use its

inuence.” Id.; see also S. Rep. No. 100-85, at 50.

258 Section 20(e) of the Exchange Act, titled “Prosecution

of Persons Who Aid and Abet Violations,” explicitly provides

that for purposes of a civil action seeking injunctive relief

or a civil penalty, “any person that knowingly or recklessly

provides substantial assistance to another person in violation

of a provision of this title, or of any rule or regulation issued

under this title, shall be deemed to be in violation of such

provision to the same extent as the person to whom such

assistance is provided.” See Section 20(e) of the Exchange Act,

15 U.S.C. § 78t(e).

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116

259 See Complaint at 11-12, SEC v. Elkin, No. 10-cv-661

(D.D.C. Apr. 28, 2010), ECF No. 1, available at https://www.sec.

gov/litigation/complaints/2010/comp21509.pdf.

260 Id., ECF Nos. 6-9 (nal judgments).

261

See, e.g., Complaint, SEC v. Nature’s Sunshine Prod.,

Inc., No. 09-cv-672 (D. Utah, July 31, 2009), ECF No. 2,

available at https://www.sec.gov/litigation/complaints/2009/

comp21162.pdf.

262 See Admin. Proc. Order, In re Watts Water Tech.,

Inc. and Leesen Chang, Exchange Act Release No. 65555 (SEC

Oct. 13, 2011), available at https://www.sec.gov/litigation/

admin/2011/34-65555.pdf.

263

Id. at 2, 4, 6-7.

264 Exchange Act Rule 13b2-1, 17 C.F.R. § 240.13b2-1.

265 15 U.S.C. § 78m(b)(5).

266 Section 3(a)(9) of the Exchange Act, 15 U.S.C. § 78c(a)(9).

267 Exchange Act Rule 13b2-2, 17 C.F.R. § 240.13b2-2.

268 Complaint, SEC v. Jennings, No. 11-cv-144 (D.D.C.

Jan. 24, 2011), ECF No. 1, available at http://www.sec.gov/

litigation/complaints/2011/comp21822.pdf.

269 Id., ECF Nos. 1, 3 (Complaint and Final Judgment).

270 Serious Fraud Oce, Innospec Ltd: Former CEO

admits bribery to falsify product tests (July 30, 2012), available

at https://www.sfo.gov.uk/2012/07/30/innospec-ltd-former-

ceo-admits-bribery-falsify-product-tests/.

271 15 U.S.C. § 78(a).

272 See Deferred Pros. Agreement, United States v. Och-

Zi Capital Mgmt. Group LLC, No. 16-cr-516 (E.D.N.Y. Sept. 29,

2016), available at https://www.justice.gov/criminal-fraud/

le/900261/download.

273 See Deferred Pros. Agreement, United States v.

Panasonic Avionics Corp., No. 18-cr-118 (D.D.C. Apr. 30, 2018),

available at https://www.justice.gov/opa/press-release/

file/1058466/download.

274 See Minute Entry of Guilty Plea, United States v.

Peterson, supra note 9, ECF No. 13; see also Press Release, U.S.

Dept. of Justice, Former Morgan Stanley Managing Director

Pleads Guilty for Role in Evading Internal Controls Required

by FCPA (Apr. 25, 2012), available at http://www.justice.gov/

opa/pr/2012/April/12-crm-534.html.

275 See Criminal Information, United States v. Baker

Hughes Svcs. Int’l, Inc., No. 07-cr-129 (S.D. Tex. Apr. 11,

2007), ECF No. 1, available at https://www.justice.gov/sites/

default/files/criminal-fraud/legacy/2011/02/16/04-11-

07bakerhughesintl-info.pdf.

276 See Criminal Information, United States v. Panalpina,

Inc., No. 10-cr-765 (S.D. Tex. Nov. 4, 2010), ECF No. 1, available

at http://www.justice.gov/criminal/fraud/fcpa/cases/

panalpina-inc/11-04-10panalpina-info.pdf.

277 Id.

278

See 15 U.S.C. § 78(a).

279

See FASB Statement of Financial Accounting Concepts

No. 2, ¶¶ 63-80.

280

PCAOB Auditing Standard No. 12 and PCAOB AU

Section 325.

281

See Section 10A of the Exchange Act, 15 U.S.C. § 78j-1.

282 18 U.S.C. § 1952.

283 See, e.g., United States v. Baptiste, supra note

43; Criminal Information, United States v. Ernesto Lujan,

No. 13-cr-671 (S.D.N.Y. Aug. 29, 2013), ECF No. 11, available

at https://www.justice.gov/sites/default/files/criminal-

fraud/legacy/2013/08/30/lujan-filed-information.

pdf; Criminal Information, United States v. Robert Richard

King, No. 01-cr-190 (W.D. Mo. June 27, 2001), available

at https://www.justice.gov/sites/default/les/criminal-

fraud/legacy/2011/02/16/05-03-02king-robert-indict.pdf;

Superseding Indictment, United States v. Mead, supra note

43, ECF No. 22; Criminal Information, United States v. Saybolt

North America Inc., No. 98-cr-10266 (D. Mass. Aug. 18, 1998),

available at https://www.justice.gov/sites/default/les/

criminal-fraud/legacy/2011/02/16/08-10-98saybolt-info.pdf.

284 See Second Superseding Indictment, United

States v. Kozeny, No. 05-cr-518 (S.D.N.Y. May 26, 2009), ECF

No. 203, available at http://www.justice.gov/criminal/fraud/

fcpa/cases/kozenyv/05-26-09bourke2nd-supersed-indict.

pdf; Judgment, United States v. Bourke, No. 05-cr-518 (S.D.N.Y.

Nov. 12, 2009), ECF No. 253, available at http://www.justice.

gov/criminal/fraud/fcpa/cases/kozenyv/11-12-09bourke-

judgment.pdf.

285 Plea Agreement, United States v. Control Components,

supra note 243, ECF No. 7, available at https://www.justice.

gov/sites/default/les/criminal-fraud/legacy/2011/02/16/07-

24-09cci-plea-agree.pdf; see also Order, United States v. Carson,

supra note 119, ECF No. 440 (denying motion to dismiss

counts alleging Travel Act violations), available at http://www.

justice.gov/criminal/fraud/fcpa/cases/carsons/2011-09-20-

carson-minutes-denying-motion-to-dismiss.pdf.

286 See, e.g., United States v. Ahsani, supra note 9;

Criminal Information, United States v. Matthias Krull,

No. 18-cr-20682 (S.D. Fla. Aug. 16, 2018), ECF. No. 23, available

at https://www.justice.gov/criminal-fraud/file/1119951/

download; United States v. Ng, supra note 43; Criminal

Information, United States v. Darwin Enrique Padron-Acosta,

No. 16-cr-437 (S.D. Tex. Sept. 30, 2016), ECF No. 1, available

at https://www.justice.gov/criminal-fraud/file/1226941/

download; Criminal Information, United States v. Esquenazi,

supra note 43; Criminal Information, United States v. Green,

supra note 43; Criminal Information, United States v. General

Elec. Co., No. 92-cr-87 (S.D. Ohio July 22, 1992), available at

http://www.justice.gov/criminal/fraud/fcpa/cases/general-

electric/1992-07-22-general-electric-information.pdf.

287 Foreign ocials may “not be charged with violating

the FCPA itself, since the [FCPA] does not criminalize the

receipt of a bribe by a foreign ocial.” United States v.

Blondek, 741 F. Supp. 116, 117 (N.D. Tex. 1990), a ’d United

States v. Castle, 925 F.2d 831 (5th Cir. 1991) (“We hold that

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

117

foreign ocials may not be prosecuted under 18 U.S.C.

§ 371 for conspiring to violate the FCPA.”). Foreign ocials,

however, can be charged with violating the FCPA when the

foreign ocial acts as an intermediary of a bribe payment.

See, e.g., Information, United States v. Basu, No. 02-cr-475

(D.D.C. Nov. 26, 2002) (World Bank employee charged with

wire fraud and FCPA violations for facilitating bribe payments

to another World Bank ocial and Kenyan government

ocial), available at http://www.justice.gov/criminal/fraud/

fcpa/cases/basu/11-26-02basu-info.pdf; Information, United

States v. Sengupta, No. 02-cr-40 (D.D.C. Jan. 30, 2002), available

at https://www.justice.gov/sites/default/les/criminal-fraud/

legacy/2011/02/16/01-30-02sengupta-info.pdf.

288 See, e.g., Judgments, United States v. Esquenazi, supra

note 43, ECF Nos. 182, 816, 824 (judgments against foreign

ocial defendants).

289 Criminal Information, United States v. SSI Int’l, supra

note 243 (alleging violations of 18 U.S.C. §§ 1343, 1346); Plea

Agreement, United States v. SSI Int’l, supra note 243, (Oct. 10,

2006), available at https://www.justice.gov/sites/default/les/

criminal-fraud/legacy/2011/02/16/10-10-06ssi-fareast-plea.

pdf.

290 See Ex-Im Bank, Form of Exporter’s Certicate, EIB

15-04 (May 2019), available at https://www.exim.gov/sites/

default/les/forms/eib15-04_0.pdf.

291 See 18 U.S.C. § 1001.

292 22 C.F.R. §§ 130.2, 130.9.

293 For example, in United States v. BAE Systems plc, BAE

pleaded guilty to conspiring to defraud the United States

by impairing and impeding its lawful functions, to making

false statements about its FCPA compliance program, and

to violating the AECA and ITAR. BAE paid a $400 million ne

and agreed to an independent corporate monitor to ensure

compliance with applicable anti-corruption and export control

laws. Criminal Information and Plea Agreement, United States

v. BAE Sys. plc, No. 10-cr-35 (D.D.C. Mar. 1, 2010), ECF Nos.

1, 8, available at https://www.justice.gov/sites/default/les/

criminal-fraud/legacy/2011/02/16/02-01-10baesystems-info.

pdf and https://www.justice.gov/sites/default/les/criminal-

fraud/legacy/2011/02/16/03-01-10baesystems-plea-agree.

pdf. In an action based on the same underlying facts as the

criminal guilty plea, BAE entered a civil settlement with the

Directorate of Defense Trade Controls for violations of AECA

and ITAR, including over 2500 ITAR violations that included

a failure to report the payment of fees or commissions

associated with defense transactions and failure to maintain

records involving ITAR-controlled transactions. BAE paid $79

million in penalties, and the State Department imposed a

“policy of denial” for export licenses on three BAE subsidiaries

involved in the wrongful conduct. Press Release, BAE Systems

plc Enters Civil Settlement of Alleged Violations of the AECA

and ITAR and Agrees to Civil Penalty of $79 Million (May 17,

2011), available at https://2009-2017.state.gov/r/pa/prs/

ps/2011/05/163530.htm.

294 26 U.S.C. § 162(c)(1); see also, e.g., Criminal

Superseding Information, United States v. Julia Vivi Wang,

No. 16-cr-495 (S.D.N.Y. Apr. 4, 2018), ECF. No. 55, available

at https://www.justice.gov/criminal-fraud/file/1061041/

download; Criminal Information, United States v. Roberto

Enrique Rincon-Fernandez, No. 15-cr-654 (S.D. Tex. June 15,

2016), ECF No. 61, available at https://www.justice.gov/

criminal-fraud/le/878951/download; Plea Agreement, United

States v. Leo Winston Smith, No. 07-cr-69 (C.D. Cal. Sept. 3, 2009),

ECF No. 89, available at https://www.justice.gov/sites/

default/files/criminal-fraud/legacy/2011/02/16/09-03-

09smithl-plea-agree.pdf; Criminal Information, United

States v. Titan Corp., supra note 190.

295 See JM § 9-27.000.

296

See JM § 9-27.420 (setting forth considerations to be

weighed when determining whether it would be appropriate

to enter into plea agreement).

297

See JM § 9-28.000 et seq.

298 See JM § 9-28.710 (discussing attorney-client and

work product protections).

299 FCPA Corporate Enforcement Policy, available at

https://www.justice.gov/criminal-fraud/file/838416/

download.

300 Id.

301 See, e.g., DOJ Declination Letter, Cognizant

Technology Solutions Corporation (Feb. 13, 2019), available

at https://www.justice.gov/criminal-fraud/file/1132666/

download; DOJ Declination Letter, Insurance Corporation of

Barbados Limited (Aug. 23, 2018), available at https://www.

justice.gov/criminal-fraud/page/le/1089626/download; DOJ

Declination Letter, Guralp Systems Limited (Aug. 20, 2018),

available at https://www.justice.gov/criminal-fraud/page/

le/1088621/download.

302 See FCPA Corporate Enforcement Policy, supra note 299.

303 Id.

304 Id.

305 See Plea Agreement, United States v. Alstom S.A., supra

note 194; Criminal Information, United States v. Marubeni Corp.,

Press Release, U.S. Dept. of Justice, Marubeni Corporation

Agrees to Plead Guilty to Foreign Bribery Charges and to Pay

an $88 Million Fine, available at https://www.justice.gov/

opa/pr/marubeni-corporation-agrees-plead-guilty-

foreign-bribery-charges-and-pay-88-million-fine.

306 See, e.g., DOJ Declination Letter, Dun & Bradstreet

Corp. (Apr. 23, 2018), available at https://www.justice.gov/

criminal-fraud/file/1055401/download; Cease-and-Desist

Order, In the Matter of The Dun & Bradstreet Corp., Admin.

Proc. 3-18446 (Apr. 23, 2018), available at https://www.sec.

gov/litigation/admin/2018/34-83088.pdf; DOJ Declination

Letter, Nortek Inc. (June 3, 2016), available at https://www.

justice.gov/criminal-fraud/file/865406/download; Nortek

Inc., SEC Non-Prosecution Agreement (June 7, 2016), available

at https://www.sec.gov/news/press/2016/2016-109-npa-

nortek.pdf.

307 DOJ Declination Letters, available at https://www.

justice.gov/criminal-fraud/corporate-enforcement-policy/

declinations.

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118

308 See SEC Enforcement Manual, available at https://

www.sec.gov/divisions/enforce/enforcementmanual.pdf.

309 See JM § 9-28.300.A; see also JM § 9-28.700.B

(explaining benets of cooperation for both government and

corporation).

310

See JM § 9-28.1000 (discussing restitution and

remediation). The commentary further provides that

prosecutors should consider and weigh whether the

corporation appropriately disciplined wrongdoers and a

corporation’s eorts to reform, including its quick recognition

of the aws in the program and its eorts to improve the

program. Id.

311

See JM §§ 9-27.230, 9-27.420.

312 U.S. Sentencing Guidelines § 8B2.1(b)(7) (2018).

313 Id. § 8C2.5(f)(2) (2011).

314 U.S. Sec. and Exchange Comm., Report of

Investigation Pursuant to Section 21(a) of the Securities

Exchange Act of 1934 and Commission Statement on the

Relationship of Cooperation to Agency Enforcement

Decisions, SEC Rel. Nos. 34-44969 and AAER-1470 (Oct. 23,

2001) [hereinafter Seaboard Report] available at http://www.

sec.gov/litigation/investreport/34-44969.htm.

315 U.S. Sec. and Exchange Comm., Policy Statement

Concerning Cooperation by Individuals in its Investigations

and Related Enforcements Actions, 17 C.F.R. § 202.12

(Jan. 10, 2010), available at http://www.sec.gov/rules/

policy/2010/34-61340.pdf.

316 See U.S. Sentencing Guidelines § 8B2.1(a)(2).

317 U.S. Sentencing Guidelines § 8B2.1(b).

318 See generally Debbie Troklus, et al., Compliance

101: How to build and maintain an eective compliance

and ethics program, Society of Corp. Compliance and Ethics

(2008) 3-9 [hereinafter Compliance 101] (listing reasons

to implement compliance program, including protecting

company’s reputation, creating trust between management

and employees, preventing false statements to customers,

creating eciencies and streamlining processes, detecting

employee and contractor fraud and abuse, ensuring high-

quality products and services, and providing “early warning”

system of inappropriate actions); Transparency Int’l, Business

Principles for Countering Bribery: Small and Medium

Enterprise (SME) Edition 5 (2008) (citing benets of anti-

bribery program like protecting reputation, creating record

of integrity enhances opportunities to acquire government

business, protecting company assets otherwise squandered

on bribes); Mark Pieth, Harmonising Anti-Corruption

Compliance: The OECD Good Practice Guidance 45-46 (2011)

[hereinafter Harmonising Anti-Corruption Compliance]

(citing need for compliance program to prevent and detect

in-house risks, such as workplace security or conicts

of interest, and external risks, like anti-trust violations,

embargo circumvention, environmental hazards, and money

laundering).

319 U.S. Dep’t. of Justice, Crim. Div., Evaluation of

Corporate Compliance Programs, at 1 (June 2020) [hereinafter

Evaluation of Corporate Compliance Programs], available at

https://www.justice.gov/criminal-fraud/page/file/937501/

download.

320 Debarment authorities, such as the Department of

Defense or the General Services Administration, may also

consider a company’s compliance program when deciding

whether to debar or suspend a contractor. Specically, the

relevant regulations provide that the debarment authority

should consider “[w]hether the contractor had eective

standards of conduct and internal control systems in place at

the time of the activity which constitutes cause for debarment

or had adopted such procedures prior to any Government

investigation of the activity cited as a cause for debarment,”

and “[w]hether the contractor has instituted or agreed to

institute new or revised review and control procedures and

ethics training programs.” 48 C.F.R. § 9.406-1(a).

321 Seaboard Report, supra note 314; U.S. Sec. and

Exchange Comm., Report of Investigation Pursuant to

Section 21(a) of the Securities Exchange Act of 1934 and

Commission Statement on the Relationship of Cooperation

to Agency Enforcement Decisions, SEC Release No. 44969

(Oct. 23, 2001), available at http://www.sec.gov/litigation/

investreport/34-44969.htm.

322 JM § 9-28.300. When evaluating the pervasiveness

of wrongdoing within the corporation, prosecutors are

advised that while it may be appropriate to charge a

corporation for minor misconduct where the wrongdoing

was pervasive, “it may not be appropriate to impose liability

upon a corporation, particularly one with a robust compliance

program in place, under a strict respondeat superior theory for

the single isolated act of a rogue employee.” Id. § 9-28.500.A

(emphasis added). Prosecutors should also consider a

company’s compliance program when examining any

remedial actions taken, including eorts to implement an

eective compliance program or to improve an existing one.

As the commentary explains, “although the inadequacy of a

corporate compliance program is a factor to consider when

deciding whether to charge a corporation, that corporation’s

quick recognition of the aws in the program and its eorts

to improve the program are also factors to consider as

to appropriate disposition of a case.” Id. § 9-28.1000.B.

Finally, the Principles of Federal Prosecution of Business

Organizations provides that prosecutors should consider the

existence and eectiveness of the corporation’s pre-existing

compliance program in determining how to treat a corporate

target. Id. § 9-28.800.

323 See JM § 9-28.800.B; see also U.S. Sentencing

Guidelines § 8B2.1(a) (2018) (“The failure to prevent or detect

the instant oense does not necessarily mean that the

program is not generally eective in preventing and detecting

criminal conduct.”).

324 See Press Release, U.S. Dept. of Justice, Former

Morgan Stanley Managing Director Pleads Guilty for Role

in Evading Internal Controls Required by FCPA (Apr. 25,

2012) (declining to bring criminal case against corporate

employer that had “constructed and maintained a system

of internal controls, which provided reasonable assurances

that its employees were not bribing government ocials”),

available at http://www.justice.gov/opa/pr/2012/April/12-

crm-534.html; Press Release, U.S. Sec. and Exchange

Comm., SEC Charges Former Morgan Stanley Executive with

FCPA Violations and Investment Adviser Fraud, No. 2012-

78 (Apr. 25, 2012) (indicating corporate employer was not

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

119

charged in the matter and had “cooperated with the SEC’s

inquiry and conducted a thorough internal investigation to

determine the scope of the improper payments and other

misconduct involved”), available at http://www.sec.gov/news/

press/2012/2012-78.htm.

325

See JM § 9-28.800.B.

326

See, e.g., Int’l Chamber of Commerce, ICC Rules

on Combating Corruption (2011) [hereinafter ICC Rules

on Combating Corruption], available at https://cdn.

iccwbo.org/content/uploads/sites/3/2011/10/ICC-Rules-

on-Combating-Corruption-2011.pdf; Transparency Int’l,

Business Principles for Countering Bribery (3rd ed. 2013)

[hereinafter Business Principles for Countering Bribery],

available at https://issuu.com/transparencyinternational/

docs/business_principles_web_final; United Kingdom

Ministry of Justice, The Bribery Act of 2010, Guidance about

procedures which relevant commercial organisations

can put into place to prevent persons associated with

them from bribing (2010), available at http://www.justice.

gov.uk/downloads/legislation/bribery-act-2010-guidance.

pdf; World Bank Group, Integrity Compliance Guidelines

(2017) [hereinafter Integrity Compliance Guidelines],

available at https://wallensteinlawgroup.com/wp-content/

uploads/2017/12/WBG-Integrity-Compliance-Guidelines-

full.pdf; Asia-Pacic Economic Cooperation, APEC Anti-

corruption Code of Conduct for Business (2007) [hereinafter

APEC Anti-corruption Code], available at http://www.apec.

org/Groups/SOM-Steering-Committee-on-Economic-

and-Technical-Cooperation/Task-Groups/~/media/Files/

Groups/ACT/07_act_codebrochure.ashx; Int’l Chamber of

Commerce, et al., Resisting Extortion and Solicitation in

International Transactions: A Company Tool for Employee

Training (2011), available at https://iccwbo.org/content/

uploads/sites/3/2016/11/RESIST-English.pdf; Int’l Chamber

of Commerce, et al., Clean Business Is Good Business: The

Business Case against Corruption (2008), available at https://

www.unglobalcompact.org/library/158; World Economic

Forum, Partnering Against Corruption Initiative: Global

Principles for Countering Corruption (May 2016) [hereinafter

Partnering Against Corruption], available at http://www3.

weforum.org/docs/WEF_PACI_Global_Principles_for_

Countering_Corruption.pdf; Working Group on Bribery,

OECD, Good Practice Guidance on Internal Controls, Ethics,

and Compliance (Feb. 2010) [hereinafter OECD Good

Practice Guidance], available at http://www.oecd.org/daf/

anti-bribery/44884389.pdf; U.N. Global Compact, The Ten

Principles of the UN Global Compact [hereinafter The Ten

Principles], available at https://www.unglobalcompact.org/

what-is-gc/mission/principles.

327 This is also reected in the Sentencing Guidelines,

which recognizes that no single, formulaic set of requirements

should be imposed, but instead focuses on a number of

factors like “applicable industry practice or the standards

called for by any applicable governmental regulation,” the

size of the organization, and whether the organization has

engaged in similar misconduct in the past. See U.S. Sentencing

Guidelines § 8B2.1 & app. note 2 (2018).

328 This was underscored by then-SEC Commissioner

Cynthia Glassman in 2003 in a speech on SEC’s implementation

of the Sarbanes-Oxley Act: “[T]he ultimate eectiveness of

the new corporate governance rules will be determined by

the ‘tone at the top.’ Adopting a code of ethics means little

if the company’s chief executive ocer or its directors make

clear, by conduct or otherwise, that the code’s provisions do

not apply to them. . . . Corporate ocers and directors hold

the ultimate power and responsibility for restoring public

trust by conducting themselves in a manner that is worthy

of the trust that is placed in them.” Cynthia Glassman, SEC

Implementation of Sarbanes-Oxley: The New Corporate

Governance, Remarks at National Economists Club (Apr.

7, 2003), available at http://www.sec.gov/news/speech/

spch040703cag.htm.

329 Indeed, research has found that “[e]thical culture

is the single biggest factor determining the amount of

misconduct that will take place in a business.” Ethics

Resource Center, 2009 National Business Ethics Survey:

Ethics in the Recession (2009), at 41. Metrics of ethical

culture include ethical leadership (tone at the top), supervisor

reinforcement of ethical behavior (middle management

reinforcement), and peer commitment (supporting one

another in doing the right thing). Ethics Resource Center,

2013 National Business Ethics Survey: Workplace Ethics in

Transition (2014) at 19. Strong ethical cultures and strong

ethics and compliance programs are related, as data show

that a well-implemented program helps lead to a strong

ethical culture. Id. at 17. “Understanding the nature of any

gap between the desired culture and the actual culture is

a critical rst step in determining the nature of any ethics-

based risks inside the organization.” David Gebler, The Role of

Culture at 1.7, in Society of Corporate Compliance and Ethics,

The Complete Compliance and Manual (2011). To create an

ethical culture, attention must be paid to norms at all levels

of an organization, including the “tone at the top,” “mood in

the middle,” and “buzz at the bottom.” Id. 1.9-1.10.

330 See, e.g., U.S. Sentencing Guidelines § 8B2.1(b)(2)(B)-

331 Id.

332 Id.

333 Id.

334 See, e.g., Ethics and Compliance Ocer Association

Foundation, The Ethics and Compliance Handbook: A

Practical Guide From Leading Organizations (2008) at 13-26

[hereinafter The Ethics and Compliance Handbook].

335 See, e.g., U.S. Sentencing Guidelines § 8B2.1(b)(4)

(2018).

336 See U.S. Sentencing Guidelines § 8B2.1(b)(6) (2018)

(“The organization’s compliance and ethics program shall

be promoted and enforced consistently throughout the

organization through (A) appropriate incentives to perform

in accordance with the compliance and ethics program; and

(B) appropriate disciplinary measures for engaging in criminal

conduct and for failing to take reasonable steps to prevent or

detect criminal conduct.”).

337 See, e.g., Joseph E. Murphy, Society of Corp.

Compliance and Ethics, Using Incentives in Your Compliance

and Ethics Program (2011) at 4; The Ethics and Compliance

Handbook, supra note 334, at 111-23.

338 Stephen M. Cutler, Director, Division of Enforcement,

SEC, Tone at the Top: Getting It Right, Second Annual General

Counsel Roundtable (Dec. 3, 2004), available at http://www.

sec.gov/news/speech/spch120304smc.htm.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

120

339 See, e.g., ICC Rules on Combating Corruption, supra

note 326, at 7.

340 See, e.g., U.S. Sentencing Guidelines § 8B2.1(b)(5)(C)

(2018); Compliance 101, supra note 318, at 30-33.

341

See U.S. Sentencing Guidelines § 8B2.1(b)(5)(B)

(2018) (“The organization shall take reasonable steps . . . to

evaluate periodically the eectiveness of the organization’s

compliance and ethics program.”).

342 See, e.g., Compliance 101, supra note 318, at 60-

61; The Ethics and Compliance Handbook, supra note 334,

at 155-60; Business Principles for Countering Bribery, supra

note 326, at 14.

343

See, e.g., Michael M. Mannix and David S. Black.,

Compliance Issues in M&A: Performing Diligence on the Target’s

Ethics and Compliance Program at 5.71-5.81, in Society of

Corporate Compliance and Ethics, The Complete Compliance

and Ethics Manual (2011).

344 Complaint, SEC v. Syncor International Corp., No. 02-

cv-2421 (D.D.C. Dec. 10, 2002), ECF No. 1, available at http://

www.sec.gov/litigation/complaints/comp17887.htm;

Criminal Information, United States v. Syncor Taiwan, Inc., No.

02-cr-1244 (C.D. Cal. Dec. 5, 2002), ECF No. 1, available at

https://www.justice.gov/criminal-fraud/case/united-states-v-

syncor-taiwan-inc-court-docket-number-02-cr-1244-svw.

345 U.S. Dept. of Justice, FCPA Op. Release 08-02 (June

13, 2008), available at http://justice.gov/criminal/fraud/fcpa/

opinion/2008/0802.pdf.

346 Complaint, SEC v. Rae Sys., Inc., supra note 92; Non-

Pros. Agreement, In re Rae Sys. Inc., supra note 92.

347 See Evaluation of Corporate Compliance Programs,

supra note 319.

348 U.S. Dept. of Commerce, Business Ethics: A

Manual for Managing a Responsible Business Enterprise

in Emerging Market Economies (2004), available at https://

legacy.trade.gov/goodgovernance/adobe/bem_manual.pdf.

349 U.S. Dept. of State, Fighting Global Corruption:

Business Risk Management (2d ed. 2001), available at

http://wgfacml.asa.gov.eg/en/anticorrupcion/USA/EU%20

ghting%20against%20corruption.usa%202001-2003.pdf.

350 See Harmonising Anti-Corruption Compliance, supra

note 318, at 46 (“Anti-corruption compliance is becoming

more and more harmonised worldwide.”).

351 OECD Good Practice Guidance, supra note 326.

352 APEC Anti-corruption Code, supra note 326.

353 ICC Rules on Combating Corruption, supra note 326.

354 Business Principles for Countering Bribery, supra

note 326.

355 The Ten Principles, supra note 326.

356 Integrity Compliance Guidelines, supra note 326.

357 Partnering Against Corruption, supra note 326.

358 15 U.S.C. §§ 78dd-2(g)(1)(A), 78dd-3(e)(1)(A),

78ff(c)(1)(A).

359 15 U.S.C. §§ 78dd-2(g)(2)(A), 78dd-3(e)(2)(A),

78ff(c)(2)(A); 18 U.S.C. § 3571(b)(3), (e) (fine provision that

supersedes FCPA-specific fine provisions).

360

15 U.S.C. § 78(a).

361

Id.

362

18 U.S.C. § 3571(d); see Southern Union v. United

States, 132 S. Ct. 2344, 2350-51 & n.4 (2012).

363

15 U.S.C. §§ 78dd-2(g)(3), 78dd-3(e)(3), 78(c)(3).

364 The U.S. Sentencing Guidelines are promulgated by

the U.S. Sentencing Commission:

The United States Sentencing Commission

(“Commission”) is an independent agency in

the judicial branch composed of seven voting

and two non-voting ex-ocio members. Its

principal purpose is to establish sentencing

policies and practices for the federal criminal

justice system that will assure the ends of

justice by promulgating detailed guidelines

prescribing the appropriate sentences for

oenders convicted of federal crimes. The

guidelines and policy statements promulgated

by the Commission are issued pursuant to

Section 994(a) of Title 28, United States Code.

U.S. Sentencing Guidelines § 1A1.1 (2018).

365 Id. at ch. 3-5.

366 Id. § 2C1.1.

367 Id. § 2C1.1(b).

368 Id. § 3B1.1.

369 Id. at ch. 4, § 5A.

370 Id. § 2B1.1(b)(10)(B), 2B1.1(b)(18)(A).

371 Id. § 8C2.4 (a).

372 Id. § 8C2.5.

373 Id. § 8C2.5(f), 8C2.5(g).

374 DOJ has exercised this civil authority in limited

circumstances in the last thirty years. See, e.g., United States

& SEC v. KPMG Siddharta Siddharta & Harsono, et al., No.

01-cv-3105 (S.D. Tex. 2001) (entry of injunction barring

company from future FCPA violations based on allegations

that company paid bribes to Indonesian tax ocial in order

to reduce the company’s tax assessment); United States v.

Metcalf & Eddy, Inc., No. 99-cv-12566 (D. Mass. 1999) (entry

of injunction barring company from future FCPA violations

and requiring maintenance of compliance program based on

allegations that it paid excessive marketing and promotional

expenses such as airfare, travel expenses, and per diem to

an Egyptian ocial and his family); United States v. American

Totalisator Co. Inc., No. 93-cv-161 (D. Md. 1993) (entry of

injunction barring company from future FCPA violations

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121

based on allegations that it paid money to its Greek agent

with knowledge that all or some of the money paid would

be oered, given, or promised to Greek foreign ocials in

connection with sale of company’s system and spare parts);

United States v. Eagle Bus Manufacturing, Inc., No. 91-cv-171

(S.D. Tex. 1991) (entry of injunction barring company from

future FCPA violations based on allegations that employees

of the company participated in bribery scheme to pay foreign

ocials of Saskatchewan’s state-owned transportation

company $50,000 CAD in connection with sale of buses);

United States v. Carver, et al., No. 79-cv-1768 (S.D. Fla. 1979)

(entry of injunction barring company from future FCPA

violations based on allegations that Carver and Holley,

ocers and shareholders of Holcar Oil Corp., paid $1.5 million

to Qatar foreign ocial to secure an oil drilling concession

agreement); United States v. Kenny, et al., No. 79-cv-2038

(D.D.C. 1979) (in conjunction with criminal proceeding, entry

of injunction barring company from future FCPA violations

for providing illegal nancial assistance to political party to

secure renewal of stamp distribution agreement).

375 15 U.S.C. §§ 78dd-2(g)(1)(B), 78dd-3(e)(1)(B),

78(c)(1)(B); see also 17 C.F.R. § 201.1004 (providing

adjustments for ination).

376 15 U.S.C. §§ 78dd-2(g)(2)(B), 78dd-3(e)(2)(B),

78(c)(2)(B); see also 17 C.F.R. § 201.1004 (providing

adjustments for ination).

377 15 U.S.C. §§ 78dd-2(g)(3), 78dd-3(e)(3), 78(c)(3); see

also 17 C.F.R. § 201.1004 (providing adjustments for ination).

378 Section 21(B)(b) of the Exchange Act, 15 U.S.C.

§ 78u(d)(3); see also 17 C.F.R. § 201.1004 (providing

adjustments for ination), available at https://www.sec.gov/

enforce/civil-penalties-ination-adjustments.htm.

379 See Securities Enforcement Remedies and Penny

Stock Reform Act of 1990, Pub. L. No. 101-429, 104 Stat. 931

§§ 202, 301, 401, and 402 (codied in scattered sections of

Title 15 of the United States Code).

380 591 U.S. __ (2020).

381 Press Release, United States v. Braskem S.A.,

No. 16-cr-644 (E.D.N.Y. Dec. 21, 2016), available at https://

www.justice.gov/opa/pr/odebrecht-and-braskem-plead-

guilty-and-agree-pay-least-35-billion-global-penalties-

resolve.

382 See, e.g., Press Release, United States v. Airbus (DOJ

coordinating with France and United Kingdom), available at

https://www.justice.gov/opa/pr/airbus-agrees-pay-over-

39-billion-global-penalties-resolve-foreign-bribery-and-

itar-case; Press Release, United States v. TechnipFMC (DOJ

coordinating with Brazil), available at https://www.justice.

gov/opa/pr/technipfmc-plc-and-us-based-subsidiary-agree-

pay-over-296-million-global-penalties-resolve; Press Release,

United States v. Société Générale (DOJ coordinating with

France), available at https://www.justice.gov/opa/pr/soci-

t-g-n-rale-sa-agrees-pay-860-million-criminal-penalties-

bribing-gadda-era-libyan; Press Release, United States v.

Keppel Oshore & Marine Ltd., No 17-cr-697 (E.D.N.Y. Dec. 22,

2017) (DOJ coordinating with Brazil and Singapore), available

at https://www.justice.gov/opa/pr/keppel-oshore-marine-

ltd-and-us-based-subsidiary-agree-pay-422-million-global-

penalties; Press Release, United States v. SBM Oshore (S.D.

Tex. Nov. 29, 2017). (DOJ coordinating with the Netherlands

and Brazil), available at https://www.justice.gov/opa/pr/sbm-

offshore-nv-and-united-states-based-subsidiary-resolve-

foreign-corrupt-practices-act-case; Press Release, United

States v. Telia Company AB, No. 17-cr-581 (S.D.N.Y. Sept. 21,

2017) (DOJ and SEC coordinating with the Netherlands),

available at https://www.justice.gov/opa/pr/telia-company-

ab-and-its-uzbek-subsidiary-enter-global-foreign-bribery-

resolution-more-965; Press Release, United States v. Rolls-

Royce plc, No. 16-cr-247 (S.D. Ohio Jan. 17, 2017) (DOJ

coordinating with United Kingdom and Brazil), available at

https://www.justice.gov/opa/pr/rolls-royce-plc-agrees-

pay-170-million-criminal-penalty-resolve-foreign-corrupt-

practices-act; Press Release, United States v. Odebrecht S.A.,

No. 16-cr-643 (E.D.N.Y. Dec. 21, 2016) (DOJ coordinating with

Brazil and Switzerland), available at https://www.justice.gov/

opa/pr/odebrecht-and-braskem-plead-guilty-and-agree-

pay-least-35-billion-global-penalties-resolve; Press Release,

United States v. Braskem S.A., No. 16-cr-644 (E.D.N.Y. Dec. 21,

2016) (DOJ and SEC coordinating with Brazil and Switzerland),

available at https://www.justice.gov/opa/pr/odebrecht-and-

braskem-plead-guilty-and-agree-pay-least-35-billion-global-

penalties-resolve; Press Release, United States v. VimpelCom

Ltd., No. 16-cr-137 (S.D.N.Y. Feb. 18, 2016) (DOJ and SEC

coordinating with the Netherlands), available at https://www.

justice.gov/opa/pr/vimpelcom-limited-and-unitel-llc-enter-

global-foreign-bribery-resolution-more-795-million; Press

Release, United States v. Siemens AG, supra note 233 (DOJ and

SEC coordinating with Germany), available at https://www.

justice.gov/archive/opa/pr/2008/December/08-crm-1105.

html.

383 See Rod J. Rosenstein, Deputy Attorney General,

U.S. Department of Justice, Letter to Heads of Department

Components on Policy on Coordination of Corporate

Resolution Penalties (May 9, 2018), available at https://www.

justice.gov/opa/speech/le/1061186/download.

384 Id. at 1.

385 48 C.F.R. §§ 9.406-2, 9.407-2.

386 48 C.F.R. § 9.402(b).

387 See 48 C.F.R. §§ 9.406-1, 9.407-1(b)(2). Section

9.406-1 sets forth the following non-exhaustive list of factors:

(1)Whether the contractor had eective standards of

conduct and internal control systems in place at the time

of the activity which constitutes cause for debarment or

had adopted such procedures prior to any Government

investigation of the activity cited as a cause for debarment.

(2) Whether the contractor brought the activity cited as

a cause for debarment to the attention of the appropriate

Government agency in a timely manner.

(3) Whether the contractor has fully investigated the

circumstances surrounding the cause for debarment and,

if so, made the result of the investigation available to the

debarring ocial.

(4) Whether the contractor cooperated fully with

Government agencies during the investigation and any court

or administrative action.

(5) Whether the contractor has paid or has agreed to pay all

criminal, civil, and administrative liability for the improper

activity, including any investigative or administrative costs

incurred by the Government, and has made or agreed to

make full restitution.

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122

(6) Whether the contractor has taken appropriate disciplinary

action against the individuals responsible for the activity

which constitutes cause for debarment.

(7) Whether the contractor has implemented or agreed to

implement remedial measures, including any identied by

the Government.

(8) Whether the contractor has instituted or agreed to

institute new or revised review and control procedures and

ethics training programs.

(9) Whether the contractor has had adequate time to eliminate

the circumstances within the contractor’s organization that

led to the cause for debarment.

(10) Whether the contractor’s management recognizes and

understands the seriousness of the misconduct giving rise to

the cause for debarment and has implemented programs to

prevent recurrence.

388

48 C.F.R. § 9.406-1(a).

389 Exec. Order No. 12,549, 51 Fed. Reg. 6,370

(Feb. 18, 1986); Exec. Order No. 12,689, 54 Fed. Reg. 34131

(Aug. 18, 1989).

390 48 C.F.R. § 9.407-2(b).

391 JM § 9-28.1500.B.

392 See, e.g., African Development Bank Group, Integrity

and Anti-Corruption Progress Report 2009-2010 7, 14 (“As the

premier nancial development institution in Africa, the AfDB

is determined to root out misconduct, fraud and corruption

within its own ranks as well as in the implementation of the

projects it nances. In order to do so, the Bank created an

anti-corruption and fraud investigation division in November

2005 as its sole investigative body. The unit became

operational in June 2006 and commenced investigations

in January 2007. . . . Investigations conducted by the IACD

[Integrity and Anti-Corruption Department] are not criminal

proceedings; they are administrative in nature. Sanctions

range from personnel disciplinary actions, such as separation,

to loan cancellation and debarment for contractors, which

can be temporary or permanent.”), available at https://

www.afdb.org/fileadmin/uploads/afdb/Documents/

Publications/Integrity%20and%20Anti-Corruption.

pdf; World Bank Report Concerning the Debarment

Process of the World Bank, available at https://www.

worldbank.org/content/dam/documents/sanctions/

other-documents/osd/ThornburghReport.pdf.

The World Bank’s debarment process was rst formulated

in July 1996, and the Sanctions Committee was established

in November 1998 to review allegations and recommend

sanctions to the President. Written procedures were issued

in August 2001 and are posted on the Bank’s website,

along with the sanction actions, and are posted at https://

www.worldbank.org/en/about/unit/sanctions-system/

sanctions-board.

393 See African Development Bank Group, Asian

Development Bank, European Bank for Reconstruction and

Development, Inter-American Development Bank Group

and World Bank Group, Agreement for Mutual Enforcement

of Debarment Decisions (Apr. 9, 2010), available at https://

www.adb.org/documents/agreement-mutual-enforcement-

debarment-decisions.

394

Id.; see also The World Bank Group, Multilateral

Development Banks Step Up Their Fight Against Corruption

with Joint Sanction Accord (Apr. 9, 2010) (“‘With today’s

cross-debarment agreement among development banks,

a clear message on anticorruption is being delivered: Steal

and cheat from one, get punished by all,’ said World Bank

Group President Robert B. Zoellick.”), available at https://

www.worldbank.org/en/news/press-release/2010/04/09/

multilateral-development-banks-step-up-fight-against-

corruption-joint-sanction-accord.

395

22 C.F.R. §§ 126.7(a)(3)-(4), 120.27(a)(6).

396

Authority under the AECA is delegated to the DDTC.

See 22 C.F.R. § 120.1(a).

397 22 U.S.C. § 2778(g)(1)(A)(vi), (g)(3)(B).

398 22 C.F.R. § 127.7(c).

399 See supra note 293.

400 See Gary G. Grindler, Acting Dep. Att’y Gen.,

U.S. Dept. of Justice, Mem. to the Heads of Department

Components and United States Attorneys on Additional

Guidance on the Use of Monitors in Deferred Prosecution

Agreements and Non-Prosecution (May 25, 2010), available at

http://www.justice.gov/dag/dag-memo-guidance-monitors.

pdf; Lanny A. Breuer, Assist. Att’y Gen., Dep’t of Justice, Mem.

to All Criminal Division Personnel on Selection of Monitors

in Criminal Division Matters (June 24, 2009), available at

http://www.justice.gov/criminal/fraud/fcpa/docs/response3-

supp-appx-3.pdf; see also Craig S. Morford, Acting Dep. Att’y

Gen., U.S. Dept. of Justice, Mem. to the Heads of Department

Components and United States Attorneys on Selection

and Use of Monitors in Deferred Prosecution Agreements

and Non-Prosecution Agreements with Corporations

(Mar. 7, 2008), available at https://www.justice.gov/

sites/default/files/dag/legacy/2008/03/20/morford-

useofmonitorsmemo-03072008.pdf.

401 See Brian A. Benczkowski, Assistant Att’y General,

U.S. Department of Justice, Memo to All Criminal Division

Personnel on Selection of Monitors in Criminal Division

Matters (Oct. 11, 2018), available at https://www.justice.gov/

opa/speech/le/1100531/download.

402 Id. at 2.

403 Id.

404 Id.

405 Historically, DOJ had, on occasion, agreed to DPAs

with companies that were not led with the court. That is no

longer the practice of DOJ.

406 JM § 9-27.230.

407 Id.

408 DOJ has declined matters where some or all of the

following circumstances were present: (1) a corporation

voluntarily and fully disclosed the potential misconduct;

(2) corporate principles voluntarily engaged in interviews

with DOJ and provided truthful and complete information

about their conduct; (3) a parent company conducted

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

123

extensive pre-acquisition due diligence of potentially liable

subsidiaries and engaged in signicant remediation eorts

post-acquisition; (4) a company provided information

about its extensive compliance policies, procedures, and

internal controls; (5) a company agreed to a civil resolution

with the Securities and Exchange Commission while also

demonstrating that criminal declination was appropriate;

(6) only a single employee was involved in the improper

payments; and (7) the improper payments involved minimal

funds compared to overall business revenues.

409

SEC Rules of Practice, 17 C.F.R. § 201.102(e).

410

Deferred Pros. Agreement, In the Matter of Tenaris,

S.A. (May 17, 2011), available at http://www.sec.gov/news/

press/2011/2011-112-dpa.pdf; see also Press Release, U.S.

Sec. and Exchange Comm., Tenaris to Pay $5.4 Million in SEC’s

First-Ever Deferred Prosecution Agreement (May 17, 2011),

available at http://www.sec.gov/news/press/2011/2011-112.

htm.

411 See Non-Pros. Agreement, In re Tenaris, S.A. (May 17,

2011), available at https://www.justice.gov/sites/default/les/

criminal-fraud/legacy/2011/12/08/2011-03-14-tenaris.pdf.

412 See U.S. Sec. and Exchange Comm., Enforcement

Manual § 6.2.3. (Mar. 9, 2012), available at https://www.sec.

gov/divisions/enforce/enforcementmanual.pdf.

413 See id. § 6.2.4.

414 See id. § 2.6.

415 18 U.S.C. § 1514A(c).

416 18 U.S.C. § 1513(e).

417 15 U.S.C. § 78u-6(a)(3). The new provision denes

“original information” to mean information that:

(A) is derived from the independent knowledge

or analysis of a whistleblower; (B) is not known

to the Commission from any other source,

unless the whistleblower is the original source

of the information; and (C) is not exclusively

derived from an allegation made in a judicial or

administrative or investigation, or from the news

media, unless the whistleblower is a source of

the information.

418 15 U.S.C. § 78u-6; see also Dodd-Frank Wall Street

Reform and Consumer Protection Act, Pub. L. No. 111-203,

§ 922, 124 Stat. 1376, 1841-49 (2010).

419 For detailed information about the program,

including eligibility requirements and certain limitations that

apply, see Section 922 of the Dodd-Frank Wall Street Reform

and Consumer Protection Act, available at https://www.sec.

gov/les/dodd-frank-sec-922.pdf, and the nal rules on

eligibility, Exchange Act Rule 21F-8, 17 C.F.R. § 240.21F-8,

available at https://www.sec.gov/about/oces/owb/reg-21f.

pdf.

420 For example, the rules: (1) make a whistleblower

eligible for an award if the whistleblower reports original

information internally, and the company informs SEC about

the violations; (2) give whistleblowers 120 days to report

information to SEC after rst reporting internally and still

be treated as if he or she had reported to SEC at the earlier

reporting date, thus preserving their “place in line” for a

possible whistleblower award from SEC; and (3) provide

that a whistleblower’s voluntary participation in an entity’s

internal compliance and reporting systems is a factor that can

increase the amount of an award, and that a whistleblower’s

interference with internal compliance and reporting system

is a factor that can decrease the amount of an award. See

Exchange Act Rule 21F, 17 C.F.R. § 240.21F.

421 See Exchange Act Rule 21F-7(b), 17 C.F.R.

§ 240.21F-7(b).

422 For example, SEC sta will not disclose a

whistleblower’s identity in response to requests under the

Freedom of Information Act. However, there are limits on

SEC’s ability to shield a whistleblower’s identity, and in certain

circumstances SEC must disclose it to outside entities. For

example, in an administrative or court proceeding, SEC may

be required to produce documents or other information

that would reveal the whistleblower’s identity. In addition, as

part of ongoing SEC investigatory responsibilities, SEC sta

may use information provided by a whistleblower during the

course of the investigation. In appropriate circumstances,

SEC may also provide information, subject to condentiality

requirements, to other governmental or regulatory entities.

See Exchange Act Rule 21F-7(a), 17 C.F.R. 240.21F-7(a).

423 Although SEC does not have an opinion procedure

release process, it has declared its decision to follow the

guidance announced through DOJ’s FCPA Opinion Release

Procedure. U.S. Sec. and Exchange Comm., SEC Release

No. 34-17099 (Aug. 29, 1980), available at http://www.

sec.gov/news/digest/1980/dig082980.pdf. SEC Release

No. 34-17099 stated that, to encourage issuers to take

advantage of DOJ’s FCPA Review Procedure, as a matter of

prosecutorial discretion, SEC would “not take enforcement

action alleging violations of Section 30A in any case where an

issuer has sought and obtained an FCPA Review Procedure

letter from the Department, prior to May 31, 1981, stating

that the Department will not take enforcement action under

Section 30A with 385 respect to the transaction involved.” Id.

The release further noted that it would revisit this policy once

DOJ had evaluated the results of the FCPA Review Procedure

after its rst year of operation. A second release stated that

SEC would continue to adhere to the policy announced in

Release No. 34-17099. U.S. Sec. and Exchange Comm., SEC

Release. No. 34-18255 (Nov. 13, 1981), available at http://

www.sec.gov/news/digest/1981/dig111381.pdf.

424 Both DOJ’s opinion procedure releases (from 1993

to present) and 03-review procedure releases (from 1980-

1992) are available at http://www.justice.gov/criminal/fraud/

fcpa/opinion.

425 The full regulations relating to DOJ’s opinion

procedure are available at http://www.justice.gov/criminal/

fraud/fcpa/docs/frgncrpt.pdf.

426 28 C.F.R. § 80.1.

427 28 C.F.R. § 80.3.

428 28 C.F.R. § 80.12 (“Neither the submission of a

request for an FCPA Opinion, its pendency, nor the issuance

of an FCPA Opinion, shall in any way alter the responsibility

of an issuer to comply with the accounting requirements of

15 U.S.C. 78m(b)(2) and (3).”).

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

124

429 28 C.F.R. § 80.4.

430

28 C.F.R. § 80.5.

431

28 C.F.R. § 80.6.

432

28 C.F.R. § 80.14(a). This non-disclosure policy

applies regardless of whether DOJ responds to the request or

the party withdraws the request before receiving a response.

Id.

433 28 C.F.R. § 80.6.

434

28 C.F.R. § 80.2.

435 In connection with any request for an FCPA opinion,

DOJ may conduct whatever independent investigation it

believes appropriate. 28 C.F.R. § 80.7.

436 28 C.F.R. § 80.15. Once a request is withdrawn,

it has no eect. However, DOJ reserves the right to retain

a copy of any FCPA opinion request, documents, and

information submitted during the opinion release procedure

for any governmental purpose, subject to the restrictions on

disclosures in 28 C.F.R. § 80.14.

437 28 C.F.R. § 80.8.

438 28 C.F.R. § 80.7. “Such additional information, if

furnished orally, must be conrmed in writing promptly. The

same person who signed the initial request must sign the

written, supplemental information and must again certify it to

be a true, correct and complete disclosure of the requested

information.” Id.

439 28 C.F.R. § 80.9 (“No oral clearance, release or other

statement purporting to limit the enforcement discretion

of the Department of Justice may be given. The requesting

issuer or domestic concern may rely only upon a written

FCPA opinion letter signed by the Attorney General or his

designee.”).

440 28 C.F.R. § 80.8. FCPA opinions do not bind or

obligate any agency other than DOJ. They also do not aect

the requesting party’s obligations to any other agency or

under any statutory or regulatory provision other than those

specically cited in the particular FCPA opinion. 28 C.F.R.

§ 80.11. If the conduct for which an FCPA opinion is requested

is subject to approval by any other agency, such FCPA opinion

may not be taken to indicate DOJ’s views on any legal or

factual issues before that other agency. 28 C.F.R. § 80.13.

441 28 C.F.R. § 80.10. DOJ can rebut this presumption

by a preponderance of the evidence. A court determining

whether the presumption has been rebutted weighs

all relevant factors, including whether the submitted

information was accurate and complete and the activity was

within the scope of conduct specied in the request. Id. As

of September 2012, DOJ has never pursued an enforcement

action against a party for conduct that formed the basis of

an FCPA opinion stating that the prospective conduct would

violate DOJ’s present enforcement policy.

442 As a general matter, DOJ normally anonymizes

much of the information in its publicly released opinions

and includes the general nature and circumstances of the

proposed conduct. DOJ does not release the identity of any

foreign sales agents or other types of identifying information.

28 C.F.R. § 80.14(b). However, DOJ may release the identity

of the requesting party, the foreign country in which the

proposed conduct is to take place, and any actions DOJ took

in response to the FCPA opinion request. Id. If a party believes

that an opinion contains proprietary information, it may

request that DOJ remove or anonymize those portions of the

opinion before it is publicly released. 28 C.F.R. § 80.14(c).

443 28 C.F.R. § 80.16.

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

FCPA Unit

Fraud Section, Criminal Division

U.S. Department of Justice

1400 New York Avenue, N.W.

Washington, DC 20005

http://www.justice.gov/criminal/fraud/fcpa/

FCPA Unit

Enforcement Division

U.S. Securities & Exchange Commission

100 F Street, NE

Washington, DC 20549

http://www.sec.gov/spotlight/fcpa.shtml

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.