The Heart-Pounding Dangers of International Trade and the FCPA

International trade is undeniably the lifeblood of the economy, offering tantalizing opportunities for countless U.S. businesses. However, this vast and alluring world of commerce also conceals numerous risks that, if left unchecked, can lead to administrative, criminal, or even civil proceedings. Take a deep breath and pay close attention, because if you find yourself in violation of the Foreign Corrupt Practices Act (FCPA) or other statutes governing international trade, you may face devastating criminal charges of corruption.

Unraveling the FCPA’s Complex Web

The FCPA is an unnervingly powerful law, equipping federal prosecutors with the authority to target corporations and individuals alike in myriad circumstances. The pulsating heart of most litigation lies in accusations of corruption involving foreign government contracts. But companies can also face corruption charges based on how they import and export goods.

Criminal charges can emerge from bribery directed at U.S. officials, potentially ensnaring even companies not directly involved in a corruption or bribery case but who deal with foreign entities that are. This underscores the indispensability of performing due diligence before signing an international supplier or distributor.

What Lurking Risks Does the FCPA Pose?

The FCPA casts a wide net, covering every legal “person” in the U.S., including business entities and individuals, as well as certain publicly-traded foreign companies. If any transaction involves the transportation of goods across borders, coupled with a bribe or an attempt to influence a foreign official, it can be criminally prosecuted under the FCPA.

An initial inquiry might escalate to dire charges, and if the targeted entity is convicted, they could face astronomical fines — $5 million for individuals, and a staggering $25 million for businesses. Moreover, individuals could be exposed to a maximum of 20 years in federal prison. FCPA prosecutions may also entail consequences such as injunctions, disgorgements, forfeitures, and even debarment from doing business with governments.

Companies can tremble at the thought of criminal prosecution stemming from their import and export capabilities. These charges could relate to one of two broad categories: internal interactions with foreign officials or relationships with third parties that interact with foreign officials.

Thrillingly Risky Internal Foreign Interactions

Internal foreign interactions represent one of the most direct pathways to criminal charges. Instances arise when personnel within a company engage with foreign officials. In import and export-related cases, multiple people may be involved at various levels, each foreign interaction presenting a potential corruption hazard.

Some corruption may be deliberate, such as when an employee solicits or accepts a bribe. However, employees may unintentionally breach FCPA regulations, often due to the absence of anti-corruption training that highlights potential risks and red flags.

Exacerbating the situation is the income disparity between often underpaid foreign officials and much wealthier company executives. Certain officials may be particularly susceptible to the influence of executives, who may be ignorant to the fact that the benefits and inflated payments requested are, in fact, illegal bribes.

The Invisible Web of Third-Party Relationships

Your company may not engage in corrupt dealings, but that doesn’t mean you’re safe. If your company affiliates with a third party that engages in corrupt dealings with foreign officials on your behalf, you can still be held responsible. Corruption can manifest in customs brokers, consulting firms, freight forwarders, import agents, and export agents. If a company delegates their foreign interactions to a third party and said party engages in bribery, the company could be held liable.

Although companies can attempt to distance themselves from third parties by adjusting contractual language, this protection is often illusory, insufficient to deter the government from pursuing criminal prosecutions.

Other Prosecution Risks Lurking in the Shadows

Additional statutes present their own chilling risks for prosecution. Charges may arise for influencing or bribing public officials, especially customs and border officials, potentially leading to a 15-year prison sentence. Conspiring to defraud the U.S. may also lead to charges, even in cases where no successful bribe occurred but a plan existed for one to transpire.