The United States passed the Foreign Corrupt Practices Act in 1977 with the intention of combating corruption between U.S. citizens or entities and foreign officials. This act was followed by a series of other anti-bribery laws, and it was later amended through the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The penalties associated with a conviction under the Foreign Corrupt Practices Act are severe, but there are effective defense strategies that your attorney could use to address the matter. What should you know about violations of the Foreign Corrupt Practices Act?
Understanding the Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act specifically applies to individuals, U.S. businesses, foreign businesses that conduct business in the U.S. and foreign businesses listed on the national stock exchange. It directly prohibits the bribery of a foreign official specifically for the purpose of retaining or obtaining business in a foreign land. It covers cash payments, gifts of value and promises of cash or gifts as a means of influence to specific individuals and entities. These include government officials, party officials, political candidates, political parties and others that may have influential power in the matter.
More than that, it prohibits bribes that may be made through third parties. Because of this nuance of the law, it specifically covers corruption and bribery related to money laundering. The laws specifically define who the issuer of the bribe is, the jurisdiction of the law, the impact on the United States and accounting documentation. Notably, companies are required under the provision to have an oversight system in place to prevent and identify corruption internally. Through this measure, the company may be held responsible for the actions of an employee.
Penalties for a Violation of the Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act is enforced by the Department of Justice and the Securities and Exchange Commission. Violators of the act may face both civil and criminal penalties. Individuals who violate the act may face up to five years in prison and a fine of up to $100,000. This extends to stockholders, officers, employees and others. Businesses may also be fined up to $2 million for a violation.
Both individuals and businesses may face separate civil penalties as well. The civil fine includes a $10,000 base amount plus an additional amount that ranges between $5,000 and $500,000. This additional amount can be equal to the amount of the individual’s or entity’s gain. In addition to these penalties, the person or the business may be forbidden from doing any business with the government in the future.
Defense Strategies for Foreign Corrupt Practices Charges
Several factors must be present in order for a violation to occur. First, the act must be corrupt, or it must be intended to misuse or abuse the official’s position. Second, a guilty party must have explicit knowledge that his or her willful actions are prohibited. Third, an item of value or a promise must be conveyed to a foreign official. Finally, there is a 5-year statute of limitations for this crime, so the bribe must have been made relatively recently.
With these factors in mind, a criminal defense attorney may adopt strategies to poke holes in one or several of these factors. There are also affirmative defense strategies. For example, the defense attorney may argue that the payment was lawfully made under the law of the foreign country. This is known as the local law defense. Another strategy is to prove that the money was conveyed through a contractual obligation for a legitimate business purpose. For these defenses, however, the defendant carries the burden of proof. Because of the unique nature of this white-collar crime and the long-term effects it can have on your finances and your professional life, an effective defense prepared by a skilled attorney is essential.
Request a Legal Consultation Today
Have you recently been charged with a violation of the Foreign Corrupt Practices Act? The ramifications of a conviction for these charges can be significant, so you understandably need to start building your defense as soon as possible. It is never too early to involve your defense lawyer in the matter. With this in mind, you should schedule a legal consultation soon even if charges have not yet been filed. For a consultation, contact our law firm today.
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