The FCPA is an act that allows federal prosecutors to target corporations and individuals regarding many different circumstances. Most litigation occurs because an individual or company is accused of corruption with their foreign government contracts. But it’s also possible for companies to be charged with corruption based on how they import and export goods.
Some individuals may use bribery toward US officials, which can lead to criminal proceedings. Even if a company isn’t involved directly in the corruption or bribery, they may still be subject to prosecution if they deal with a foreign entity who is corrupt. This is part of the reason why it’s vital to do due diligence before settling on an international supplier or distributor.
What Risks Does the FCPA Pose?
The Foreign Corrupt Practices Act covers every legal “person” in the US, meaning business entities and individuals. It also applies to some foreign companies that are traded publicly on the stock exchange. If any conduct involves the transport of goods across borders, along with a bribe or an attempt to influence a foreign official, it can be criminally prosecuted under the FCPA.
The initial inquiry may lead to charges. If a targeted entity is convicted, they may face exorbitant fines: 5 million dollars for an individual, and 25 million dollars for a business. On top of that, individuals may be subject to a maximum of 20 years in federal prison. FCPA prosecutions can also include consequences like injunctions, disgorgements, forfeitures, and even the debarment from doing business with governments.
There are a number of different ways that a company might open itself up to criminal prosecution due to its import and export capabilities. The charges may be related to one of two categories: internally interacting with foreign officials, or having relationships to third parties that interact with those officials.
Internal Foreign Interactions
This is one of the most direct ways that a company can find itself in trouble. It occurs when personnel within the company interact with the foreign officials. When cases are related to importing and exporting, there may be multiple people involved at different levels. Every foreign interaction leads to the potential for corruption.
Some corruption is intentional, such as soliciting a bribe. But employees may also unintentionally violate FCPA, especially if the company doesn’t have anti-corruption training to explain what to watch out for.
The risk is made even higher by the fact that foreign officials are often underpaid, while company executives tend to have much higher salaries. Certain officials might be very susceptible to an executive’s influence. They may ask for benefits and inflated payments that the other person does not realize are illegal bribes.
Third Party Relationships
Sometimes your company might not be involved in any corrupt dealings at all. But it may be involved with a third party that engages in corrupt dealings with foreign officials on the company’s behalf. Corruption might occur in customs brokers, consulting firms, freight forwarders, import agents, and export agents. If the company expects the third party to handle their foreign interactions, and the third party engages in bribery, the company can be held responsible.
There are ways that companies can distance themselves from third parties in their contracts. However, the language won’t typically be strong enough to prevent the government from pursuing criminal prosecutions.
Other Risks for Prosecution
Some other statutes also come with prosecution risks. You may be charged with a crime if you influence or bribe public officials, including customs and border officials. Conviction can lead to prison sentences of 15 years.
You may also be charged with conspiring to defraud the US if no successful bribe exchanged hands, but there was a plan for one to do so.