The Foreign Corrupt Practices Act (FCPA) prohibits United States Companies and individuals (as well as certain foreign companies that are required to make certain filing with the United States Securities and Exchange Commission (SEC)) from offering bribes or kickback to obtain business. The FCPA specifically addresses bribery as follows:
It shall be unlawful for any issuer [of certain securities] …, or for any officer, director, employee, or agent of such an issuer …, to make use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay, or authorization of the payment of … anything of value to—
(3) any person, while knowing that all or a portion of such money … will be offered, given, or promised, directly or indirectly, to any foreign official … for purposes of-
(A)(i) influencing any act or decision of such foreign official … in his … official capacity …,
(ii) inducing such foreign official … to do or omit to do any act in violation of the lawful duty of such foreign official …, or
(iii) securing any improper advantage … in order to assist such domestic concern in obtaining or retaining business for or with, or directing business to, any person.
Note that these provisions are very broad and prohibit bribes or kickbacks to get an improper advantage and cover both direct and indirect payments. As indicated above, the FCPA applies to all U.S. companies and citizens as well as foreign corporations that are issuers of certain securities, or that are required to file reports under the Securities and Exchange Act of 1934. Additionally, since 1998, the FCPA applies to foreign companies and persons who cause (directly or through its agents) an act in furtherance of a bribe to take place within the territory of the United States. The Federal District Court for the Southern District of Texas recently ruled that the government does not need to identify the specific government official that was bribed to successfully bring an action under the FCPA. The fact that the FCPA prohibits using any person (or an intermediary) to facilitate a bribe to a foreign official suggests that the statute contemplates situations in which the person offering the bribe may know that a public official will ultimately receive a bribe but not know the identity of the official.
Regulation 21F of the Security Exchange Act of 1934 provides for the ability of a private citizen to report a violation of this law as a whistleblower, and obtain an award when the whistleblower:
(1) Voluntarily provide the Commission
(2) With original information
(3) That leads to the successful enforcement by the Commission of a federal
court or administrative action
(4) In which the Commission obtains monetary sanctions totaling more than
The amount of the award due to the whistleblower is discretionary but the whistleblower must receive between 10% and 30% of the recovery by the government. Section 21F also includes a set of factors that the Commission will apply in determining the percentage including the significance of the information provided and the amount of assistance provided by the whistleblower. There has been a trend of the last several years with many multi-million dollar recoveries by the SEC.
If you have any questions about the The Foreign Corrupt Practices Act, feel free to contact us for a free confidential consultation.