Bribery is illegal even if it is customary local practice in some countries.
By Stuart Sinai
Of course you are aware that bribing any federal, state or local government official or any employee of a government agency is a crime. Are you equally aware, however, that bribing an official or an employee of a foreign government (or even a government-owned or controlled separate entity) can be a crime in the U.S. regardless of the laws of that country and where the bribe was paid? Furthermore, the Foreign Corrupt Practices Act (FCPA) applies to both publicly-traded and private U.S. companies as well as to U.S. citizens.
What is the definition of a “bribe” under the Act?
What might be considered as just following local practice in some countries can be considered a “bribe” under the FCPA. It includes, of course, straight out cash payments. However, it also includes “anything of value.” One luncheon is not likely a violation but numerous meals could be when the seeming purpose is to influence conduct to obtain or retain business or to merely gain a competitive advantage or balance. Gifts, indirect payments to a relative or a business controlled by the official, advances or reimbursement for travel or other “expenses” or offering to pay or provide any type of benefit, can be considered illegal.
When operating in certain parts of the world, it is customary to hire advisors and consultants. Payments to them in excess of what is necessary to pay for reasonably comparable services may be an indication that a portion of the “fees” are actually intended to be used to bribe and influence someone in government important to your objectives. To attempt to alleviate the possibility that your company would be tainted by the consultant’s misuse of his fees, we urge that all agreements with the foreign consultant require that it abide by all U.S. laws, including specifically the FCPA. Those agreements can also include indemnification provisions requiring reimbursement for any costs, expenses or fines the client suffers as a result of the consultant’s violations. Needless to say, actually collecting from a Russian or Chinese foreign consultant is more a dream than a reality. Accordingly, the best you can do is to check out the reputation of those who you hire and demand an accounting of every dollar paid to any third party.
Every company should have an anti-corruption policy/program in place especially if business is conducted in any foreign environment where doing business is rife with those who have been accustomed to payoffs. We can help you craft a policy that will help your employees know what is a normal business expense versus a possible illegal payment or expenditure and how to handle unlawful requests. Executives of U.S. firms can face both cash fines and criminal charges for acts of employees and agents that occur here or in foreign countries. Implementing anti-bribery controls and adopting written policies can provide an essential mitigating defense to Justice Department allegations of complicity.
For further information regarding these matters, please contact Mr. Sinai at 248.740.5660 or via email.