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U.S. companies are increasingly exploring new business opportunities around the globe. In so doing, they must be cognizant of the Foreign Corrupt Practices Act (FCPA), enacted by Congress more than 30 years ago to prevent and penalize efforts by companies and individuals who engage in corrupt dealings with foreign officials.
The FCPA's prohibitions and mandates focus on two distinct areas, anti-bribery and internal accounting controls, and give the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) broad authority to investigate and review the records and details of almost any international business transaction. Providing gifts or benefits to foreign officials, improperly accounting for funds used overseas, or establishing relationships with corrupt foreign agents, partners or affiliates can subject U.S. companies to multi-million dollar penalties and, for individuals, incarceration. Enforcement of the FCPA continues to be a priority for the DOJ and SEC.
Our FCPA legal team guides U.S. and multinational companies in virtually every sector of the global economy, including energy, technology, manufacturing and business services. We notably represent companies that do business in "red flag" regions, where the use of joint ventures, sub-contractors and other third-parties is commonplace and where export controls are required. Whether a company is seeking compliance advice or is under investigation, we possess the experience and knowledge to help.
Our lawyers advise companies and individuals on what to expect from enhanced FCPA enforcement and how to navigate these legal challenges within a complex international business environment. We help companies at every stage of the compliance and investigation process, reviewing delicate transactions and conducting due diligence on potential foreign business partners or agents, establishing FCPA compliance programs and working with enforcement officials when sensitive situations arise. In recent years, our lawyers have traveled to and assisted clients with FCPA concerns in China, Russia, Kazakhstan, Europe, Dubai, India and Mexico.
FCPA Compliance Advice and Reviews
The FCPA carries with it substantial penalties for violations of its accounting and anti-bribery provisions. The DOJ and SEC are increasingly looking to hold companies liable for not having FCPA compliance programs that meet their standards. In fact, the SEC has created a separate unit dedicated solely to pursuing FCPA cases against companies and their executives for failing to maintain accurate books and records or to implement adequate controls.
Under these conditions, the importance of implementing a rigorous compliance program that withstands regular auditing and testing cannot be overstated. An effective compliance program is important not only because it can help prevent violations of the FCPA from occurring, but also because it can minimize the penalties associated with any violations that may occur despite the presence of a program.
We have conducted numerous compliance reviews and provided counseling to dozens of multinational corporations. In these compliance reviews, we help clients develop proper record-keeping procedures and internal controls. Key factors in developing internal controls that can withstand regulatory scrutiny include the role of the Board of Directors in decision-making; communication of corporate policies and procedures; accountability for performance and compliance; and objectivity and effectiveness of the company's internal audit efforts.
We also assist companies in complying with the anti-bribery provisions of the FCPA and the adequacy of documents to avoid liability. Affirmative defenses to these provisions require a thorough review of documentation and transactions relating to a company's international transactions, contractual relationships with third parties, acts of both employees and directors, and acts of contractors and agents. Following on our compliance review, we help establish compliance standards and procedures; assign responsibility to specific high-level personnel; communicate the company's standards to all employees and agents; and enforce appropriate internal disciplinary mechanisms.
Some recent compliance engagements include:
- Retained by a major U.S. public company to conduct a global FCPA compliance review.
- Represented a large travel services company in regard to analysis of potential FCPA liability, creation and implementation of new FCPA compliance program, and FCPA training on three continents.
- Analyzed FCPA risks and crafted compliance response for a company involved in significant transactions related to the 2008 Olympics in Beijing.
Our experience in the energy sector is particularly extensive:
- Represented a major US oil field services company in due diligence procedures and the negotiation of contracts with foreign representatives to include provisions relating to FCPA compliance.
- Represented one of the world's leading natural gas companies in the design and implementation of new FCPA compliance policies and in conducting training for the Board of Directors.
- Drafted a new FCPA compliance policy for a Fortune 500 fuels company.
- Retained by an energy industry company to provide counsel on FCPA issues in connection with an offering.
- Crafted a new FCPA compliance program for a large integrated energy company.
FCPA Internal Investigations
We have been retained on numerous occasions by companies and audit committees to conduct internal investigations into allegations of potential FCPA violations. These investigations have required us to travel extensively across the globe and, in particular, to high-risk regions where corruption is prevalent and a real risk for any U.S. companies doing business there. Some recent examples of our work in this area include:
- Retained by a U.S. government contractor to conduct an internal investigation relating to possible FCPA violations in the Middle East.
- Retained by a large corporation to conduct multiple internal investigations into allegations of improper payments to foreign government officials by foreign subsidiaries in numerous countries.
- Conducted an internal investigation into allegations of foreign commercial bribery by employees of a U.S. private equity fund.
FCPA Enforcement Defense
Our team helps companies anticipate and respond to FCPA enforcement actions brought by the DOJ and SEC. Our clients benefit from our lawyers' prior experience as senior attorneys at both of these federal enforcement agencies. When sensitive situations arise with enforcement officials, we help investigate the government's allegations, negotiate the terms of the investigation, respond to document requests, defend against prosecutions and, where necessary, negotiate non-prosecution agreements. Some of our most recent experience in this area includes:
- Retained by the audit committee of a multinational public company to conduct an independent internal investigation into potential FCPA violations and to represent the company in a parallel investigation conducted by the SEC which ultimately did not bring charges.
- Represented a firearms manufacturer in an extensive FCPA investigation by DOJ. No charges were filed against our client.
- Retained by a multinational corporation to represent one of its foreign subsidiaries indicted for commercial bribery, bid-rigging and theft of trade secrets.