The Foreign Corrupt Practices Act and the UK Bribery Act are two of the most important anti-bribery laws that seek to prevent corruption globally. Their broad scope and long reach mean that organizations of all sizes that do business overseas or have foreign partners should consider offering online FCPA training to their employees as well as their agents and partners when appropriate.
Brief History of the FCPA & UK Bribery Act
In the early 1970s, with public trust already shaken by the Watergate Scandals, investigations conducted by the Securities and Exchange Commission revealed that many US corporations were maintaining special cash slush funds for bribing foreign officials. According to a Congressional report, over 400 corporations admitted to making illegal or questionable payments to foreign officials, totaling more than $300 million (or $1.2 billion in 2015 dollars).
In response to these shocking revelations, Congress passed The Foreign Corrupt Practices Act (FCPA) in 1977, prohibiting US businesses or persons from bribing foreign officials to get, keep, or direct business. In its report on the FCPA, Congress explained:
The payment of bribes to influence the acts or decisions of foreign officials, foreign political parties or candidates for foreign political office is unethical. It is counter to the moral expectations and values of the American public. But not only is it unethical, it is bad business as well. It erodes public confidence in the integrity of the free market system.
Today the Securities and Exchange Commission (SEC) and Department of Justice (DOJ) jointly enforce the FCPA. Together, they have brought an increasing number of FCPA enforcement actions charging violators with both civil and criminal offenses. The year 2016″produced what arguably is the most significant year of enforcement in the statute’s 39-year history” according to attorney F. Joseph Warin. The SEC and DOJ brought 53 enforcement actions against companies and levied more than $2 billion in corporate fines against companies.
Since the passage of the FCPA in 1977, the global marketplace has become governed by an increasing number of laws and regulations that aim to prevent corruption. In addition to the FCPA, organizations doing business overseas may find themselves governed by other nations’ laws.
Of particular note is the UK Bribery Act 2010, applying to UK businesses and persons. The UK Bribery Act imposes more severe penalties and is broader in scope than the FCPA, covering bribes to private parties as well to foreign officials. The UK Bribery Act also prohibits being bribed, not just giving bribes. Because of the close ties between the United States and the United Kingdom, US businesses should pay special attention to all forms of potential bribery abroad, regardless of jurisdictional technicalities.
Penalties for Breaking Anti-Bribery Laws
The penalties for violating either the FCPA or the UK Bribery Act are significant. Both individuals and corporations can be held liable. While this shouldn’t form the basis of prevention, it highlights the enforcement bite of legal noncompliance.
Individuals who violate the anti-bribery provisions of the FCPA may face criminal and civil fines, up to five years in prison, and ineligibility for future activities such as doing business with the federal government or the securities business, according to the FCPA Resource Guide.
Businesses may face criminal fines up to $2,000,000, civil penalties, and ineligibility for future activities such as doing business with the government, securities activities, or export licenses as well. There are additional hefty penalties for violating the FCPA’s accounting provisions. It’s worth noting that under the Alternative Fines Act individuals and businesses may face fines much higher than those suggested by the FCPA: up to twice what the defendant gained by making the corrupt payment.
Under the UK Bribery Act, individuals or businesses may face up to 10 years in prison or unlimited unlimited fines.
The Importance of Training on Anti-Bribery Laws
Given the intricacy and potential consequences of violating anti-bribery laws, it is crucial that your organization has compliance programs in place to prevent corruption whenever it has dealings overseas. This is why companies should invest in FCPA Training. It’s more than avoiding legal liability. It’s really about doing what’s right.
Both the DOJ and SEC take into consideration an organization’s compliance program when deciding whether to open an investigation or bring charges under the FCPA.
According to the FCPA Resource Guide, “In appropriate circumstances, the DOJ and SEC may decline to pursue charges against a company based on the company’s effective compliance program, or may otherwise seek to reward a company for its program, even when that program did not prevent the particular underlying FCPA violation that gave rise to the investigation.” Similarly, companies can defend themselves against charges related to the UK Bribery Act if they can show that they had adequate procedures in place to prevent bribery.
Further, the DOJ’s Fraud Section issued the”Evaluation of Corporate Compliance Programs“ (ECCP), a litany of”important topics and sample questions” to help companies evaluate their compliance programs. My colleague Karen Peterson correctly points out that measuring compliance program effectiveness goes beyond checking a box. Data, culture, and ethical managers are critical facets that companies must validate, support, and foment.
Training is a hallmark of an effective compliance program. It helps reinforce an organization’s values, distribute its anti-corruption policies, inform the organization’s workers of the relevant laws and best practices, and ensure that workers understand how to act on those values, policies, and practices.
This post was informed by considerable research and analysis by my former colleague, Pax Hehmeyer.