4 Common Violations of the Foreign Corrupt Practices Act

August 20, 2019
Andrew Cove

The Foreign Corrupt Practices Act (FCPA) was created in 1977 to prevent US businesses and individuals from bribing foreign countries to do business with them. All US publicly traded companies must adhere to the FCPA – even if the company is located in a foreign country.

In addition to applying to employees and directors, the FCPA also applies to stockholders, officers, and other agents for the company. Even contractors and other unidentified third parties must follow the Act. For example, if a third party is contracted to deliver a bribe from one company to another, the bribe-giving company is still in violation of the FCPA. The United States is serious about punishing those who commit this crime. Here are the four most common violations of the Foreign Corrupt Practices Act.

1. You bribed a foreign business to secure a business contract.

Bribes are when you or an agent of your business give money to another organization without a proper swap of goods or services. Instead of paying for something tangible, a bribe secures a future favor or a promise of something. If you, any employee of your company, or any contractor associated with your company bribe someone to secure a business contract, your company is in direct violation of the FCPA. Although there is no set minimum fine for punishment, fines tend to be hefty and severe to deter such illegal activity.

2. You bribed a doctor for endorsement.

Another example of violating the FCPA is bribing a doctor for an endorsement. In this case, it can be tough to understand exactly what is illegal, so let’s look at an example. Let’s say you are a drug manufacturer, and you want to sell your drug in a foreign country. You bribe a US doctor to endorse your product. Then, with the doctor’s endorsement, you attempt to sell your product to foreign countries. It’s this last step that makes this case a direct violation of the FCPA.

3. You bribed a foreign politician or official to increase business.

Just as you cannot bribe a foreign company for a contract, you also cannot bribe foreign politicians, government officials, or other “influencers.” A good rule of thumb is if you think it’s a bad idea to write a receipt for how you’re spending your money, it’s possibly illegal.

4. Your company’s bookkeeping is questionable.

It’s important for so many reasons to keep good records of business expenditures and income. However, if your bookkeeping is sloppy or missing obvious information, it’s normally a red flag for the government. Even if you aren’t truly doing anything illegal, missing information makes you and your company look extremely suspicious.

Do You Think Your Company Might Need Help?

Whether your company is currently facing charges or has been notified of investigation, you need a qualified business defense attorney to help you out. At Cove Law, our experts have been helping businesses like yours for over twenty-five years. Let us answer your questions and help you prepare for the days ahead. Give us a call today at (954) 921-1121 or contact us online to learn more.

Andrew Cove
Latest posts by Andrew Cove (see all)