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The Foreign Corrupt Practices Act: A Pitfall in International Trade

Just as in 2014, the Foreign Corrupt Practices Act (“FCPA”) should be top of mind for any automotive company conducting or considering international business. Indeed, any doubts that the government was still interested in investigating and prosecuting companies and individuals for violations of the FCPA, were put to rest in 2014. This is so because government enforcement authorities disclosed two enforcement actions in 2014 that resulted in two of the top 10 fines ever paid for violations of the FCPA. Don’t just take our word for it. “This is a wake-up call for small and medium-size businesses that want to enter into high-risk markets and expand their international sales,” said the chief of the Security & Exchange Commission’s FCPA enforcement group after settling an FCPA case.

What Does the FCPA Cover?

Generally speaking, the FCPA prohibits the payment of a bribe or the offer to pay anything of value, directly or indirectly, to a foreign official for the purpose of influencing the official in some official act in order to obtain or retain business. The FCPA also imposes certain recordkeeping and internal control requirements on public companies. The anti-bribery provisions are particularly relevant to companies that engage in business in certain foreign countries, including emerging giants such as Brazil, Russia, India, and China, where common business practices can lead companies to run afoul of the FCPA. These realities have led to an abundance of FCPA-enforcement actions, which can cost companies hundreds of millions of dollars.

The U.S. Government Is Dedicated to FCPA Enforcement

Although several executives have prevailed in FCPA-enforcement actions in recent years, companies have not been as fortunate. And the government has not been deterred; the FBI continues to aggressively investigate FCPA violations. In fact, last month, the Department of Justice (“DOJ”) announced three new squads dedicated solely to foreign bribery. In 2013, more than 90 public companies reported they were subjects of FCPA investigations. Recently, among others, Bank of New York Mellon announced it is under investigation for FCPA violations. The bottom line: the government does not appear to be deterred from aggressively enforcing the FCPA in the foreseeable future.

FCPA Violations Cost Companies

In December 2014, the DOJ’s settlement with Alstom SA, set a new record–$772M. Earlier in 2014, Alcoa, Inc. entered into a $384 million settlement with government authorities, also breaking into the “top ten” of FCPA settlements of all time. Yet it is not just the fines and penalties that raise concerns, it is the costs of investigation. Indeed, in 2014, Wal-Mart Stores, Inc. disclosed that it had spent over $282 million dollars in fiscal year 2014 alone for investigation fees and expenses in response to a FCPA investigation.

Because the FCPA includes internal control requirements (for public companies) and the penalties are so steep, Benjamin Franklin’s old adage, “An ounce of prevention is worth a pound of cure,” could not be more apropos. At the end of the day, the consequences of an FCPA investigation range from “huge” to “catastrophic.” 

Stay tuned because Dashboard Insights will continue to cover the FCPA in more depth in coming posts. Specifically, upcoming posts will address topics such as who is subject to the FCPA, what the FCPA actually prohibits and requires, defenses and exceptions to the FCPA, the FCPA’s penalties, and keys to an FCPA compliance program.

© 2020 Foley & Lardner LLPNational Law Review, Volume V, Number 75


About this Author


Nicholas Williams is an associate and litigator with Foley & Lardner LLP. His practice focuses on general commercial litigation, including non-compete, construction, white collar defense, and bankruptcy litigation. Mr. Williams has successfully obtained judgments and negotiated settlements for clients, including regional and national banks, in commercial disputes. He is a member of the firm's Legal Innovation Hub® for NextGen Manufacturers.

Jaime Guerrero, White collar criminal defense attorney, Foley law firm

Jaime Guerrero is a partner and litigation lawyer with Foley & Lardner LLP. Mr. Guerrero focuses in the areas of government enforcement actions, white collar criminal defense, Foreign Corrupt Practices Act ("FCPA") investigations, accounting litigation, securities litigation, and partnership disputes. He represents companies and individuals in parallel civil and criminal proceedings initiated by regulatory and prosecuting agencies for a variety of alleged wrongdoing and business disputes. Mr. Guerrero has conducted internal investigations, in both English and Spanish, in Latin American countries and as a result, the firm’s Government Enforcement, Compliance & White Collar Defense Practice has garnered recognition by Chambers USA (2014), which reported that the firm is “[p]articularly noted for its presence in providing counsel on FCPA matters to Latin American clients.”