Page 19 - U.S. FOREIGN CORRUPT PRACTICES ACT

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

whether they utilize the U.S. mails or a means or capacity, (ii) inducing a foreign official to do or omit
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instrumentality of interstate commerce. Thus, for to do any act in violation of the lawful duty of such
example, a foreign national who attends a meeting official, (iii) securing any improper advantage; or (iv)
in the United States that furthers a foreign bribery inducing a foreign official to use his influence with
scheme may be subject to prosecution. 59 a foreign government or instrumentality thereof
In addition, under the “alternative jurisdiction” to affect or influence any act or decision of such
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provision of the FCPA enacted in 1998, U.S. government or instrumentality. In addition, the
companies or persons may be subject to the anti- payment, offer, or promise must be made in order
bribery provisions even if they act outside the to assist “in obtaining or retaining business for or
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United States. The 1998 amendments to the FCPA with, or directing business to, any person.” This
expanded the jurisdictional coverage of the Act by requirement is known as the “business purpose
establishing an alternative basis for jurisdiction, that test” and is broadly interpreted. 65
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is, jurisdiction based on the nationality principle. Not surprisingly, many enforcement actions
In particular, the 1998 amendments removed involve bribes to obtain or retain government
the requirement that there be a use of interstate contracts. The FCPA also prohibits bribes in
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commerce (e.g., wire, email, telephone call) for acts connection with conducting business or to gain a

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in furtherance of a corrupt payment to a foreign business advantage. For example, bribe payments
official by U.S. companies and persons occurring made to secure favorable tax treatment, to reduce
wholly outside of the United States. or eliminate customs duties, to obtain government
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action to prevent competitors from entering a
What Is Covered? market, or to circumvent a licensing or permit

The FCPA applies only to payments, offers, or requirement, can all satisfy the business purpose
promises made for the purpose of: (i) influencing test.
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any act or decision of a foreign official in his official

Hypothetical: FCPA Jurisdiction
Company A, a Delaware company with its principal place of business in New York, is a large energy company that
operates globally, including in a number of countries that have a high risk of corruption, such as Foreign Country. Company
A’s shares are listed on a national U.S. stock exchange. Company A enters into an agreement with a European company
(EuroCo) to submit a joint bid to the Oil Ministry to build a refinery in Foreign Country. EuroCo is not an issuer.

Executives of Company A and EuroCo meet in New York to discuss how to win the bid and decide to hire a purported
third-party consultant (Intermediary) and have him use part of his “commission” to bribe high-ranking officials within the
Oil Ministry. Intermediary meets with executives at Company A and EuroCo in New York to finalize the scheme. Eventually,
millions of dollars in bribes are funneled from the United States and Europe through Intermediary to high-ranking officials
at the Oil Ministry, and Company A and EuroCo win the contract. A few years later, a front page article alleging that the
contract was procured through bribery appears in Foreign Country, and DOJ and SEC begin investigating whether the FCPA
was violated.

Based on these facts, which entities fall within the FCPA’s jurisdiction?
All of the entities easily fall within the FCPA’s jurisdiction. Company A is an “issuer” under the FCPA, and
Intermediary is an “agent” of Company A. EuroCo and Intermediary are also subject to the FCPA’s territorial
jurisdiction provision based on their conduct while in the United States.

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