Page 23 - U.S. FOREIGN CORRUPT PRACTICES ACT

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

Items of nominal value, such as cab fare, parties, a portion of which was used to pay for
reasonable meals and entertainment expenses, gifts, travel, and entertainment, including overseas
or company promotional items, are unlikely to trips, for Chinese government officials in order to
improperly influence an official, and, as a result, win business with state-owned telecommunications
are not, without more, items that have resulted in companies. Although a portion of the trips were

enforcement action by DOJ or SEC. The larger or purportedly for the individuals to participate in
more extravagant the gift, however, the more likely training at the company’s facilities, in reality, no
it was given with an improper purpose. DOJ and training occurred on many of these trips and the
SEC enforcement cases thus have involved single company had no facilities at those locations. Such
instances of large, extravagant gift-giving (such as trips included, among others, a luxury cruise through
sports cars, fur coats, and other luxury items) as the Caribbean and trips to Las Vegas and London.

well as widespread gifts of smaller items as part of a The company also mischaracterized payments for
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pattern of bribes. For example, in a recent case, a these trips in its internal books and records.
publicly traded energy company in the Netherlands Likewise, a New Jersey-based telecommunic-
resolved with DOJ over bribes it paid that included ations company spent millions of dollars on
extravagant gifts such as paying for foreign officials approximately 315 trips for Chinese government

to travel to sporting events and providing them with officials, ostensibly to inspect factories and train
“spending money,” paying for school tuition for the the officials in using the company’s equipment. In
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children of foreign officials, and shipping luxury reality, during many of these trips, the officials spent
vehicles to foreign officials. little or no time visiting the company’s facilities,
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In another case brought by DOJ and SEC, a but instead visited tourist destinations such as
defendant gave a government official a country Hawaii, Las Vegas, the Grand Canyon, Niagara Falls,

club membership fee and a generator, as well as Disney World, Universal Studios, and New York
household maintenance expenses, payment of City. Some of the trips were characterized as
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cell phone bills, an automobile worth $20,000, and “factory inspections” or “training” with government
limousine services. The same official also received customers, but consisted primarily or entirely of

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$250,000 through a third-party agent. sightseeing at locations chosen by the officials,
In addition, a number of FCPA enforcement typically lasting two weeks and costing between
actions have involved the corrupt payment of $25,000 and $55,000 per trip. In some instances,
travel and entertainment expenses. Both DOJ the company gave the government officials $500
and SEC have brought cases where these types of to $1,000 per day in spending money and paid all
expenditures occurred in conjunction with other lodging, transportation, food, and entertainment

conduct reflecting systemic bribery or other clear expenses. The company either failed to record
indicia of corrupt intent. these expenses or improperly recorded them as
A case involving a Sweden-based “consulting fees” in its corporate books and records.
telecommunications company “issuer” illustrates The company also failed to implement appropriate
the types of improper travel and entertainment internal controls to monitor the provision of travel

expenses that may violate the FCPA. Beginning in and other things of value to Chinese government
the 1990s and continuing until at least 2013, the officials.
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company paid millions of dollars to various third
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