Page 24 - U.S. FOREIGN CORRUPT PRACTICES ACT

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

Companies also may violate the FCPA if they have set clear monetary thresholds for gifts along
give payments or gifts to third parties, such as an with annual limitations, with limited exceptions
official’s family members, as an indirect way of for gifts approved by appropriate management.
corruptly influencing a foreign official. For example, Clear guidelines and processes can be effective and
one defendant paid personal bills and provided efficient means for controlling gift-giving, deterring

airline tickets to a cousin and close friend of the improper gifts, and protecting corporate assets.
foreign official whose influence the defendant The FCPA does not prohibit gift-giving. Rather,
sought in obtaining contracts. The defendant was just like its domestic bribery counterparts, the FCPA
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convicted at trial and received a prison sentence. 100 prohibits the payments of bribes, including those
In another example, a Hong Kong subsidiary of a disguised as gifts.
Switzerland-based bank engaged in a systematic

scheme to hire, promote, and retain the children Charitable Contributions
of Chinese officials in order to win business with Companies often engage in charitable giving
those officials. 101 The company ultimately disgorged as part of legitimate local outreach. The FCPA does
approximately $30 million and paid a $47 million not prohibit charitable contributions or prevent
criminal fine for its FCPA violations. corporations from acting as good corporate citizens.
Companies, however, cannot use the pretense
of charitable contributions as a way to funnel bribes
Examples of Improper Travel to government officials.
and Entertainment For example, a pharmaceutical company

• a $12,000 birthday trip for a government used charitable donations to a small local castle
decision maker from Mexico that included restoration charity headed by a foreign government
visits to wineries and dinners
official to induce the official to direct business to
• $10,000 spent on dinners, drinks, and
entertainment for a government official the company. Although the charity was a bona
• a trip to Italy for eight Iraqi government fide charitable organization, internal documents
officials that consisted primarily of at the pharmaceutical company’s subsidiary
sightseeing and included $1,000 in
“pocket money” for each official established that the payments were not viewed as
• a trip to Paris for a government official and charitable contributions but rather as “dues” the
his wife that consisted primarily of touring subsidiary was required to pay for assistance from
activities via a chauffeur-driven vehicle
the government official. The payments constituted

a significant portion of the subsidiary’s total
As part of an effective compliance program, a promotional donations budget and were structured
company should have clear and easily accessible to allow the subsidiary to exceed its authorized
guidelines and processes in place for gift-giving limits. The payments also were not in compliance
by the company’s directors, officers, employees, with the company’s internal policies, which provided
and agents. Though not necessarily appropriate that charitable donations generally should be made

for every business, many larger companies have to healthcare institutions and relate to the practice
automated gift-giving clearance processes and of medicine. 102

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