Page 43 - U.S. FOREIGN CORRUPT PRACTICES ACT

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

Based on these facts, would DOJ or SEC prosecute?
Absent unusual circumstances not contemplated by this hypothetical, DOJ and SEC are unlikely to prosecute
Company A for the pre-acquisition misconduct of Company B, provided that Company B still exists in a form
that would allow it to be prosecuted separately (e.g., Company B is a subsidiary of Company A). DOJ and SEC
understand that no due diligence is perfect and that society benefits when companies with strong compliance
programs acquire and improve companies with weak ones. At the same time, however, neither the liability
for corruption—nor the harms caused by it—are eliminated when one company acquires another. Whether
DOJ and SEC will pursue a case against Company B (or, in unusual circumstances, Company A) will depend
on consideration of all the factors in the Principles of Federal Prosecution of Business Organizations and the
Seaboard Report, respectively.

Scenario 3:
Company A merges with Company B, which is in the same line of business and interacts with the same
Foreign Government customers, and forms Company C. Due diligence before the merger reveals that both
Company A and Company B have been engaging in similar bribery. In both cases, the bribery was extensive and
known by high-level management within the companies.

Based on these facts, would DOJ or SEC prosecute?
Yes. DOJ and SEC have prosecuted companies like Company C on the basis of successor liability.
Company C is a combination of two companies that both violated the FCPA, and their merger does not eliminate
their liability. In addition, since Company C is an ongoing concern, DOJ and SEC may impose a monitorship to
ensure that the bribery has ceased and a compliance program is developed to prevent future misconduct.

Additional Principles of Criminal Under normal principles of conspiracy liability,

Liability for Anti-Bribery individuals and companies, including foreign
Violations: Aiding and Abetting nationals and companies, may also be liable for
and Conspiracy conspiring to violate the FCPA—i.e., for agreeing

Under federal law, individuals or companies to commit an FCPA violation—even if they are
that aid or abet a crime, including an FCPA violation, not, or could not be, independently charged
are as guilty as if they had directly committed the with a substantive FCPA violation. For instance, a
offense themselves. The aiding and abetting statute foreign, non-issuer company could be convicted
provides that whoever “commits an offense against of conspiring with a domestic concern to violate
the United States or aids, abets, counsels, commands, the FCPA. Under certain circumstances, it could

induces or procures its commission,” or “willfully also be held liable for the domestic concern’s
causes an act to be done which if directly performed substantive FCPA violations under Pinkerton v.
by him or another would be an offense against the United States, which imposes liability on a defendant
United States,” is punishable as a principal. 203 Aiding for reasonably foreseeable crimes committed by a

and abetting is not an independent crime, and the co-conspirator in furtherance of a conspiracy that
government must prove that an underlying FCPA the defendant joined. 205
violation was committed. 204

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