Under the anti-bribery provisions of the Foreign Corrupt Practices Act (the “FCPA”), companies and individuals are prohibited from paying bribes or otherwise transferring anything of value to any foreign government official in exchange for assistance in obtaining or retaining business. In addition, publicly traded companies are required to implement certain accounting and recordkeeping controls and practices which facilitate the detection and prevention of improper payments.
FCPA Enforcement Agencies
Both the Department of Justice (“DOJ”) and Securities Exchange Commission (“SEC”) have authority to bring enforcement actions under the FCPA. The SEC’s enforcement is limited to civil enforcement against companies registered with the SEC or listed on a U.S. stock exchange, while the DOJ brings all civil actions against unregistered entities and individuals and is responsible for bringing all criminal actions.
Potentials Penalties under the FCPA may be severe for companies and individuals alike.
Criminal Penalties include:
• For companies, fines of up to $2 million per violation of the anti-bribery provisions and fines of up to $25 million for violations of the accounting and recordkeeping provisions.
• For individuals, incarceration of up to five years per violation and fines up to $250,000 per violation of the anti-bribery provisions and incarceration of up to twenty years and fines up to $5 million for violations of the accounting and record keeping provisions.
• Alternatively, criminal fines may be calculated under the profit disgorgement up to twice the gross gain intended by the defendant.
Civil penalties include:
• For companies, penalties of up to $16,000 per violation of the anti-bribery provisions and penalties ranging from $75,000 to $725,000 for violation of the accounting and recordkeeping provisions.
• For individuals, penalties of up to $16,000 per violation of the anti-bribery provisions and penalties ranging from $7,500 to $150,000 for violation of the accounting and recordkeeping provisions.
Company Enforcement Mitigation
Companies that learn of misconduct may attempt to mitigate liability under the FCPA by (1) self-disclosing the violation; (2) fully cooperating with the FCPA investigation; and (3) implementing appropriate remedial measures in a timely manner. Such action may result in a declination to prosecute, or where sufficient aggravating factors are found and declination is not appropriate, a 50% reduction from low-end U.S. Sentencing Guidelines. If a company cooperates and implements appropriate remedial measures but did not self-disclose, it may be eligible for a 25% reduction from low-end U.S. Sentencing Guidelines.
Don’t wait until it’s too late.
Elliott Sauter is a firm founded by former federal prosecutors with experience evaluating, prosecuting, and defending FCPA cases. This experience gives us a thorough understanding of the procedures and tactics used at each stage of civil or criminal FCPA investigation. If you suspect that you are the target of an FCPA investigation, it is important to act quickly and retain experienced counsel so that you can get ahead of the investigation and achieve the most favorable result possible.