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Amendments to the Original FCPA

Amendments to the Original FCPA

 

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Full video transcript available below:

Hello and welcome to today's webinar hosted by me, Joe Boyhan of MCO, and Paul Murdock of MCG Compliance Services. Today, we're going to be looking at the Foreign Corrupt Practices Act or the FCPA.

I now want to pass you on to Paul, who's going to start today's webinar.

So, the act came about in 1977, but what's important is that there were a couple of amendments that really put some teeth into the FCP Act. That was around the prohibitions on improper payments, or the anti-bribery provisions of the act, and the accounting regulations and the accounting whole aspect of the act. We're going to get a little bit more into that as we go through the various aspects of the seminar.

So, who enforces this act, and really goes after individuals that have violated it? Well, it's a combination of the SEC and the DOJ, so the Department of Justice. They really share their authority on sanction and then going after criminal offense and criminal intent under this act. Let's talk about some of the elements of the act that's very important.

So, what are the actual elements of bribery under the Foreign Corrupt Practices Act? So, the act itself, the FCPA, makes it a crime to make a payment of offer or promise to pay, or authorize a payment of money, or anything of value directly, or indirectly, to any foreign official; politician, party official, candidate for office, any intermediaries, that essentially, you know, should not be accepting these types of payments. A third aspect of it is that there must be a corrupt motive. Then fourth is the purpose of influencing one of these persons ... The persons in the official act where the officiants do violate a lawful duty. The last element is in order to assist and obtain, or retain, it's business.

So, as we look at the Act, in totality, there are a couple of elements that [inaudible 04:24] to all of these cases. One, you know, it must deal with foreign officials and, you know, you really must have a strong intent to really exchange something of value in order to get business. So, what constitutes a payment under the Act itself? Well, as the Department of Justice points out, and it's brochure, if you go on the website and take a look at the details there, that's FCPA does not really define what it is. It does not define, determine, anything of value, so it's fairly broad. There's no real legislative history, or case law, that defines exactly what that term means.

So, you could see from, kind of, a legal perspective, and we're not giving legal advice through this webinar by any means, but by the broad definition of anything of value, it really brings into play many aspects in which you can be found really offering something of value. So, hopefully that makes sense, but the point here is that it's really broad in context.

So, let's talk about the possible criminal penalties for violating the Foreign Corruption Practices Act. So, if a corporation or a business entity violates anti-bribery provision of the FCPA, it may be subject to fines of up to two million dollars. So, that's significant. Offices direct to stock holders, employees, agents, anyone who violates this anti-bribery provision is also subject to fines of up to $100,000. This is for each event, each incident, and there's also a prison penalty, where you could go to jail for up to five years in prison. 

There's also another act that also comes into play at times during some of these cases. We're not really going to talk about that today, but that's under the Alternative Fines Act. That, essentially what it does, it could even double some of the fines under the FCPA. So, what are the possible civil consequences for violating an anti-bribery provisions of the FCPA? Well, either the Attorney General, or the SEC, can bring a civil action against any firm, office, or direct through employee, agent or stockholder acting on behalf of the firm. The fines can be as much as $10,000.

Certain SEC enforcement actions to court, could impose additional fines, but not greater than the gross amount of the defendants monetary gain resulted from the violation, or a specific dollar limitation based on the egregiousness of the act. That can range from $5,000 to $100,000 per person, or $50,000 to $500,000 per company. So, there's really a formula that they use in terms of sanctions and fines, and if you read through some of the cases that have been brought, you could actually see how the fines were calculated.


 

This webinar was co-hosted with MCG Consulting

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