Anti-Bribery and Corruption Investigations

Foreign Corrupt Practices Act Assessment

Review measures to mitigate violation potential

Conducting business overseas and across borders can be tricky business, especially when you are unaware of the complexities of the Foreign Corrupt Practices Act (FCPA). The Ingenium Consulting Group FCPA team understands the FCPA and regularly advises clients from large corporations to small regional and local exporters on FCPA compliance and litigation matters.

FCPA

The US Foreign Corrupt Practices Act (FCPA) of 1977 is the most widely enforced anti-corruption law. It is the first to introduce corporate liability, responsibility for third parties and extraterritoriality for corruption offences, meaning companies and persons can be held criminally and civilly responsible for corruption offences committed abroad. The Act also applies to any act by U.S. businesses, foreign corporations trading securities in the U.S., American nationals, citizens, and residents acting in furtherance of a foreign corrupt practice whether or not they are physically present in the U.S. This is considered the nationality principle of the act. Whenever businesses decide to follow the unethical road, there are consequences including high financial penalties. Any individuals that are involved in those activities may face prison time. This act was passed to make it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.

Criminal penalties

  • Up to $2 million per violation for companies
  • Up to $250,000 fine and 5 years in prison for individuals
  • Alternative fines equal to twice amount of total profit

Civil penalties

  • Injunctions against future violations
  • Civil monetary penalties
  • Collateral consequences (e.g., debarment)

A company cannot indemnify an officer, director, employee or consultant for fines assessed in violation of the FCPA and insurance will not cover such fines or penalties.

Most sophisticated business people know that the Foreign Corrupt Practices Act (FCPA) makes it unlawful for U.S. or foreign corporations with substantial connections to the United States to provide anything of value to a foreign official for the purpose of obtaining or retaining business. What is less known is that corporations subject to the FCPA are vicariously liable for the actions of their subsidiaries, employees and agents, even if such actions were not requested, encouraged or known to their management. Moreover, corporations that invest in or acquire foreign companies are liable under the FCPA for the violations of their targets that occurred prior to the investment or acquisition.

The Right Team

Recognizing the increasing risk to our clients posed by the FCPA, Ingenium has a dedicated team of attorneys to assist our clients in FCPA risk mitigation and remedy. Ingenium has substantial experience in FCPA compliance matters, including advising several companies—from large publicly-traded corporations to small regional exporters and manufacturers—on FCPA compliance.

Our FCPA team assists clients with the following:

FCPA Risk Mitigation Essentials

Three core elements:

  • Internal compliance program
  • Due diligence on third parties/transactions
  • Prompt response to possible violations

U.S. Government will consider each of these elements in evaluating whether to bring enforcement action.

FCPA internal controls

  • Cash handling procedures
  • Accounting and financial controls
  • Record-keeping requirements
  • Segregation of duties
  • Documentation requirements
  • Authorization requirements

Training and education

  • Live training preferred
  • Local language if necessary
  • Must be understandable to be effective
  • Initial training upon hiring/acquisition
  • Periodic refresher sessions
  • Supplemental distributions of policy/law changes

Compliance monitoring

  • Training completion certification
  • Annual compliance certification
  • Audit testing of high-risk areas
  • Internal/external compliance audits
  • Confidential reporting system

What to do if potential FCPA violation is suspected?

  • Investigate through internal/external resources
  • Maintain objectivity, confidentiality and privileges
  • Conduct prompt and thorough investigation
  • Comply with applicable employment/other laws
  • Report findings to appropriate internal channels
  • Evaluate voluntary disclosure issue

Get the answers you need, call the professionals at Ingenium Consulting Chicago for a free confidential consultation.