Foreign Corrupt Practices Act
Foreign Corrupt Practices Act
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The United States passed the Foreign Corrupt Practices Act (FCPA) in 1977 to prevent corrupt payments to foreign government officials and others considered to act on behalf of others. The FCPA applies to U.S. companies and institutions, as well as foreign companies, institutions or persons connected to the United States and their affiliates.
What is the Foreign Corrupt Practices Act (FCPA)?
The FCPA has two components: anti-bribery and accounting.
The Anti-bribery provisions are provided to prevent bribes and/or other payments that are not permitted.
The Accounting items prevent bribes from being hidden by maintaining Generally Accepted Accounting Principles (GAAP).
Penalties for violations can be civil or criminal. They can include fines, imprisonment, disgorgement of any ill-gotten profits, debarment from receiving federal awards, and loss of export control licenses.
Prohibition against corrupt payments appears simplistic and straightforward on its face. In practice, though, the FCPA reflects pitfalls that are far from obvious.
What the FCPA Prohibits
A violation of the antibribery provision of the FCPA consists of:
- a payment, offer, promise to pay, or authorization of the payment of any money, or offer, gift, or promise to give or authorization of the giving of anything of value
- to a foreign government official (including a party official or manager of a state-owned concern, or other instrumentality of a foreign government), or to any other person, knowing that the payment or promise will be passed on to a foreign official or instrumentality;
- with corrupt intent;
- for the purpose of obtaining or retaining business, which can include (summarized from 15 U.S.C. 78dd-1 ):
- influencing any act or decision of that person,
- inducing such person to do or omit any action in violation of his lawful duty,
- securing an improper advantage, or
- inducing such person to use his influence to affect an official act or decision in order to assist in obtaining or retaining business for or with, or directing any business to, any person.
Pitfalls for Universities
Because the University of Colorado Colorado Springs (UCCS) is a U.S. institution, the FCPA applies to all personnel regardless of nationality or location and operations worldwide. Violating the FCPA and other anti-bribery laws include criminal, regulatory and reputational risks. Pitfalls for the unwary include:
- The definitions of “payment” and “foreign official” are broad. They cover a wide range of benefits conferred on someone in a position to affect dealings with a foreign government or instrumentality. Non-monetary benefits, including travel and entertainment, fall within these broad definitions.
- Even “charitable donations” in the foreign country may constitute a violation of the FCPA, if it is intended to corruptly assist the University to obtain the necessary government approvals to operate in the region.
- The FCPA might consider employees of state-owned foreign institutions and enterprises to be “foreign officials.” This could include faculty at foreign universities.
- The statute contains no minimum threshold for money, offer, gift, promise to give, or authorization to give anything of value. Even the smallest benefits conferred are prohibited.
- A corrupt benefit does not need to be paid or delivered. The FCPA also prohibits the offer, authorization, or promise to provide a corrupt benefit.
- For global institutions such as the University of Colorado, dangers include potential liability for third parties who act on our behalf, such as consultants.
How This May Impact You and UCCS
Sanctions for FCPA violations may be significant and imposed on both the University and individuals. International cooperation, global health, and overseas activities must be undertaken with an awareness of these risks. Special precautions must be taken when using a third party to deal with a foreign entity. You and UCCS could be liable for their actions.
Consider this example. A university researcher hires a local in-country consultant. This consultant, in turn, pays money to a government official in exchange for official actions that benefit the researcher and allow her research program to proceed. Because this action meets all requirements for a FCPA violation, the university employee and the university are targeted by the U.S. Department of Justice even though neither had actual knowledge of the corrupt payment.
When using an advisor, consultant, or coordinator to deal with a foreign entity, red flags to watch for may include:
- Unusual payment patterns or financial arrangements
- A history of corruption in the Country
- Apparent lack of qualifications or resources by local agents despite effectiveness
- Unusually high commissions for “getting things done”
- Lack of transparency in expenses and accounting records
- Payment of expenses in advance
As a member of the UCCS community, you are responsible for compliance with the FCPA. This page is to provide an overview of the FCPA. To learn more, see the resource below.
For questions, please contact:
OSPRI- Mike Sanderson firstname.lastname@example.org
Campus Compliance email@example.com
Campus Legal firstname.lastname@example.org