Despite 35 years of existence and 15 years of stepped-up enforcement, the Foreign Corrupt Practices Act (FCPA) issues still vex companies. The three primary reasons for this are: (i) the FCPA is a broadly written set of statutes; (ii) the broad writing is coupled with a history of aggressive interpretation by the Securities and Exchange Commission (SEC) and the US Department of Justice (DOJ); and (iii) litigation is risky and not cost-effective; consequently, opportunities for judicial review potentially limiting application of the Act have been few.

Fortunately, certain standard compliance measures can be adapted and updated to address these issues.

For all companies, the first hurdle to clear is gaining an understanding of how far-ranging the interpretation of the FCPA can be. To that end, some examples follow.

An ‘issuer’ can include a foreign company that simply trades American Depository Receipts on a US exchange. The Act can also apply to ‘certain persons and entities’, operating anywhere in the world, whose emails or phone calls pass through US based servers or switches or whose transfers pass through US intermediary banks.

‘Foreign officials’ may have rather remote connections to a government. In its information filed in regard to the medical devices company Smith & Nephew, the DOJ observed: “Health care providers who work at publicly-owned hospitals (HCPs) are government employees, providing health care services in their official capacities. Therefore, such HCPs in Greece are ‘foreign officials’ as that term is defined in the FCPA”.

Apr-Jun 2015 issue

CohnReznick Advisory Group