Foreign Corrupt Practices Act Claims

By: Stephen T. Raptis
– Risk Management Magazine

The federal government has ramped up enforcement of the Foreign Corrupt Practices Act (FCPA) in recent years. Generally speaking, the FCPA prohibits U.S. companies (and foreign companies with certain U.S. ties) from bribing foreign government officials to further their business interests. This bribery does not have to involve cash payment, and may include non-monetary “favors” or items that may traditionally been considered merely "gifts." Through increased enforcement of the FCPA, the United States is better defining the sometimes blurry line between acceptable business practices and illegal corruption. Presenting a Chinese diplomat with a bottle of local Kentucky bourbon as a gesture of thanks for his hospitality should not be treated the same as handing that official an envelope of cash in the backseat of an unmarked car.

For those that violate the FCPA, the costs can be staggering. Companies may be fined millions, forced to forfeit profits and prohibited from doing future business with U.S. government entities.

The legal fees can be even greater. In 2010, Daimler AG settled an FCPA investigation by paying $93.6 million. But that wasn't the worst of it. The settlement paled in comparison to the more than $500 million a company source told Forbes that it cost the German automaker to comply with the investigation,which began in 2004, required the services of 85 outside attorneys and looked at transactions in 75 countries.

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