U.S Foreign Corrupt Practices Act Compliance
The United States Foreign Corrupt Practices Act of 1977 affects entities with any connection to the United States such as individuals who may be United States citizens or residents and businesses which may trade in United States securities or maintain a presence in the country either directly or through a subsidiary.
The FCPA criminalizes the paying of bribes to foreign government and public officials in order to secure contracts or business advantages. The Act does not only focus on the aforementioned entities directly but also their agents such as consultants, suppliers, distributors or joint venture partners. A United States company under this Act may be deemed liable for the actions of a licensed distributor in West Africa for example, if the said distributor is known to have paid bribes to government officials in order to secure business.
FCPA penalties may range from fines of several million dollars, to hundreds of millions or in certain cases billions of dollars. Prison sentences may also be meted out to individual parties perceived to be involved in the violations. In 2011, Joel Esquenazi of Terra Telecommunications Corporation was sentenced to 15 years in prison for his role in bribing officials in a Haitian government owned telecommunications firm for a contract.
Other than fines and prison sentences, there is also the stigma associated with being seen to be involved with untoward activities that can negatively affect an institution’s reputation as well as its future business efforts.
With corruption rife in sub-Saharan Africa, it is necessary for companies to conduct more than cursory due diligence in order to avoid legal liability for actions they might otherwise be unaware of. Conducting due diligence also provides companies with a defence in the event that any FCPA violations by third-party associates is uncovered in future.