Integrity Legal

Posts Tagged ‘FCPA India’

28th December 2010

The FCPA (Foreign Corrupt Practices Act) is one of the most misunderstood, or least understood pieces of legislation amongst Americans as the provisions and language of this legislation is somewhat difficult to comprehend for those who are unaccustomed to so-called “legalese.” That said, this law is integral to a full understanding of United States corporate and transactional law in an international context. In order to understand the full scope of this issue it may be best to quote directly from the United States Department of Justice (DOJ) official website:

The Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §§ 78dd-1, et seq. (“FCPA”), was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. Specifically, the anti-bribery provisions of the FCPA prohibit the willful use of the mails or any means of instrumentality of interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a foreign official to influence the foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person.

Since 1977, the anti-bribery provisions of the FCPA have applied to all U.S. persons and certain foreign issuers of securities. With the enactment of certain amendments in 1998, the anti-bribery provisions of the FCPA now also apply to foreign firms and persons who cause, directly or through agents, an act in furtherance of such a corrupt payment to take place within the territory of the United States.

The FCPA also requires companies whose securities are listed in the United States to meet its accounting provisions. See 15 U.S.C. � 78m. These accounting provisions, which were designed to operate in tandem with the anti-bribery provisions of the FCPA, require corporations covered by the provisions to (a) make and keep books and records that accurately and fairly reflect the transactions of the corporation and (b) devise and maintain an adequate system of internal accounting controls.

As can be gathered from the above citation, the FCPA would seem to have been enacted in an effort to increase transparency in Business-to-Government transactions occurring outside of the United States of America. Furthermore, the Act also appears to have been designed to restrict acts of bribery in matters pertaining to an American person or entity abroad. That said, there are some definitions within the provisions of the act which distinguish certain activities from the definition of bribery. For instance, the Act makes use of the term “grease payment” in describing payments which are considered exempt from being defined as bribery where the payment itself is not made in order to have an impact upon the outcome of an adjudication.

For interesting insight into this facet of the Foreign Corrupt Practices Act it may be best to quote the Wikipedia website:

Regarding payments to foreign officials, the act draws a distinction between bribery and facilitation or “grease payments”, which may be permissible under the FCPA but may still violate local laws. The primary distinction is that grease payments are made to an official to expedite his performance of the duties he is already bound to perform. Payments to foreign officials may be legal under the FCPA if the payments are permitted under the written laws of the host country. Certain payments or reimbursements relating to product promotion may also be permitted under the FCPA.

First, those reading this posting should note that this piece is not meant to act as a definitive analysis of the Foreign Corrupt Practices Act (FCPA) since any legal matter must be analyzed based upon the unique set of facts existing in the case. Furthermore, legal analysis of matters which may fall under the scope of the FCPA should only be conducted by a licensed American attorney trained and experienced in American corporate law as well as international law because corporate transactions can often become highly complex, from a legal standpoint, in an international context. Therefore, failure to retain adequate legal counsel in matters which may touch upon the FCPA could result in severe civil or even criminal penalties for both American corporations operating abroad or American natural persons doing business outside of the United States of America.

Those American firms and individuals wishing to conduct business in countries such as Thailand, Myanmar (Burma), Malaysia, China, India, Vietnam, Korea, Japan, Taiwan, Sri Lanka, Indonesia, Laos, Cambodia, Bangladesh and Singapore should be aware that not only must local laws be adhered to, but also the Foreign Corrupt Practices Act should the entity or individual in question be subject to the FCPA’s jurisdiction.

Fore related information please see: US Company Registration or Thailand Company.

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