Integrity Legal

It recently came to the administration’s attention that the Securities and Exchange Commission (SEC) in the United States is reportedly investigating possible violations of the Foreign Corrupt Practices Act (FCPA). To quote directly from a recent blog entry written by Ashby Jones on the Wall Street Journal‘s website wsj.com:

The Securities and Exchange Commission is investigating whether banks and private-equity firms violated bribery laws in their dealings with sovereign-wealth funds, according to people familiar with the matter. Click here for Dionne Searcey and Randall Smith’s article in today’s WSJ; click here for the NYT story; here for the Bloomberg story.

According to the WSJ, the SEC has sent letters of inquiry to banks such as Citigroup as well as private-equity firms including Blackstone Group, the people said. Though the letters didn’t contain specific allegations of bribery, they requested that firms retain documents and asked about the firms’ dealings with sovereign-wealth funds, the people said.

Those who are unfamiliar with the FCPA should note that the provisions of the law deal primarily with matters pertaining to bribery and corruption of foreign officials. Some Americans are under the mistaken impression that companies and individuals operating outside of the United States’ physical boundaries are entitled to engage in activity which amounts to bribery. In fact, this is simply not the case as the United States has a great deal of legislation in place as an attempt to discourage and punish such activity. When the legislation was passed it would appear that the intention was to criminalize activity by those physically abroad (or companies doing business abroad). However, the circumstances in the above cited matters would seem to suggest that those under investigation were operating (at least partially) within the geographical boundaries of the United States. To quote the aforementioned blog posting on wsj.com further:

The letters appear to be tied to a broad Foreign Corrupt Practices Act investigation of the banking industry, said attorneys who are familiar with past FCPA investigations of other industries. Foreign employees who work on sovereign-wealth funds would be considered government officials and covered by the FCPA, legal experts said.

As of yet, it would appear as though no one noted above has been formally charged in any matter pertaining to the FCPA. Furthermore, it should be noted that until such time as a party has made a pleading or been convicted of a violation of the FCPA they are, in the eyes of the law, innocent.

The Foreign Corrupt Practices Act is an important piece of legislation for Americans and American companies. Pursuant to the provisions of the FCPA, American individuals and corporate entities are precluded from engaging in acts of bribery or, as the title of the act itself suggests, corrupt practices. That said, application of the FCPA must take into consideration the factual circumstances in a given case. Therefore, those conducting business abroad may find that the opinion of American legal experts experienced at handling legal and business matters in jurisdictions outside of the USA can be beneficial by providing unique insight and perspective into the customs and procedures of governmental organizations and officers abroad while maintaining an American attorney’s understanding of the FCPA.

For example, the Kingdom of Thailand has a very different legal system compared to that of the United States. Meanwhile, the business community in Thailand is also dissimilar from that of the USA. An upshot of these facts is that American Citizens and US Companies attempting to conduct business in Thailand may have little idea of how to effectively operate while still complying with laws such as the Foreign Corrupt Practices Act.  The same can be said for many of the nations of Asia as the legal systems, cultural traditions, customs, and trade practices of some countries can prove bewildering to those who are accustomed to conducting business in a more “Western” context. The fact is: the FCPA is a serious piece of legislation with which American companies and individuals must maintain compliance. In some cases, retaining the services of legal counsel to assist in understanding the FCPA and methods of maintaining compliance can prove highly beneficial for both natural and corporate persons.

One can hope that the aforementioned inquiries prove fruitless due to the fact that no violations occurred. Bearing that in mind, if violations of the FCPA occurred, then it would seem highly likely that an organization such as the SEC would be able to uncover them.

For related information please see: Amity Treaty Company or American LLC.

Tags: American Business, American Business Asia, American Business Thailand, banking FCPA Compliance, Blackstone Group, Citigroup, FCPA, FCPA Compliance, Foreign Corrupt Practices Act, Foreign Corrupt Practices Act Compliance, Private Equity FCPA, Private Equity Foreign Corrupt Practices Act, SEC, Securities and Exchange Commission, Sovereign Wealth Funds, US Business, US Business Asia, US Business Thailand, US Company Thailand
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