> REGULATION FOCUS principal place of business in the United States, while the record-keeping provi- sion only applies to companies with securities registered with the SEC and companies that must file reports with the SEC. Importantly, even if your company does not have any direct foreign opera- tions, it can be held liable for a FCPA vio- lation committed by a foreign agent of your company, such as a business con- sultant or sales agent. The FCPA prohibits acts that are com- mitted “corruptly”—in other words, payments intended to induce the recipi- ent to misuse his or her official position. In addition, to be a violation, the pay- ment must have been made to obtain or retain business. However, this require- ment is read broadly. For example, pay- ments designed to lessen customs or tax liability are considered as intended to Beware the Foreign obtain or retain business. Bribes can come in all shapes and sizes and so, the FCPA prohibits the giv- Corrupt Practices Act ing of “anything of value.” There is no minimum threshold amount in the Act for corrupt gifts or payments. Regardless The hand of U.S. law reaches overseas, and the FCPA can of size, to violate the statute, the payor prove to be a trap for the unwary tobacco product exporter. must have intent to improperly influence >BY TROUTMAN SANDERS TOBACCO TEAM the government official into misusing their position. Companies are not prohib- ited from giving gifts, but should not use E xporting tobacco products to for- Securities and Exchange Commission gifts to disguise bribes. In the same man- eign markets presents a significant (SEC) detailing illegal payments by over ner, a company cannot make a charitable opportunity for manufacturers to 400 United States companies to non- contribution as a pretext to provide a increase sales. Great opportunities, how- United States governmental officials, bribe to a government official. ever, bring with them legal risks and com- politicians, and political parties. The The FCPA broadly defines the term pliance issues. Gaining access to new mar- FCPA contains two separate require- “foreign official” to include any officer kets and achieving market penetration in ments to discourage bribery. or employee (including low-level foreign countries will involve working, at First, the statute’s “anti-bribery” pro- employees and officials) of a foreign least at some level, with foreign govern- visions makes it a crime to offer or give government or any department, agency, ment officials. Whether your company’s anything of value to a foreign govern- or instrumentality of the government, sales representatives make those contacts ment official, a foreign political party, a including government-owned or gov- directly or work through foreign agents, foreign party official, or a foreign politi- ernment-controlled businesses and the risk of improper and illegal payments cal candidate in order to obtain or retain enterprises, and public international to government officials will arise in many business for or with, or to direct business organizations, or any person acting in an countries. It is critical that your company to, any person. official capacity for or on behalf of any understands the laws governing these Second, the statute’s “books and such government or department, agency, interactions and takes appropriate steps records” provision requires that compa- or instrumentality or public internation- to comply with those laws. nies make and keep accurate books and al organization. The FCPA also prohibits The Foreign Corrupt Practices Act records and devise and maintain an corrupt payments to foreign political (FCPA), was enacted in 1977 in the wake adequate system of internal accounting parties, officials of foreign political par- of public outcry to the Watergate scandal controls. ties, or any candidate for foreign politi- and in response to government investiga- The FCPA’s anti-bribery provision cal office. tions that led to a report from the U.S. applies broadly to any company with its Generally, the Department of Justice 48 SMOKESHOP February 2013
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