Kevin Feldis U.S. Department of Justice Resident Legal Advisor - - PowerPoint PPT Presentation

Investigating and Prosecuting Transnational Corruption and Bribery

November 16, 2016

Kevin Feldis U.S. Department of Justice Resident Legal Advisor U.S. Embassy, Jakarta

FCPA Overview

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Foreign Bribery Was Made Illegal in the United States in 1977

Foreign Corrupt Practices Act (“FCPA”)

FCPA Overview Anti-bribery provisions:

• Prohibit payment, offer of payment, or authorization of payment of

bribes, directly or indirectly, to foreign officials, foreign parties, foreign party officials, and foreign candidates for public office

Accounting provisions:

• Books and Records: make and keep books, records, and accounts,

which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer; and

• Internal Controls: devise and maintain a system of internal

accounting controls

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FCPA Overview Criminal and Civil Enforcement

Justice Department - Criminal and civil enforcement authority

• Criminal enforcement authority over issuers, domestic

concerns, and foreign persons and entities (acting within the territory of the U.S.)

• Civil (anti-bribery) enforcement authority over persons and

non-issuers subject to the FCPA Securities and Exchange Commission - Civil enforcement authority

• Civil enforcement authority over issuers (and their officers,

employees, etc.) only

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FCPA Overview

“Put simply corruption undermines the promise of democracy. It imperils development, stability, and faith in our markets. And it weakens the rule of law.”

− U.S. Attorney General Eric Holder, May 2010

• No matter where or how it happens or what it is

called, bribery has the same corrosive effect:

− Weakened economic development − Lost confidence in the marketplace − Imperils political stability − Unfair and distorted competition − Undermines U.S. interests abroad

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FCPA Overview The Foreign Corrupt Practices Act (FCPA)

• Prohibits U.S. and certain foreign persons and companies from:
• Paying or promising to pay anything of value;
• To foreign officials, foreign political parties (or officers

thereof) or candidates for foreign office;

• For the purposes of:
• Influencing any act or decision of the official in his/her
• fficial capacity;
• Inducing the official to take any action or refrain from

taking any action in violation of his/her lawful duty;

• Obtaining any improper advantage; or
• Inducing the official to use his/her influence to affect or

influence any act of a government;

• In order to assist the company in obtaining or retaining

business or directing business to any person.

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FCPA Overview Anything of Value…

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FCPA Overview

Directly and Indirectly…

• Third party agents or consultants
• Intermediaries
• Hiring a company “owned” by a relative of the officials
• You do not need to know what actually happens to the

money to violate the FCPA

• It makes no difference if the third party agent does not pass a single

penny on to the official

• The FCPA does not require that a corrupt act succeed in its purpose
• “Willful blindness”

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FCPA Overview To Obtain or Retain Business…

• Payments made for specific contracts
• To secure a successful bid
• To extend an existing contract
• Payments that may indirectly relate to obtaining business
• Payments that “provide an unfair advantage over competitors” –

U.S. v. Kay, 359 F.3d 738, 749 (5th Cir. 2004)

• Examples: Tax benefits, customs clearance

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FCPA Overview Exceptions and Defenses…

• Exception for Routine Government Action (facilitation payments):
• Small payments to secure, facilitate or expedite routine government action;
• Applies only to government action to which a company is already entitled

without the exercise of discretion by a foreign official;

• Does not apply to small payments to avoid otherwise applicable requirements.
• Affirmative Defenses:
• Reasonable and bona fide expenditures that are directly related to:
• Promotion, demonstration or explanation of products;
• Execution or performance of a contract;
• Testing equipment; training; visiting the plant where product is

manufactured for a demonstration

• Payments, gifts and offers that are legal under the written laws and regulations
• f the official’s country

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The Foreign Corrupt Practices Act Accounting Provisions

• Public companies must “make and keep books,

records and accounts” which “accurately and fairly reflect the transactions and dispositions of the assets of the issuer”

• Public companies must “devise and maintain a system
• f internal accounting controls” that provide reasonable

assurances that the transactions are properly authorized

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FCPA Overview

FCPA Enforcement

• Origins of FCPA Investigations:
• Corporate voluntary self disclosures
• Mergers and acquisitions
• Undercover investigations
• Whistleblowers
• Foreign law enforcement partners
• Tips from U.S. embassies / Anonymous tips
• Pro-active investigations on other matters
• Data analysis (bank records / SARs)
• Media reports

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FCPA Enforcement: Investigative Tools

• Subpoenas
• Search warrants
• MLATs
• Interviews
• Confidential informants
• Cooperating defendants
• Wire taps

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FCPA Enforcement: Cooperation

• Increasing Methods of International Cooperation
• Formal evidence requests by treaty
• Multilateral Organizations (OECD, UNCAC, Eurojust)
• Informal Intelligence Sharing
• Parallel Investigations and Prosecutions
• Division of wrongful conduct / defendants
• Referrals of Investigations
• US referral of entire investigation
• US referral of foreign public officials

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FCPA Voluntary Disclosure Program

• DOJ Pilot Program for Voluntary Disclosures:
• Company must voluntarily self-disclose
• Must provide full cooperation
• Must remediate the harm done

If Voluntary Disclosure requirements are all satisfied:

• Up to 50% penalty fine/reduction
• No post conviction monitoring will be required
• Potential for non-prosecution agreement

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