Caught in the (Foreign Corrupt Practices) Act

Welcome to the October 2018 edition of our newsletter!  In this issue, we’ll examine how a recent ruling about foreign bribery allegations could change the way in which they’re investigated.

Cross-Border Changes: Recent Ruling Narrows Scope of Prosecution Under Foreign Corrupt Practices Act

As noted in this space before, the U.S. Foreign Corrupt Practices Act (“FCPA”) prohibits executives of U.S. companies from bribing foreign officials.  The parties on the receiving end of the bribery scheme have also been subject to prosecution if the act occurred in the United States, but a recent U.S. Court of Appeals ruling found that a defendant in one such case was not subject to the FCPA because he was not an employee of the U.S.-based unit of his French employer, nor was he within the United States when the alleged crime occurred.  In its ruling, the appellate court found that prosecutors could make the case that the defendant conspired with others in furtherance of that crime.

Researching Multinational Financial Crimes

The ruling was described in news articles as possibly being narrowly implemented, as most multinational companies have a U.S. component, and an increasingly global business environment reduces the likelihood that a party would have no interaction whatsoever with such an office.  Yet the ruling may present another nuance to investigations, specifically determining where a crime is said to have occurred.  This can be done via analysis of internal records such as e-mails and other correspondence, but also indicates that corporate records may be of greater importance, in part to determine if common management and control of entities exists between U.S. and non-U.S. based groups within the same company.

After at least 20 years of increased globalization of markets and businesses, the environment continues to evolve, and with it the laws governing participation in the global marketplace.  As a result, the tools and rules used by investigators looking into such offenses must also grow to understand and address such changes.