chapter 1

Introduction

A Resource Guide to the

FCPA

U.S. Foreign Corrupt Practices Act

By the Criminal Division of the U.S. Department of Justice and

the Enforcement Division of the U.S. Securities and Exchange Commission
This guide is intended to provide information for businesses and individuals regarding the U.S. Foreign Corrupt Practices 

Act (FCPA). The guide has been prepared by the staff of the Criminal Division of the U.S. Department of Justice and the 

Enforcement Division of the U.S. Securities and Exchange Commission. It is non-binding, informal, and summary in nature, and 

the information contained herein does not constitute rules or regulations. As such, it is not intended to, does not, and may not 

be relied upon to create any rights, substantive or procedural, that are enforceable at law by any party, in any criminal, civil, or 

administrative matter. It is not intended to substitute for the advice of legal counsel on specific issues related to the FCPA. It does 

not in any way limit the enforcement intentions or litigating positions of the U.S. Department of Justice, the U.S. Securities and 

Exchange Commission, or any other U.S. government agency. 

Companies or individuals seeking an opinion concerning specific prospective conduct are encouraged to use the U.S. 

Department of Justice’s opinion procedure discussed in Chapter 9 of this guide. 

This guide is United States Government property. It is available to the public free of charge online at www.justice.gov/

criminal/fraud/fcpa and www.sec.gov/spotlight/fcpa.shtml.
A RESOURCE GUIDE TO THE

U.S. FOREIGN CORRUPT PRACTICES ACT

By the Criminal Division of the U.S. Department of Justice and 

the Enforcement Division of the U.S. Securities and Exchange Commission
FOREWORD

We are pleased to announce the publication of A Resource Guide to the U.S. Foreign Corrupt Practices Act. The Foreign 

Corrupt Practices Act (FCPA) is a critically important statute for combating corruption around the globe. Corruption has 

corrosive effects on democratic institutions, undermining public accountability and diverting public resources from important priorities such as health, education, and infrastructure. When business is won or lost based on how much a company is 

willing to pay in bribes rather than on the quality of its products and services, law-abiding companies are placed at a competitive disadvantage—and consumers lose. For these and other reasons, enforcing the FCPA is a continuing priority at the 

Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). 

The Guide is the product of extensive efforts by experts at DOJ and SEC, and has benefited from valuable input from 

the Departments of Commerce and State.  It endeavors to provide helpful information to enterprises of all shapes and sizes—

from small businesses doing their first transactions abroad to multi-national corporations with subsidiaries around the world.  

The Guide addresses a wide variety of topics, including who and what is covered by the FCPA’s anti-bribery and accounting 

provisions; the definition of a “foreign official”; what constitute proper and improper gifts, travel and entertainment expenses; 

the nature of facilitating payments; how successor liability applies in the mergers and acquisitions context; the hallmarks of 

an effective corporate compliance program; and the different types of civil and criminal resolutions available in the FCPA 

context. On these and other topics, the Guide takes a multi-faceted approach, setting forth in detail the statutory requirements while also providing insight into DOJ and SEC enforcement practices through hypotheticals, examples of enforcement actions and anonymized declinations, and summaries of applicable case law and DOJ opinion releases.

The Guide is an unprecedented undertaking by DOJ and SEC to provide the public with detailed information about 

our FCPA enforcement approach and priorities. We are proud of the many lawyers and staff who worked on this project, 

and hope that it will be a useful reference for companies, individuals, and others interested in our enforcement of the Act. 

 

November 14, 2012

Lanny A. Breuer

Assistant Attorney General

Criminal Division

Department of Justice

Robert S. Khuzami

Director of Enforcement

Securities and Exchange Commission

CONTENTS

Chapter 1: INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

The Costs of Corruption 2

Historical Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

National Landscape: Interagency Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Department of Justice 4

Securities and Exchange Commission 4

Law Enforcement Partners 5

Departments of Commerce and State 5

International Landscape: Global Anti-Corruption Efforts 7

OECD Working Group on Bribery and the Anti-Bribery Convention . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

U.N. Convention Against Corruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Other Anti-Corruption Conventions 8

Chapter 2: THE FCPA: ANTI-BRIBERY PROVISIONS . . . . . . . . . . . . . . . . . . . . .10

Who Is Covered by the Anti-Bribery Provisions? 10

Issuers—15 U.S.C. § 78dd-1 10

Domestic Concerns—15 U.S.C. § 78dd-2 11

Territorial Jurisdiction—15 U.S.C. § 78dd-3 11

What Jurisdictional Conduct Triggers the Anti-Bribery Provisions? 11

What Is Covered?—The Business Purpose Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

What Does “Corruptly” Mean? 14

What Does “Willfully” Mean and When Does It Apply? 14

What Does “Anything of Value” Mean? 14

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Gifts, Travel, Entertainment, and Other Things of Value 15

Charitable Contributions 16

Who Is a Foreign Official? 19

Department, Agency, or Instrumentality of a Foreign Government 20

Public International Organizations 21

How Are Payments to Third Parties Treated? 21

What Affirmative Defenses Are Available? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

The Local Law Defense 23

Reasonable and Bona Fide Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

What Are Facilitating or Expediting Payments? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

Does the FCPA Apply to Cases of Extortion or Duress? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

Principles of Corporate Liability for Anti-Bribery Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

Parent-Subsidiary Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

Successor Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

Additional Principles of Criminal Liability for Anti-Bribery Violations: Aiding and Abetting and Conspiracy . . . .34
Additional Principles of Civil Liability for Anti-Bribery Violations: Aiding and Abetting and Causing . . . . . . . .34

What Is the Applicable Statute of Limitations? 34

Statute of Limitations in Criminal Cases 34

Statute of Limitations in Civil Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

Chapter 3: THE FCPA: ACCOUNTING PROVISIONS . . . . . . . . . . . . . . . . . . . . 38

What Is Covered by the Accounting Provisions? 39

Books and Records Provision 39

Internal Controls Provision 40

Potential Reporting and Anti-Fraud Violations 41

What Are Management’s Other Obligations? 42

Who Is Covered by the Accounting Provisions? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

Civil Liability for Issuers, Subsidiaries, and Affiliates 42

Civil Liability for Individuals and Other Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

Criminal Liability for Accounting Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

Conspiracy and Aiding and Abetting Liability 45

Auditor Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45

Chapter 4: OTHER RELATED U.S. LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . .48

Travel Act 48

Money Laundering 48

Mail and Wire Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

Certification and Reporting Violations 49

Tax Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

Chapter 5: GUIDING PRINCIPLES OF ENFORCEMENT . . . . . . . . . . . . . . . . . . .52

What Does DOJ Consider When Deciding Whether to Open an Investigation or Bring Charges? 52

DOJ Principles of Federal Prosecution 52

DOJ Principles of Federal Prosecution of Business Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

What Does SEC Consider When Deciding Whether to Open an Investigation or Bring Charges? 53

Self-Reporting, Cooperation, and Remedial Efforts 54

Criminal Cases 54

Civil Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55

Corporate Compliance Program 56

Hallmarks of Effective Compliance Programs 57

Commitment from Senior Management and a Clearly Articulated Policy Against Corruption 57

Code of Conduct and Compliance Policies and Procedures 57

Oversight, Autonomy, and Resources 58

Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58

Training and Continuing Advice 59

Incentives and Disciplinary Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59

Third-Party Due Diligence and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
Confidential Reporting and Internal Investigation 61

Continuous Improvement: Periodic Testing and Review 61

Mergers and Acquisitions: Pre-Acquisition Due Diligence and Post-Acquisition Integration 62

Other Guidance on Compliance and International Best Practices 63

Chapter 6: FCPA PENALTIES, SANCTIONS, AND REMEDIES . . . . . . . . . . . . . . . .68

What Are the Potential Consequences for Violations of the FCPA? 68

Criminal Penalties 68

U.S. Sentencing Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68

Civil Penalties 69

Collateral Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69

Debarment 70

Cross-Debarment by Multilateral Development Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70

Loss of Export Privileges 71

When Is a Compliance Monitor or Independent Consultant Appropriate? 71

Chapter 7: RESOLUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

What Are the Different Types of Resolutions with DOJ? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74

Criminal Complaints, Informations, and Indictments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74

Plea Agreements 74

Deferred Prosecution Agreements 74

Non-Prosecution Agreements 75

Declinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75

What Are the Different Types of Resolutions with SEC? 76

Civil Injunctive Actions and Remedies 76

Civil Administrative Actions and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76

Deferred Prosecution Agreements 76

Non-Prosecution Agreements 77

Termination Letters and Declinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77

What Are Some Examples of Past Declinations by DOJ and SEC? . . . . . . . . . . . . . . . . . . . . . . . . . . . .77

Chapter 8: WHISTLEBLOWER PROVISIONS AND PROTECTIONS . . . . . . . . . . . . .82

Chapter 9: DOJ OPINION PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . .86

Chapter 10: CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90

APPENDIX: THE FOREIGN CORRUPT PRACTICES ACT . . . . . . . . . . . . . . . . . . .92

APPENDIX: ENDNOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Corporate bribery is bad business. In our free market system it is basic that the 

sale of products should take place on the basis of price, quality, and service. 

Corporate bribery is fundamentally destructive of this basic tenet. Corporate 

bribery of foreign officials takes place primarily to assist corporations in gaining 

business. Thus foreign corporate bribery affects the very stability of overseas 

business. Foreign corporate bribes also affect our domestic competitive climate 

when domestic firms engage in such practices as a substitute for healthy competition for foreign business.1

—United States Senate, 1977

chapter 1

Introduction

2

INTRODUCTION

Congress enacted the U.S. Foreign Corrupt Practices Act (FCPA or the Act) in 

1977 in response to revelations of widespread bribery of foreign officials by U.S. 

companies. The Act was intended to halt those corrupt practices, create a level 

playing field for honest businesses, and restore public confidence in the integrity of the marketplace.2

The FCPA contains both anti-bribery and accounting 

provisions. The anti-bribery provisions prohibit U.S. persons and businesses (domestic concerns), U.S. and foreign 

public companies listed on stock exchanges in the United 

States or which are required to file periodic reports with 

the Securities and Exchange Commission (issuers), and 

certain foreign persons and businesses acting while in the 

territory of the United States (territorial jurisdiction) from 

making corrupt payments to foreign officials to obtain or 

retain business. The accounting provisions require issuers 

to make and keep accurate books and records and to devise 

and maintain an adequate system of internal accounting 

controls. The accounting provisions also prohibit individuals and businesses from knowingly falsifying books and 

records or knowingly circumventing or failing to implement a system of internal controls. 

The Department of Justice (DOJ) and the 

Securities and Exchange Commission (SEC) share FCPA 

enforcement authority and are committed to fighting foreign bribery through robust enforcement. An important 

component of this effort is education, and this resource 

guide, prepared by DOJ and SEC staff, aims to provide 

businesses and individuals with information to help them 

abide by the law, detect and prevent FCPA violations, and 

implement effective compliance programs. 

The Costs of Corruption

Corruption is a global problem. In the three decades 

since Congress enacted the FCPA, the extent of corporate 

bribery has become clearer and its ramifications in a transnational economy starker. Corruption impedes economic 

growth by diverting public resources from important priorities such as health, education, and infrastructure. It 

undermines democratic values and public accountability 

and weakens the rule of law.3

 And it threatens stability and 

security by facilitating criminal activity within and across 
3

borders, such as the illegal trafficking of people, weapons, 

and drugs.4 International corruption also undercuts good 

governance and impedes U.S. efforts to promote freedom 

and democracy, end poverty, and combat crime and terrorism across the globe.5

Corruption is also bad for business. Corruption is 

anti-competitive, leading to distorted prices and disadvantaging honest businesses that do not pay bribes. It increases 

the cost of doing business globally and inflates the cost of 

government contracts in developing countries.6 Corruption 

also introduces significant uncertainty into business transactions: Contracts secured through bribery may be legally 

unenforceable, and paying bribes on one contract often 

results in corrupt officials making ever-increasing demands.7

Bribery has destructive effects within a business as well, 

undermining employee confidence in a company’s management and fostering a permissive atmosphere for other kinds 

of corporate misconduct, such as employee self-dealing, 

embezzlement,8 financial fraud,9 and anti-competitive 

behavior.10 Bribery thus raises the risks of doing business, 

putting a company’s bottom line and reputation in jeopardy. Companies that pay bribes to win business ultimately 

undermine their own long-term interests and the best interests of their investors.

Historical Background

Congress enacted the FCPA in 1977 after revelations of widespread global corruption in the wake of the 

Watergate political scandal. SEC discovered that more than 

400 U.S. companies had paid hundreds of millions of dollars in bribes to foreign government officials to secure business overseas.11 SEC reported that companies were using 

secret “slush funds” to make illegal campaign contributions 

in the United States and corrupt payments to foreign officials abroad and were falsifying their corporate financial 

records to conceal the payments.12

Congress viewed passage of the FCPA as critical 

to stopping corporate bribery, which had tarnished the 

image of U.S. businesses, impaired public confidence in 

the financial integrity of U.S. companies, and hampered 

the efficient functioning of the markets.13 As Congress 

recognized when it passed the FCPA, corruption imposes 

enormous costs both at home and abroad, leading to market inefficiencies and instability, sub-standard products, 

and an unfair playing field for honest businesses.14 By 

enacting a strong foreign bribery statute, Congress sought 

to minimize these destructive effects and help companies 

resist corrupt demands, while addressing the destructive foreign policy ramifications of transnational bribery.15 The Act also prohibited off-the-books accounting 

through provisions designed to “strengthen the accuracy 

of the corporate books and records and the reliability of 

the audit process which constitute the foundations of our 

system of corporate disclosure.”16

In 1988, Congress amended the FCPA to add two 

affirmative defenses: (1) the local law defense; and (2) the 

reasonable and bona fide promotional expense defense.17

Congress also requested that the President negotiate an 

international treaty with members of the Organisation 

for Economic Co-operation and Development (OECD) 

to prohibit bribery in international business transactions 

by many of the United States’ major trading partners.18

Subsequent negotiations at the OECD culminated in the 

Convention on Combating Bribery of Foreign Officials 

in International Business Transactions (Anti-Bribery 

Convention), which, among other things, required parties 

to make it a crime to bribe foreign officials.19

No problem does more to alienate citizens 

from their political leaders and institutions, 

and to undermine political stability and 

economic development, than endemic 

corruption among the government, political 

party leaders, judges, and bureaucrats.

— USAID Anti-Corruption Strategy
chapter 1

Introduction

4

In 1998, the FCPA was amended to conform to 

the requirements of the Anti-Bribery Convention. These 

amendments expanded the FCPA’s scope to: (1) include 

payments made to secure “any improper advantage”; (2) 

reach certain foreign persons who commit an act in furtherance of a foreign bribe while in the United States; (3) 

cover public international organizations in the definition 

of “foreign official”; (4) add an alternative basis for jurisdiction based on nationality; and (5) apply criminal penalties to foreign nationals employed by or acting as agents 

of U.S. companies.20 The Anti-Bribery Convention came 

into force on February 15, 1999, with the United States 

as a founding party. 

National Landscape: Interagency 

Efforts

DOJ and SEC share enforcement authority for the 

FCPA’s anti-bribery and accounting provisions.21 They also 

work with many other federal agencies and law enforcement partners to investigate and prosecute FCPA violations, reduce bribery demands through good governance 

programs and other measures, and promote a fair playing 

field for U.S. companies doing business abroad.

Department of Justice

DOJ has criminal FCPA enforcement authority 

over “issuers” (i.e., public companies) and their officers, 

directors, employees, agents, or stockholders acting on the 

issuer’s behalf. DOJ also has both criminal and civil enforcement responsibility for the FCPA’s anti-bribery provisions 

over “domestic concerns”—which include (a) U.S. citizens, 

nationals, and residents and (b) U.S. businesses and their 

officers, directors, employees, agents, or stockholders acting on the domestic concern’s behalf—and certain foreign 

persons and businesses that act in furtherance of an FCPA 

violation while in the territory of the United States. Within 

DOJ, the Fraud Section of the Criminal Division has primary responsibility for all FCPA matters.22 FCPA matters 

are handled primarily by the FCPA Unit within the Fraud 

Section, regularly working jointly with U.S. Attorneys’ 

Offices around the country.

DOJ maintains a website dedicated to the FCPA and 

its enforcement at http://www.justice.gov/criminal/fraud/

fcpa/. The website provides translations of the FCPA in 

numerous languages, relevant legislative history, and selected 

documents from FCPA-related prosecutions and resolutions 

since 1977, including charging documents, plea agreements, 

deferred prosecution agreements, non-prosecution agreements, press releases, and other relevant pleadings and court 

decisions. The website also provides copies of opinions issued 

in response to requests by companies and individuals under 

DOJ’s FCPA opinion procedure. The procedures for submitting a request for an opinion can be found at http://www.

justice.gov/criminal/fraud/fcpa/docs/frgncrpt.pdf and are 

discussed further in Chapter 9. Individuals and companies 

wishing to disclose information about potential FCPA violations are encouraged to contact the FCPA Unit at the telephone number or email address above.

Securities and Exchange Commission

SEC is responsible for civil enforcement of the FCPA 

over issuers and their officers, directors, employees, agents, 

DOJ Contact Information

Deputy Chief (FCPA Unit)

Fraud Section, Criminal Division

Bond Building

1400 New York Ave, N.W.

Washington, DC 20005

Telephone: (202) 514-7023

Facsimile: (202) 514-7021

Email: FCPA.Fraud@usdoj.gov
5

or stockholders acting on the issuer’s behalf. SEC’s Division 

of Enforcement has responsibility for investigating and 

prosecuting FCPA violations. In 2010, SEC’s Enforcement 

Division created a specialized FCPA Unit, with attorneys 

in Washington, D.C. and in regional offices around the 

country, to focus specifically on FCPA enforcement. The 

Unit investigates potential FCPA violations; facilitates 

coordination with DOJ’s FCPA program and with other 

federal and international law enforcement partners; uses its 

expert knowledge of the law to promote consistent enforcement of the FCPA; analyzes tips, complaints, and referrals 

regarding allegations of foreign bribery; and conducts public outreach to raise awareness of anti-corruption efforts 

and good corporate governance programs.

The FCPA Unit maintains a “Spotlight on FCPA” 

section on SEC’s website at http://www.sec.gov/spotlight/

fcpa.shtml. The website, which is updated regularly, provides general information about the Act, links to all SEC 

enforcement actions involving the FCPA, including both 

federal court actions and administrative proceedings, and 

contains other useful information. 

Individuals and companies with information about 

possible FCPA violations by issuers may report them to the 

Enforcement Division via SEC’s online Tips, Complaints 

and Referral system, http://www.sec.gov/complaint/tipscomplaint.shtml. They may also submit information to 

SEC’s Office of the Whistleblower through the same online 

system or by contacting the Office of the Whistleblower 

at (202) 551-4790. Additionally, investors with questions 

about the FCPA can call the Office of Investor Education 

and Advocacy at (800) SEC-0330. 

For more information about SEC’s Whistleblower 

Program, under which certain eligible whistleblowers may 

be entitled to a monetary award if their information leads to 

certain SEC actions, see Chapter 8.

Law Enforcement Partners

DOJ’s FCPA Unit regularly works with the Federal 

Bureau of Investigation (FBI) to investigate potential FCPA 

violations. The FBI’s International Corruption Unit has primary responsibility for international corruption and fraud 

investigations and coordinates the FBI’s national FCPA 

enforcement program. The FBI also has a dedicated FCPA 

squad of FBI special agents (located in the Washington 

Field Office) that is responsible for investigating many, and 

providing support for all, of the FBI’s FCPA investigations. 

In addition, the Department of Homeland Security and the 

Internal Revenue Service-Criminal Investigation regularly 

investigate potential FCPA violations. A number of other 

agencies are also involved in the fight against international 

corruption, including the Department of Treasury’s Office 

of Foreign Assets Control, which has helped lead a number 

of FCPA investigations.

Departments of Commerce and State

Besides enforcement efforts by DOJ and SEC, 

the U.S. government is also working to address corruption abroad and level the playing field for U.S. businesses 

through the efforts of the Departments of Commerce and 

State. Both Commerce and State advance anti-corruption 

and good governance initiatives globally and regularly 

assist U.S. companies doing business overseas in several 

SEC Contact Information

FCPA Unit Chief

Division of Enforcement

U .S . Securities and Exchange Commission

100 F Street, N .E .

Washington, DC 20549

Online: Tips, Complaints, and 

Referrals website

http://www .sec .gov/complaint/tipscomplaint .shtml

Office of Investor Education and Advocacy: 

(800) SEC-0330
chapter 1

Introduction

6

important ways. Both agencies encourage U.S. businesses 

to seek the assistance of U.S embassies when they are confronted with bribe solicitations or other corruption-related 

issues overseas.23

The Department of Commerce offers a number of important resources for businesses, including the 

International Trade Administration’s United States and 

Foreign Commercial Service (Commercial Service). The 

Commercial Service has export and industry specialists 

located in over 100 U.S. cities and 70 countries who are 

available to provide counseling and other assistance to U.S. 

businesses, particularly small and medium-sized companies, 

regarding exporting their products and services. Among 

other things, these specialists can help a U.S. company conduct due diligence when choosing business partners or agents 

overseas. The International Company Profile Program, for 

instance, can be part of a U.S. business’ evaluation of potential overseas business partners.24 Businesses may contact the 

Commercial Service through its website, http://export.gov/

eac/, or directly at its domestic and foreign offices.25

Additionally, the Department of Commerce’s Office 

of the General Counsel maintains a website, http://www.

commerce.gov/os/ogc/transparency-and-anti-briberyinitiatives, that contains recent articles and speeches, links 

to translations of the FCPA, a catalogue of anti-corruption 

resources, and a list of international conventions and initiatives. The Trade Compliance Center in the Department 

of Commerce’s International Trade Administration hosts 

a website with anti-bribery resources, http://tcc.export.

gov/Bribery. This website contains an online form through 

which U.S. companies can report allegations of foreign 

bribery by foreign competitors in international business 

transactions.26 The Department of Commerce also provides information to companies through a number of U.S. 

and international publications designed to assist firms in 

complying with anti-corruption laws. For example, the 

Department of Commerce has included a new anti-corruption section in its Country Commercial Guides, prepared 

by market experts at U.S. embassies worldwide, that contains 

information on market conditions for more than 100 countries, including information on the FCPA for exporters.27

The Department of Commerce has also published a guide, 

Business Ethics: A Manual for Managing a Responsible 

Business Enterprise in Emerging Market Economies, which 

contains information about corporate compliance programs for businesses involved in international trade.28

The Departments of Commerce and State also provide advocacy support, when determined to be in the 

national interest, for U.S. companies bidding for foreign 

government contracts. The Department of Commerce’s 

Advocacy Center, for example, supports U.S. businesses 

competing against foreign companies for international contracts, such as by arranging for the delivery of an advocacy 

message by U.S. government officials or assisting with unanticipated problems such as suspected bribery by a competitor.29 The Department of State’s Bureau of Economic and 

Business Affairs (specifically, its Office of Commercial and 

Business Affairs) similarly assists U.S. firms doing business 

overseas by providing advocacy on behalf of U.S. businesses 

and identifying risk areas for U.S. businesses; more information is available on its website, http://www.state.gov/e/

eb/cba/. Also, the Department of State’s economic officers 

serving overseas provide commercial advocacy and support 

for U.S. companies at the many overseas diplomatic posts 

where the Commercial Service is not represented. 

The Department of State promotes U.S. government 

interests in addressing corruption internationally through 

country-to-country diplomatic engagement; development 

of and follow-through on international commitments relating to corruption; promotion of high-level political engagement (e.g., the G20 Anticorruption Action Plan); public 

outreach in foreign countries; and support for building 

the capacity of foreign partners to combat corruption. In 

fiscal year 2009, the U.S. government provided more than 

$1 billion for anti-corruption and related good governance 

assistance abroad. 
7

The Department of State’s Bureau of International 

Narcotics and Law Enforcement Affairs (INL) manages 

U.S. participation in many multilateral anti-corruption 

political and legal initiatives at the global and regional level. 

INL also funds and coordinates significant efforts to assist 

countries with combating corruption through legal reform, 

training, and other capacity-building efforts. Inquiries about 

the U.S. government’s general anti-corruption efforts and 

implementation of global and regional anti-corruption initiatives may be directed to INL on its website, http://www.

state.gov/j/inl/c/crime/corr/index.htm, or by email to: 

anticorruption@state.gov. In addition, the U.S. Agency for 

International Development (USAID) has developed several 

anti-corruption programs and publications, information 

about which can be found at http://www.usaid.gov/whatwe-do/democracy-human-rights-and-governance/promoting-accountability-transparency. Finally, the Department of 

State’s brochure “Fighting Global Corruption: Business Risk 

Management,” available at http://www.ogc.doc.gov/pdfs/

Fighting_Global_Corruption.pdf, provides guidance about 

corporate compliance programs as well as international anticorruption initiatives.

International Landscape: Global AntiCorruption Efforts 

In recent years, there has been a growing international consensus that corruption must be combated, and the 

United States and other countries are parties to a number 

of international anti-corruption conventions. Under these 

conventions, countries that are parties undertake commitments to adopt a range of preventive and criminal law measures to combat corruption. The conventions incorporate 

review processes that allow the United States to monitor 

other countries to ensure that they are meeting their international obligations. Likewise, these processes in turn permit 

other parties to monitor the United States’ anti-corruption 

laws and enforcement to ensure that such enforcement and 

legal frameworks are consistent with the United States’ treaty 

obligations.30 U.S. officials regularly address the subject of 

corruption with our foreign counterparts to raise awareness 

of the importance of fighting corruption and urge stronger 

enforcement of anti-corruption laws and policies. 

OECD Working Group on Bribery and the AntiBribery Convention 

The OECD was founded in 1961 to stimulate economic progress and world trade. As noted, the Anti-Bribery 

Convention requires its parties to criminalize the bribery 

of foreign public officials in international business transactions.31 As of November 1, 2012, there were 39 parties to 

the Anti-Bribery Convention: 34 OECD member countries (including the United States) and five non-OECD 

member countries (Argentina, Brazil, Bulgaria, the Russian 

Federation, and South Africa). All of these parties are 

also members of the OECD Working Group on Bribery 

(Working Group).32

The Working Group is responsible for monitoring the 

implementation of the Anti-Bribery Convention, the 2009 

Recommendation of the Council for Further Combating 

Bribery of Foreign Public Officials in International 

Business Transactions, and related instruments. Its members meet quarterly to review and monitor implementation 

of the Anti-Bribery Convention by member states around 

the world. Each party undergoes periodic peer review.33

This peer-review monitoring system is conducted in three 

phases. The Phase 1 review includes an in-depth assessment of each country’s domestic laws implementing the 

Convention. The Phase 2 review examines the effectiveness 

of each country’s laws and anti-bribery efforts. The final 

phase is a permanent cycle of peer review (the first cycle of 

which is referred to as the Phase 3 review) that evaluates 

a country’s enforcement actions and results, as well as the 

country’s efforts to address weaknesses identified during the 

Phase 2 review.34 All of the monitoring reports for the parties to the Convention can be found on the OECD website 

and can be a useful resource about the foreign bribery laws 

of the OECD Working Group member countries.35

The United States was one of the first countries to 

undergo all three phases of review. The reports and appendices can be found on DOJ’s and SEC’s websites.36 In its 
chapter 1

Introduction

8

Phase 3 review of the United States, which was completed 

in October 2010, the Working Group commended U.S. 

efforts to fight transnational bribery and highlighted a 

number of best practices developed by the United States. 

The report also noted areas where the United States’ antibribery efforts could be improved, including consolidating publicly available information on the application of 

the FCPA and enhancing awareness among small- and 

medium-sized companies about the prevention and detection of foreign bribery. This guide is, in part, a response to 

these Phase 3 recommendations and is intended to help 

businesses and individuals better understand the FCPA.37

U.N. Convention Against Corruption

The United States is a state party to the United 

Nations Convention Against Corruption (UNCAC), 

which was adopted by the U.N. General Assembly on 

October 31, 2003, and entered into force on December 

14, 2005.38 The United States ratified the UNCAC on 

October 30, 2006. The UNCAC requires parties to criminalize a wide range of corrupt acts, including domestic and 

foreign bribery and related offenses such as money laundering and obstruction of justice. The UNCAC also establishes guidelines for the creation of anti-corruption bodies, 

codes of conduct for public officials, transparent and objective systems of procurement, and enhanced accounting and 

auditing standards for the private sector. A peer review 

mechanism assesses the implementation of the UNCAC 

by parties to the Convention, with a focus in the first round 

on criminalization and law enforcement as well as international legal cooperation.39 The United States has been 

reviewed under the Pilot Review Programme, the report 

of which is available on DOJ’s website. As of November 1, 

2012, 163 countries were parties to the UNCAC.40

Other Anti-Corruption Conventions 

The Inter-American Convention Against Corruption 

(IACAC) was the first international anti-corruption convention, adopted in March 1996 in Caracas, Venezuela, 

by members of the Organization of American States.41

The IACAC requires parties (of which the United States 

is one) to criminalize both foreign and domestic bribery. A body known as the Mechanism for Follow-Up on 

the Implementation of the Inter-American Convention 

Against Corruption (MESICIC) monitors parties’ compliance with the IACAC. As of November 1, 2012, 31 countries were parties to MESICIC.

The Council of Europe established the Group of 

States Against Corruption (GRECO) in 1999 to monitor 

countries’ compliance with the Council of Europe’s anticorruption standards, including the Council of Europe’s 

Criminal Law Convention on Corruption.42 These standards include prohibitions on the solicitation and receipt of 

bribes, as well as foreign bribery. As of November 1, 2012, 

GRECO member states, which need not be members of 

the Council of Europe, include more than 45 European 

countries and the United States.43

The United States has been reviewed under both 

MESICIC and GRECO, and the reports generated by 

those reviews are available on DOJ’s website.

chapter 2

The FCPA:

Anti-Bribery Provisions

10

THE FCPA: ANTI-BRIBERY

PROVISIONS

The FCPA addresses the problem of international corruption in two ways: (1) 

the anti-bribery provisions, which are discussed below, prohibit individuals 

and businesses from bribing foreign government officials in order to obtain 

or retain business and (2) the accounting provisions, which are discussed in 

Chapter 3, impose certain record keeping and internal control requirements 

on issuers, and prohibit individuals and companies from knowingly falsifying 

an issuer’s books and records or circumventing or failing to implement an issuer’s system of internal controls. Violations of the FCPA can lead to civil and 

criminal penalties, sanctions, and remedies, including fines, disgorgement, 

and/or imprisonment.

In general, the FCPA prohibits offering to pay, paying, promising to pay, or authorizing the payment of money 

or anything of value to a foreign official in order to influence any act or decision of the foreign official in his or her 

official capacity or to secure any other improper advantage 

in order to obtain or retain business.44

Who Is Covered by the Anti-Bribery Provisions?

The FCPA’s anti-bribery provisions apply broadly to 

three categories of persons and entities: (1) “issuers” and 

their officers, directors, employees, agents, and shareholders; (2) “domestic concerns” and their officers, directors, 

employees, agents, and shareholders; and (3) certain persons and entities, other than issuers and domestic concerns, 

acting while in the territory of the United States.

Issuers—15 U.S.C. § 78dd-1

Section 30A of the Securities Exchange Act of 1934 

(the Exchange Act), which can be found at 15 U.S.C. 

§ 78dd-1, contains the anti-bribery provision governing 
11

How Can I Tell If My Company Is an “Issuer”?

	It is listed on a national securities exchange in the 

United States (either stock or American Depository 

Receipts); or

	The company’s stock trades in the over-thecounter market in the United States and the 

company is required to file SEC reports.

	To see if your company files SEC reports, go to 

SEC’s website at http://www.sec.gov/edgar/

searchedgar/webusers.htm.

issuers.45 A company is an “issuer” under the FCPA if it 

has a class of securities registered under Section 12 of the 

Exchange Act46 or is required to file periodic and other 

reports with SEC under Section 15(d) of the Exchange 

Act.47 In practice, this means that any company with a 

class of securities listed on a national securities exchange in 

the United States, or any company with a class of securities quoted in the over-the-counter market in the United 

States and required to file periodic reports with SEC, is an 

issuer. A company thus need not be a U.S. company to be 

an issuer. Foreign companies with American Depository 

Receipts that are listed on a U.S. exchange are also issuers.48

As of December 31, 2011, 965 foreign companies were registered with SEC.49 Officers, directors, employees, agents, 

or stockholders acting on behalf of an issuer (whether U.S. 

or foreign nationals), and any co-conspirators, also can be 

prosecuted under the FCPA.50

Domestic Concerns—15 U.S.C. § 78dd-2

The FCPA also applies to “domestic concerns.” 51 A 

domestic concern is any individual who is a citizen, national, 

or resident of the United States, or any corporation, partnership, association, joint-stock company, business trust, 

unincorporated organization, or sole proprietorship that is 

organized under the laws of the United States or its states, 

territories, possessions, or commonwealths or that has its 

principal place of business in the United States.52 Officers, 

directors, employees, agents, or stockholders acting on 

behalf of a domestic concern, including foreign nationals or 

companies, are also covered.53

Territorial Jurisdiction—15 U.S.C. § 78dd-3

The FCPA also applies to certain foreign nationals or 

entities that are not issuers or domestic concerns.54 Since 

1998, the FCPA’s anti-bribery provisions have applied to 

foreign persons and foreign non-issuer entities that, either 

directly or through an agent, engage in any act in furtherance of a corrupt payment (or an offer, promise, or authorization to pay) while in the territory of the United States.55

Also, officers, directors, employees, agents, or stockholders 

acting on behalf of such persons or entities may be subject 

to the FCPA’s anti-bribery prohibitions.56

What Jurisdictional Conduct Triggers the AntiBribery Provisions?

The FCPA’s anti-bribery provisions can apply to 

conduct both inside and outside the United States. Issuers 

and domestic concerns—as well as their officers, directors, 

employees, agents, or stockholders—may be prosecuted 

for using the U.S. mails or any means or instrumentality of 

interstate commerce in furtherance of a corrupt payment 

to a foreign official. The Act defines “interstate commerce” 

as “trade, commerce, transportation, or communication 

among the several States, or between any foreign country 

and any State or between any State and any place or ship 

outside thereof ....”57 The term also includes the intrastate

use of any interstate means of communication, or any other 

interstate instrumentality.58 Thus, placing a telephone call or 

sending an e-mail, text message, or fax from, to, or through 

the United States involves interstate commerce—as does 

sending a wire transfer from or to a U.S. bank or otherwise 

using the U.S. banking system, or traveling across state borders or internationally to or from the United States.

Those who are not issuers or domestic concerns may 

be prosecuted under the FCPA if they directly, or through 

an agent, engage in any act in furtherance of a corrupt payment while in the territory of the United States, regardless of 
chapter 2

The FCPA:

Anti-Bribery Provisions

12

whether they utilize the U.S. mails or a means or instrumentality of interstate commerce.59 Thus, for example, a foreign 

national who attends a meeting in the United States that furthers a foreign bribery scheme may be subject to prosecution, 

as may any co-conspirators, even if they did not themselves 

attend the meeting. A foreign national or company may also 

be liable under the FCPA if it aids and abets, conspires with, 

or acts as an agent of an issuer or domestic concern, regardless 

of whether the foreign national or company itself takes any 

action in the United States.60

In addition, under the “alternative jurisdiction” provision of the FCPA enacted in 1998, U.S. companies or 

persons may be subject to the anti-bribery provisions even 

if they act outside the United States.61 The 1998 amendments to the FCPA expanded the jurisdictional coverage of 

the Act by establishing an alternative basis for jurisdiction, 

that is, jurisdiction based on the nationality principle.62 In 

particular, the 1998 amendments removed the requirement 

that there be a use of interstate commerce (e.g., wire, email, 

telephone call) for acts in furtherance of a corrupt payment 

to a foreign official by U.S. companies and persons occurring wholly outside of the United States.63

What Is Covered?—The Business 

Purpose Test

The FCPA applies only to payments intended to 

induce or influence a foreign official to use his or her position “in order to assist ... in obtaining or retaining business 

for or with, or directing business to, any person.”64 This 

requirement is known as the “business purpose test” and is 

broadly interpreted.65

Not surprisingly, many enforcement actions involve 

bribes to obtain or retain government contracts.66 The 

FCPA also prohibits bribes in the conduct of business or 

Hypothetical: FCPA Jurisdiction

Company A, a Delaware company with its principal place of business in New York, is a large energy company that 

operates globally, including in a number of countries that have a high risk of corruption, such as Foreign Country. Company 

A’s shares are listed on a national U.S. stock exchange. Company A enters into an agreement with a European company 

(EuroCo) to submit a joint bid to the Oil Ministry to build a refinery in Foreign Country. EuroCo is not an issuer.

Executives of Company A and EuroCo meet in New York to discuss how to win the bid and decide to hire a purported 

third-party consultant (Intermediary) and have him use part of his “commission” to bribe high-ranking officials within the 

Oil Ministry. Intermediary meets with executives at Company A and EuroCo in New York to finalize the scheme. Eventually, 

millions of dollars in bribes are funneled from the United States and Europe through Intermediary to high-ranking officials 

at the Oil Ministry, and Company A and EuroCo win the contract. A few years later, a front page article alleging that the 

contract was procured through bribery appears in Foreign Country, and DOJ and SEC begin investigating whether the 

FCPA was violated.

Based on these facts, which entities fall within the FCPA’s jurisdiction?

All of the entities easily fall within the FCPA’s jurisdiction. Company A is both an “issuer” and a “domestic concern” 

under the FCPA, and Intermediary is an “agent” of Company A. EuroCo and Intermediary are also subject to the FCPA’s 

territorial jurisdiction provision based on their conduct while in the United States. Moreover, even if EuroCo and Intermediary 

had never taken any actions in the territory of the United States, they can still be subject to jurisdiction under a traditional 

application of conspiracy law and may be subject to substantive FCPA charges under Pinkerton liability, namely, being liable 

for the reasonably foreseeable substantive FCPA crimes committed by a co-conspirator in furtherance of the conspiracy.
13

to gain a business advantage.67 For example, bribe payments 

made to secure favorable tax treatment, to reduce or eliminate customs duties, to obtain government action to prevent competitors from entering a market, or to circumvent 

a licensing or permit requirement, all satisfy the business 

purpose test.68

In 2004, the U.S. Court of Appeals for the Fifth Circuit 

addressed the business purpose test in United States v. Kay

and held that bribes paid to obtain favorable tax treatment—

which reduced a company’s customs duties and sales taxes 

on imports—could constitute payments made to “obtain 

or retain” business within the meaning of the FCPA.69 The 

court explained that in enacting the FCPA, “Congress meant 

to prohibit a range of payments wider than only those that 

directly influence the acquisition or retention of government contracts or similar commercial or industrial arrangements.”70 The Kay court found that “[t]he congressional 

target was bribery paid to engender assistance in improving 

the business opportunities of the payor or his beneficiary, 

irrespective of whether that assistance be direct or indirect, 

and irrespective of whether it be related to administering 

the law, awarding, extending, or renewing a contract, or 

executing or preserving an agreement.”71 Accordingly, Kay 

held that payments to obtain favorable tax treatment can, 

under appropriate circumstances, violate the FCPA:

Avoiding or lowering taxes reduces operating costs 

and thus increases profit margins, thereby freeing up 

funds that the business is otherwise legally obligated 

to expend. And this, in turn, enables it to take any 

number of actions to the disadvantage of competitors. Bribing foreign officials to lower taxes and customs duties certainly can provide an unfair advantage 

over competitors and thereby be of assistance to the 

payor in obtaining or retaining business.

* * *

[W]e hold that Congress intended for the FCPA 

to apply broadly to payments intended to assist the 

payor, either directly or indirectly, in obtaining or 

retaining business for some person, and that bribes 

paid to foreign tax officials to secure illegally reduced 

customs and tax liability constitute a type of payment 

that can fall within this broad coverage.72

Paying Bribes to Customs Officials 

In 2010, a global freight forwarding company and 

six of its corporate customers in the oil and gas industry 

resolved charges that they paid bribes to customs 

officials. The companies bribed customs officials in more 

than ten countries in exchange for such benefits as:

	evading customs duties on imported goods

	improperly expediting the importation of goods 

and equipment 

	extending drilling contracts and lowering tax 

assessments

	obtaining false documentation related to 

temporary import permits for drilling rigs 

	enabling the release of drilling rigs and other 

equipment from customs officials 

In many instances, the improper payments at issue 

allowed the company to carry out its existing business, 

which fell within the FCPA’s prohibition on corrupt 

payments made for the purpose of “retaining” business.

The seven companies paid a total of more than $235 

million in civil and criminal sanctions and disgorgement.

Examples of Actions Taken 

to Obtain or Retain Business

	Winning a contract

	Influencing the procurement process

	Circumventing the rules for importation of 

products

	Gaining access to non-public bid tender 

information

	Evading taxes or penalties

	Influencing the adjudication of lawsuits or 

enforcement actions

	Obtaining exceptions to regulations

	Avoiding contract termination
chapter 2

The FCPA:

Anti-Bribery Provisions

14

In short, while the FCPA does not cover every type 

of bribe paid around the world for every purpose, it does 

apply broadly to bribes paid to help obtain or retain business, which can include payments made to secure a wide 

variety of unfair business advantages.73

What Does “Corruptly” Mean?

To violate the FCPA, an offer, promise, or authorization of a payment, or a payment, to a government official must be made “corruptly.”74 As Congress noted when 

adopting the FCPA, the word “corruptly” means an intent 

or desire to wrongfully influence the recipient: 

The word “corruptly” is used in order to make clear 

that the offer, payment, promise, or gift, must be intended to induce the recipient to misuse his official 

position; for example, wrongfully to direct business 

to the payor or his client, to obtain preferential legislation or regulations, or to induce a foreign official to 

fail to perform an official function.75

Where corrupt intent is present, the FCPA prohibits 

paying, offering, or promising to pay money or anything 

of value (or authorizing the payment or offer).76 By focusing on intent, the FCPA does not require that a corrupt 

act succeed in its purpose.77 Nor must the foreign official 

actually solicit, accept, or receive the corrupt payment for 

the bribe payor to be liable.78 For example, in one case, a 

specialty chemical company promised Iraqi government 

officials approximately $850,000 in bribes for an upcoming 

contract. Although the company did not, in the end, make 

the payment (the scheme was thwarted by the U.S. government’s investigation), the company still violated the FCPA 

and was held accountable.79

Also, as long as the offer, promise, authorization, or 

payment is made corruptly, the actor need not know the 

identity of the recipient; the attempt is sufficient.80 Thus, an 

executive who authorizes others to pay “whoever you need 

to” in a foreign government to obtain a contract has violated 

the FCPA—even if no bribe is ultimately offered or paid. 

What Does “Willfully” Mean and When 

Does It Apply?

In order for an individual defendant to be criminally 

liable under the FCPA, he or she must act “willfully.”81  Proof 

of willfulness is not required to establish corporate criminal 

or civil liability,82 though proof of corrupt intent is.

The term “willfully” is not defined in the FCPA, but 

it has generally been construed by courts to connote an 

act committed voluntarily and purposefully, and with a 

bad purpose, i.e., with “knowledge that [a defendant] was 

doing a ‘bad’ act under the general rules of law.”83  As the 

Supreme Court explained in Bryan v. United States, “[a]s a 

general matter, when used in the criminal context, a ‘willful’ act is one undertaken with a ‘bad purpose.’  In other 

words, in order to establish a ‘willful’ violation of a statute, 

‘the Government must prove that the defendant acted with 

knowledge that his conduct was unlawful.’”84

Notably, as both the Second Circuit and Fifth Circuit 

Courts of Appeals have found, the FCPA does not require 

the government to prove that a defendant was specifically 

aware of the FCPA or knew that his conduct violated the 

FCPA.85  To be guilty, a defendant must act with a bad purpose, i.e., know generally that his conduct is unlawful.

What Does “Anything of Value” Mean?

In enacting the FCPA, Congress recognized that bribes 

can come in many shapes and sizes—a broad range of unfair 

benefits86—and so the statute prohibits the corrupt “offer, 

payment, promise to pay, or authorization of the payment of 

any money, or offer, gift, promise to give, or authorization of 

the giving of anything of value to” a foreign official.87

An improper benefit can take many forms. While 

cases often involve payments of cash (sometimes in the 

guise of “consulting fees” or “commissions” given through 

intermediaries), others have involved travel expenses and 
15

expensive gifts. Like the domestic bribery statute, the FCPA 

does not contain a minimum threshold amount for corrupt 

gifts or payments.88 Indeed, what might be considered a 

modest payment in the United States could be a larger and 

much more significant amount in a foreign country. 

Regardless of size, for a gift or other payment to violate the statute, the payor must have corrupt intent—that is, 

the intent to improperly influence the government official. 

The corrupt intent requirement protects companies that 

engage in the ordinary and legitimate promotion of their 

businesses while targeting conduct that seeks to improperly induce officials into misusing their positions. Thus, it 

is difficult to envision any scenario in which the provision 

of cups of coffee, taxi fare, or company promotional items 

of nominal value would ever evidence corrupt intent, and 

neither DOJ nor SEC has ever pursued an investigation 

on the basis of such conduct. Moreover, as in all areas of 

federal law enforcement, DOJ and SEC exercise discretion in deciding which cases promote law enforcement priorities and justify investigation. Certain patterns, however, 

have emerged: DOJ’s and SEC’s anti-bribery enforcement 

actions have focused on small payments and gifts only when 

they comprise part of a systemic or long-standing course of 

conduct that evidences a scheme to corruptly pay foreign 

officials to obtain or retain business. These assessments are 

necessarily fact specific.

Cash

The most obvious form of corrupt payment is large 

amounts of cash. In some instances, companies have maintained cash funds specifically earmarked for use as bribes. 

One U.S. issuer headquartered in Germany disbursed corrupt payments from a corporate “cash desk” and used offshore bank accounts to bribe government officials to win 

contracts.89 In another instance, a four-company joint venture used its agent to pay $5 million in bribes to a Nigerian 

political party.90 The payments were made to the agent in 

suitcases of cash (typically in $1 million installments), and, 

in one instance, the trunk of a car when the cash did not fit 

into a suitcase.91

Gifts, Travel, Entertainment, and Other Things 

of Value

A small gift or token of esteem or gratitude is often 

an appropriate way for business people to display respect 

for each other. Some hallmarks of appropriate gift-giving 

are when the gift is given openly and transparently, properly 

recorded in the giver’s books and records, provided only to 

reflect esteem or gratitude, and permitted under local law.  

Items of nominal value, such as cab fare, reasonable 

meals and entertainment expenses, or company promotional items, are unlikely to improperly influence an official, and, as a result, are not, without more, items that have 

resulted in enforcement action by DOJ or SEC. The larger 

or more extravagant the gift, however, the more likely it was 

given with an improper purpose. DOJ and SEC enforcement cases thus have involved single instances of large, 

extravagant gift-giving (such as sports cars, fur coats, and 

other luxury items) as well as widespread gifts of smaller 

items as part of a pattern of bribes.92 For example, in one 

case brought by DOJ and SEC, a defendant gave a government official a country club membership fee and a generator, as well as household maintenance expenses, payment 

of cell phone bills, an automobile worth $20,000, and limousine services. The same official also received $250,000 

through a third-party agent.93

In addition, a number of FCPA enforcement actions 

have involved the corrupt payment of travel and entertainment expenses. Both DOJ and SEC have brought cases 

where these types of expenditures occurred in conjunction 

with other conduct reflecting systemic bribery or other 

clear indicia of corrupt intent. 

A case involving a California-based telecommunications company illustrates the types of improper travel 

and entertainment expenses that may violate the FCPA.94

Between 2002 and 2007, the company spent nearly $7 million on approximately 225 trips for its customers in order to 

obtain systems contracts in China, including for employees 

of Chinese state-owned companies to travel to popular tourist destinations in the United States.95 Although the trips 

were purportedly for the individuals to conduct training at 
chapter 2

The FCPA:

Anti-Bribery Provisions

16

the company’s facilities, in reality, no training occurred on 

many of these trips and the company had no facilities at those 

locations. Approximately $670,000 of the $7 million was 

falsely recorded as “training” expenses.96

Likewise, a New Jersey-based telecommunications 

company spent millions of dollars on approximately 315 

trips for Chinese government officials, ostensibly to inspect 

factories and train the officials in using the company’s 

equipment.97 In reality, during many of these trips, the officials spent little or no time visiting the company’s facilities, 

but instead visited tourist destinations such as Hawaii, Las 

Vegas, the Grand Canyon, Niagara Falls, Disney World, 

Universal Studios, and New York City.98 Some of the trips 

were characterized as “factory inspections” or “training” 

with government customers but consisted primarily or 

entirely of sightseeing to locations chosen by the officials, 

typically lasting two weeks and costing between $25,000 

and $55,000 per trip. In some instances, the company gave 

the government officials $500 to $1,000 per day in spending money and paid all lodging, transportation, food, 

and entertainment expenses. The company either failed 

to record these expenses or improperly recorded them as 

“consulting fees” in its corporate books and records. The 

Examples of Improper 

Travel and Entertainment

	a $12,000 birthday trip for a government decisionmaker from Mexico that included visits to wineries 

and dinners 

	$10,000 spent on dinners, drinks, and 

entertainment for a government official

	a trip to Italy for eight Iraqi government officials 

that consisted primarily of sightseeing and 

included $1,000 in “pocket money” for each 

official

	a trip to Paris for a government official and his wife 

that consisted primarily of touring activities via a 

chauffeur-driven vehicle

company also failed to implement appropriate internal controls to monitor the provision of travel and other things of 

value to Chinese government officials.99

Companies also may violate the FCPA if they give 

payments or gifts to third parties, like an official’s family 

members, as an indirect way of corruptly influencing a foreign official. For example, one defendant paid personal bills 

and provided airline tickets to a cousin and close friend of 

the foreign official whose influence the defendant sought in 

obtaining contracts.100 The defendant was convicted at trial 

and received a prison sentence.101

As part of an effective compliance program, a company should have clear and easily accessible guidelines 

and processes in place for gift-giving by the company’s 

directors, officers, employees, and agents.  Though not 

necessarily appropriate for every business, many larger 

companies have automated gift-giving clearance processes and have set clear monetary thresholds for gifts 

along with annual limitations, with limited exceptions 

for gifts approved by appropriate management.  Clear 

guidelines and processes can be an effective and efficient 

means for controlling gift-giving, deterring improper 

gifts, and protecting corporate assets. 

The FCPA does not prohibit gift-giving. Rather, just 

like its domestic bribery counterparts, the FCPA prohibits 

the payments of bribes, including those disguised as gifts.

Charitable Contributions

Companies often engage in charitable giving as part 

of legitimate local outreach. The FCPA does not prohibit 

charitable contributions or prevent corporations from acting as good corporate citizens. Companies, however, cannot use the pretense of charitable contributions as a way to 

funnel bribes to government officials. 
17

For example, a pharmaceutical company used charitable donations to a small local castle restoration charity 

headed by a foreign government official to induce the official to direct business to the company. Although the charity 

was a bona fide charitable organization, internal documents 

at the pharmaceutical company’s subsidiary established that 

the payments were not viewed as charitable contributions 

but rather as “dues” the subsidiary was required to pay for 

assistance from the government official. The payments constituted a significant portion of the subsidiary’s total promotional donations budget and were structured to allow 

the subsidiary to exceed its authorized limits. The payments 

Hypothetical: Gifts, Travel, and Entertainment

Company A is a large U.S. engineering company with global operations in more than 50 countries, including a 

number that have a high risk of corruption, such as Foreign Country. Company A’s stock is listed on a national U.S. stock 

exchange. In conducting its business internationally, Company A’s officers and employees come into regular contact with 

foreign officials, including officials in various ministries and state-owned entities. At a trade show, Company A has a booth 

at which it offers free pens, hats, t-shirts, and other similar promotional items with Company A’s logo. Company A also 

serves free coffee, other beverages, and snacks at the booth. Some of the visitors to the booth are foreign officials.

Is Company A in violation of the FCPA?

No.  These are legitimate, bona fide expenditures made in connection with the promotion, demonstration, or 

explanation of Company A’s products or services There is nothing to suggest corrupt intent here The FCPA does not 

prevent companies from promoting their businesses in this way or providing legitimate hospitality, including to foreign 

officials Providing promotional items with company logos or free snacks as set forth above is an appropriate means of 

providing hospitality and promoting business Such conduct has never formed the basis for an FCPA enforcement action 

At the trade show, Company A invites a dozen current and prospective customers out for drinks, and pays 

the moderate bar tab. Some of the current and prospective customers are foreign officials under the FCPA.  Is 

Company A in violation of the FCPA?

No. Again, the FCPA was not designed to prohibit all forms of hospitality to foreign officials. While the cost here may 

be more substantial than the beverages, snacks, and promotional items provided at the booth, and the invitees specifically 

selected, there is still nothing to suggest corrupt intent.

Two years ago, Company A won a long-term contract to supply goods and services to the state-owned Electricity 

Commission in Foreign Country. The Electricity Commission is 100% owned, controlled, and operated by the 

government of Foreign Country, and employees of the Electricity Commission are subject to Foreign Country’s 

domestic bribery laws. Some Company A executives are in Foreign Country for meetings with officials of the 

Electricity Commission. The General Manager of the Electricity Commission was recently married, and during the 

trip Company A executives present a moderately priced crystal vase to the General Manager as a wedding gift 

and token of esteem. Is Company A in violation of the FCPA?

No. It is appropriate to provide reasonable gifts to foreign officials as tokens of esteem or gratitude. It is important that 

such gifts be made openly and transparently, properly recorded in a company’s books and records, and given only where 

appropriate under local law, customary where given, and reasonable for the occasion.

During the course of the contract described above, Company A periodically provides training to Electricity 

Commission employees at its facilities in Michigan. The training is paid for by the Electricity Commission as part of

the contract.  Senior officials of the Electricity Commission inform Company A that they want to inspect the faciliti

and ensure that the training is working well. Company A pays for the airfare, hotel, and transportation for the 

es 

(cont’d)
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Electricity Commission senior officials to travel to Michigan to inspect Company A’s facilities. Because it is a lengthy 

international flight, Company A agrees to pay for business class airfare, to which its own employees are entitled 

for lengthy flights. The foreign officials visit Michigan for several days, during which the senior officials perform an 

appropriate inspection. Company A executives take the officials to a moderately priced dinner, a baseball game, 

and a play. Do any of these actions violate the FCPA?

No Neither the costs associated with training the employees nor the trip for the senior officials to the Company’s 

facilities in order to inspect them violates the FCPA  Reasonable and bona fide promotional expenditures do not violate 

the FCPA  Here, Company A is providing training to the Electricity Commission’s employees and is hosting the Electricity 

Commission senior officials Their review of the execution and performance of the contract is a legitimate business purpose 

Even the provision of business class airfare is reasonable under the circumstances, as are the meals and entertainment, 

which are only a small component of the business trip 

Would this analysis be different if Company A instead paid for the senior officials to travel first-class with their 

spouses for an all-expenses-paid, week-long trip to Las Vegas, where Company A has no facilities?

Yes. This conduct almost certainly violates the FCPA because it evinces a corrupt intent. Here, the trip does not appear 

to be designed for any legitimate business purpose, is extravagant, includes expenses for the officials’ spouses, and therefore 

appears to be designed to corruptly curry favor with the foreign government officials. Moreover, if the trip were booked as a 

legitimate business expense—such as the provision of training at its facilities—Company A would also be in violation of the 

FCPA’s accounting provisions. Furthermore, this conduct suggests deficiencies in Company A’s internal controls.

Company A’s contract with the Electricity Commission is going to expire, and the Electricity Commission is 

offering the next contract through its tender process. An employee of the Electricity Commission contacts 

Company A and offers to provide Company A with confidential, non-public bid information from Company A’s 

competitors if Company A will pay for a vacation to Paris for him and his girlfriend. Employees of Company A 

accede to the official’s request, pay for the vacation, receive the confidential bid information, and yet still do not 

win the contract. Has Company A violated the FCPA?

Yes Company A has provided things of value to a foreign official for the purpose of inducing the official to misuse 

his office and to gain an improper advantage It does not matter that it was the foreign official who first suggested the 

illegal conduct or that Company A ultimately was not successful in winning the contract  This conduct would also violate 

the FCPA’s accounting provisions if the trip were booked as a legitimate business expense and suggests deficiencies in 

Company A’s internal controls 
19

also were not in compliance with the company’s internal 

policies, which provided that charitable donations generally should be made to healthcare institutions and relate to 

the practice of medicine.102

Proper due diligence and controls are critical for 

charitable giving. In general, the adequacy of measures 

taken to prevent misuse of charitable donations will depend 

on a risk-based analysis and the specific facts at hand. In 

Opinion Procedure Release No. 10-02, DOJ described the 

due diligence and controls that can minimize the likelihood 

of an FCPA violation. In that matter, a Eurasian-based subsidiary of a U.S. non-governmental organization was asked 

by an agency of a foreign government to make a grant to 

a local microfinance institution (MFI) as a prerequisite to 

the subsidiary’s transformation to bank status. The subsidiary proposed contributing $1.42 million to a local MFI to 

satisfy the request. The subsidiary undertook an extensive, 

three-stage due diligence process to select the proposed 

grantee and imposed significant controls on the proposed 

grant, including ongoing monitoring and auditing, earmarking funds for capacity building, prohibiting compensation of board members, and implementing anti-corruption compliance provisions. DOJ explained that it would 

not take any enforcement action because the company’s due 

diligence and the controls it planned to put in place sufficed 

to prevent an FCPA violation. 

Other opinion releases also address charitable-type 

grants or donations. Under the facts presented in those 

releases, DOJ approved the proposed grant or donation,103

based on due diligence measures and controls such as: 

•	 certifications by the recipient regarding compliance 

with the FCPA;104

•	 due diligence to confirm that none of the recipient’s 

officers were affiliated with the foreign government 

at issue;105

•	 a requirement that the recipient provide audited 

financial statements;106

•	 a written agreement with the recipient restricting 

the use of funds;107

•	 steps to ensure that the funds were transferred to a 

valid bank account;108

Five Questions to Consider When Making 

Charitable Payments in a Foreign Country:

1 What is the purpose of the payment?

2 Is the payment consistent with the company’s 

internal guidelines on charitable giving?

3 Is the payment at the request of a foreign official?

4 Is a foreign official associated with the charity 

and, if so, can the foreign official make decisions 

regarding your business in that country?

5 Is the payment conditioned upon receiving 

business or other benefits?

•	 confirmation that the charity’s commitments were 

met before funds were disbursed;109 and

•	 on-going monitoring of the efficacy of the

program.110

Legitimate charitable giving does not violate the 

FCPA. Compliance with the FCPA merely requires that 

charitable giving not be used as a vehicle to conceal payments made to corruptly influence foreign officials.

Who Is a Foreign Official?

The FCPA’s anti-bribery provisions apply to corrupt 

payments made to (1) “any foreign official”; (2) “any foreign 

political party or official thereof ”; (3) “any candidate for 

foreign political office”; or (4) any person, while knowing 

that all or a portion of the payment will be offered, given, or 

promised to an individual falling within one of these three 

categories.111 Although the statute distinguishes between a 

“foreign official,” “foreign political party or official thereof,” 

and “candidate for foreign political office,” the term “foreign official” in this guide generally refers to an individual 

falling within any of these three categories. 

The FCPA defines “foreign official” to include:

any officer or employee of a foreign government or 

any department, agency, or instrumentality thereof, 
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or of a public international organization, or any person acting in an official capacity for or on behalf of 

any such government or department, agency, or instrumentality, or for or on behalf of any such public 

international organization.112

As this language makes clear, the FCPA broadly 

applies to corrupt payments to “any” officer or employee 

of a foreign government and to those acting on the foreign government’s behalf.113 The FCPA thus covers corrupt payments to low-ranking employees and high-level 

officials alike.114

The FCPA prohibits payments to foreign officials, not 

to foreign governments.

115 That said, companies contemplating contributions or donations to foreign governments 

should take steps to ensure that no monies are used for corrupt purposes, such as the personal benefit of individual 

foreign officials. 

Department, Agency, or Instrumentality of a 

Foreign Government

Foreign officials under the FCPA include officers 

or employees of a department, agency, or instrumentality of a foreign government. When a foreign government 

is organized in a fashion similar to the U.S. system, what 

constitutes a government department or agency is typically 

clear (e.g., a ministry of energy, national security agency, or 

transportation authority).116 However, governments can be 

organized in very different ways.117 Many operate through 

state-owned and state-controlled entities, particularly in 

such areas as aerospace and defense manufacturing, banking and finance, healthcare and life sciences, energy and 

extractive industries, telecommunications, and transportation.118 By including officers or employees of agencies and 

instrumentalities within the definition of “foreign official,” 

the FCPA accounts for this variability. 

The term “instrumentality” is broad and can include 

state-owned or state-controlled entities. Whether a particular entity constitutes an “instrumentality” under the FCPA 

requires a fact-specific analysis of an entity’s ownership, 

control, status, and function.119 A number of courts have 

approved final jury instructions providing a non-exclusive 

list of factors to be considered:

•	 the foreign state’s extent of ownership of the entity;

•	 the foreign state’s degree of control over the entity 

(including whether key officers and directors of 

the entity are, or are appointed by, government 

officials);

•	 the foreign state’s characterization of the entity and 

its employees;

•	 the circumstances surrounding the entity’s creation;

•	 the purpose of the entity’s activities;

•	 the entity’s obligations and privileges under the 

foreign state’s law;

•	 the exclusive or controlling power vested in the 

entity to administer its designated functions;

•	 the level of financial support by the foreign 

state (including subsidies, special tax treatment, 

government-mandated fees, and loans);

•	 the entity’s provision of services to the jurisdiction’s 

residents;

•	 whether the governmental end or purpose sought 

to be achieved is expressed in the policies of the 

foreign government; and

•	 the general perception that the entity is performing 

official or governmental functions.120

Companies should consider these factors when evaluating the risk of FCPA violations and designing compliance programs.

DOJ and SEC have pursued cases involving instrumentalities since the time of the FCPA’s enactment and 

have long used an analysis of ownership, control, status, 

and function to determine whether a particular entity is 

an agency or instrumentality of a foreign government. 

For example, the second-ever FCPA case charged by DOJ 

involved a California company that paid bribes through a 

Mexican corporation to two executives of a state-owned 
21

Mexican national oil company. 121 And in the early 1980s, 

DOJ and SEC brought cases involving a $1 million bribe to 

the chairman of Trinidad and Tobago’s racing authority.122

DOJ and SEC continue to regularly bring FCPA 

cases involving bribes paid to employees of agencies and 

instrumentalities of foreign governments. In one such 

case, the subsidiary of a Swiss engineering company paid 

bribes to officials of a state-owned and controlled electricity commission. The commission was created by, owned 

by, and controlled by the Mexican government, and it had 

a monopoly on the transmission and distribution of electricity in Mexico. Many of the commission’s board members were cabinet-level government officials, and the director was appointed by Mexico’s president.123 Similarly, in 

another recent case, Miami telecommunications executives 

were charged with paying bribes to employees of Haiti’s 

state-owned and controlled telecommunications company. 

The telecommunications company was 97% owned and 

100% controlled by the Haitian government, and its director was appointed by Haiti’s president.124

While no one factor is dispositive or necessarily more 

important than another, as a practical matter, an entity is 

unlikely to qualify as an instrumentality if a government 

does not own or control a majority of its shares. However, 

there are circumstances in which an entity would qualify 

as an instrumentality absent 50% or greater foreign government ownership, which is reflected in the limited number of DOJ or SEC enforcement actions brought in such 

situations. For example, in addition to being convicted of 

funneling millions of dollars in bribes to two sitting presidents in two different countries, a French issuer’s three 

subsidiaries were convicted of paying bribes to employees 

of a Malaysian telecommunications company that was 43% 

owned by Malaysia’s Ministry of Finance. There, notwithstanding its minority ownership stake in the company, the 

Ministry held the status of a “special shareholder,” had veto 

power over all major expenditures, and controlled important operational decisions.125 In addition, most senior 

company officers were political appointees, including the 

Chairman and Director, the Chairman of the Board of the 

Tender Committee, and the Executive Director.126 Thus, 

despite the Malaysian government having a minority shareholder position, the company was an instrumentality of the 

Malaysian government as the government nevertheless had 

substantial control over the company. 

Companies and individuals should also remember 

that, whether an entity is an instrumentality of a foreign 

government or a private entity, commercial (i.e., privateto-private) bribery may still violate the FCPA’s accounting 

provisions, the Travel Act, anti-money laundering laws, and 

other federal or foreign laws. Any type of corrupt payment 

thus carries a risk of prosecution.

Public International Organizations

In 1998, the FCPA was amended to expand the definition of “foreign official” to include employees and representatives of public international organizations.127 A “public international organization” is any organization designated as such 

by Executive Order under the International Organizations 

Immunities Act, 22 U.S.C. § 288, or any other organization 

that the President so designates.128 Currently, public international organizations include entities such as the World Bank, 

the International Monetary Fund, the World Intellectual 

Property Organization, the World Trade Organization, the 

OECD, the Organization of American States, and numerous others. A comprehensive list of organizations designated 

as “public international organizations” is contained in 22 

U.S.C. § 288 and can also be found on the U.S. Government 

Printing Office website at http://www.gpo.gov/fdsys/. 

How Are Payments to Third Parties 

Treated?

The FCPA expressly prohibits corrupt payments 

made through third parties or intermediaries.129 Specifically, 

it covers payments made 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,”130 to a 

foreign official. Many companies doing business in a foreign 

country retain a local individual or company to help them 

conduct business. Although these foreign agents may provide entirely legitimate advice regarding local customs and 

procedures and may help facilitate business transactions, 
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companies should be aware of the risks involved in engaging third-party agents or intermediaries. The fact that a 

bribe is paid by a third party does not eliminate the potential for criminal or civil FCPA liability.131

For instance, a four-company joint venture used 

two agents—a British lawyer and a Japanese trading 

company—to bribe Nigerian government officials in 

order to win a series of liquefied natural gas construction projects.132 Together, the four multi-national corporations and the Japanese trading company paid a 

combined $1.7 billion in civil and criminal sanctions 

for their decade-long bribery scheme. In addition, the 

subsidiary of one of the companies pleaded guilty and a 

number of individuals, including the British lawyer and 

the former CEO of one of the companies’ subsidiaries, 

received significant prison terms. 

Similarly, a medical device manufacturer entered into 

a deferred prosecution agreement as the result of corrupt 

payments it authorized its local Chinese distributor to pay 

to Chinese officials.133 Another company, a manufacturer 

of specialty chemicals, committed multiple FCPA violations through its agents in Iraq: a Canadian national and 

the Canadian’s companies. Among other acts, the Canadian 

national paid and promised to pay more than $1.5 million 

in bribes to officials of the Iraqi Ministry of Oil to secure 

sales of a fuel additive. Both the company and the Canadian 

national pleaded guilty to criminal charges and resolved 

civil enforcement actions by SEC. 134

In another case, the U.S. subsidiary of a Swiss freight 

forwarding company was charged with paying bribes on 

behalf of its customers in several countries.135 Although the 

U.S. subsidiary was not an issuer under the FCPA, it was an 

“agent” of several U.S. issuers and was thus charged directly 

with violating the FCPA. Charges against the freight forwarding company and seven of its customers resulted in 

over $236.5 million in sanctions.136

Because Congress anticipated the use of third-party 

agents in bribery schemes—for example, to avoid actual 

knowledge of a bribe—it defined the term “knowing” in a 

way that prevents individuals and businesses from avoiding 

liability by putting “any person” between themselves and 

the foreign officials.137 Under the FCPA, a person’s state of 

mind is “knowing” with respect to conduct, a circumstance, 

or a result if the person:

•	 is aware that [he] is engaging in such conduct, 

that such circumstance exists, or that such result is 

substantially certain to occur; or

•	 has a firm belief that such circumstance exists or 

that such result is substantially certain to occur.138

Thus, a person has the requisite knowledge when he is 

aware of a high probability of the existence of such circumstance, unless the person actually believes that such circumstance does not exist.139 As Congress made clear, it meant to 

impose liability not only on those with actual knowledge 

of wrongdoing, but also on those who purposefully avoid 

actual knowledge: 

[T]he so-called “head-in-the-sand” problem—variously described in the pertinent authorities as “conscious disregard,” “willful blindness” or “deliberate 

ignorance”—should be covered so that management 

officials could not take refuge from the Act’s prohibitions by their unwarranted obliviousness to any 

action (or inaction), language or other “signaling device” that should reasonably alert them of the “high 

probability” of an FCPA violation.140

Common red flags associated with third parties include:

•	 excessive commissions to third-party agents or 

consultants;

•	 unreasonably large discounts to third-party 

distributors;

•	 third-party “consulting agreements” that include 

only vaguely described services;

•	 the third-party consultant is in a different line of 

business than that for which it has been engaged;

•	 the third party is related to or closely associated 

with the foreign official;
23

•	 the third party became part of the transaction at 

the express request or insistence of the foreign 

official;

•	 the third party is merely a shell company incorporated in an offshore jurisdiction; and

•	 the third party requests payment to offshore

bank accounts.

Businesses may reduce the FCPA risks associated 

with third-party agents by implementing an effective compliance program, which includes due diligence of any prospective foreign agents.

What Affirmative Defenses Are 

Available?

The FCPA’s anti-bribery provisions contain two affirmative defenses: (1) that the payment was lawful under the 

written laws of the foreign country (the “local law” defense), 

and (2) that the money was spent as part of demonstrating a 

product or performing a contractual obligation (the “reasonable and bona fide business expenditure” defense). Because 

these are affirmative defenses, the defendant bears the burden 

of proving them. 

The Local Law Defense

For the local law defense to apply, a defendant must 

establish that “the payment, gift, offer, or promise of anything of value that was made, was lawful under the written laws and regulations of the foreign official’s, political 

party’s, party official’s, or candidate’s country.”141 The defendant must establish that the payment was lawful under the 

foreign country’s written laws and regulations at the time 

of the offense. In creating the local law defense in 1988, 

Congress sought “to make clear that the absence of written 

laws in a foreign official’s country would not by itself be sufficient to satisfy this defense.”142 Thus, the fact that bribes 

may not be prosecuted under local law is insufficient to 

establish the defense. In practice, the local law defense arises 

infrequently, as the written laws and regulations of countries rarely, if ever, permit corrupt payments. Nevertheless, 

if a defendant can establish that conduct that otherwise 

falls within the scope of the FCPA’s anti-bribery provisions 

was lawful under written, local law, he or she would have a 

defense to prosecution.

In United States v. Kozeny, the defendant unsuccessfully sought to assert the local law defense regarding the law 

of Azerbaijan. The parties disputed the contents and applicability of Azeri law, and each presented expert reports and 

testimony on behalf of their conflicting interpretations. The 

court ruled that the defendant could not invoke the FCPA’s 

affirmative defense because Azeri law did not actually legalize the bribe payment. The court concluded that an exception under Azeri law relieving bribe payors who voluntarily 

United States v. Kozeny, et al.

In December 2011, the U.S. Court of Appeals 

for the Second Circuit upheld a conscious avoidance 

instruction given during the 2009 trial of a businessman 

who was convicted of conspiring to violate the FCPA’s 

anti-bribery provisions by agreeing to make payments to 

Azeri officials in a scheme to encourage the privatization 

of the Azerbaijan Republic’s state oil company. The 

court of appeals found that the instruction did not lack 

a factual predicate, citing evidence and testimony at 

trial demonstrating that the defendant knew corruption 

was pervasive in Azerbaijan; that he was aware of his 

business partner’s reputation for misconduct; that he 

had created two U.S. companies in order to shield 

himself and other investors from potential liability for 

payments made in violation of the FCPA; and that the 

defendant expressed concerns during a conference call 

about whether his business partner and company were 

bribing officials.

The court of appeals also rejected the defendant’s 

contention that the conscious avoidance charge had 

improperly permitted the jury to convict him based on 

negligence, explaining that ample evidence in the record 

showed that the defendant had “serious concerns” 

about the legality of his partner’s business practices 

“and worked to avoid learning exactly what [he] was 

doing,” and noting that the district court had specifically 

instructed the jury not to convict based on negligence.
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whether a particular expenditure is appropriate or may risk 

violating the FCPA:

•	 Do not select the particular officials who will participate in the party’s proposed trip or program147

or else select them based on pre-determined, meritbased criteria.148

•	 Pay all costs directly to travel and lodging vendors 

and/or reimburse costs only upon presentation of a 

receipt.149

•	 Do not advance funds or pay for reimbursements 

in cash.150

•	 Ensure that any stipends are reasonable approximations of costs likely to be incurred151 and/or that 

expenses are limited to those that are necessary and 

reasonable.152

•	 Ensure the expenditures are transparent,

both within the company and to the foreign 

government.153

•	 Do not condition payment of expenses on any 

action by the foreign official.154

•	 Obtain written confirmation that payment of the 

expenses is not contrary to local law.155

•	 Provide no additional compensation, stipends, or 

spending money beyond what is necessary to pay 

for actual expenses incurred.156

•	 Ensure that costs and expenses on behalf of the 

foreign officials will be accurately recorded in the 

company’s books and records.157

In sum, while certain expenditures are more likely to 

raise red flags, they will not give rise to prosecution if they 

are (1) reasonable, (2) bona fide, and (3) directly related 

to (4) the promotion, demonstration, or explanation of 

products or services or the execution or performance of 

a contract.158

disclose bribe payments to the authorities of criminal liability did not make the bribes legal.143

Reasonable and Bona Fide Expenditures

The FCPA allows companies to provide reasonable 

and bona fide travel and lodging expenses to a foreign 

official, and it is an affirmative defense where expenses 

are directly related to the promotion, demonstration, or 

explanation of a company’s products or services, or are 

related to a company’s execution or performance of a contract with a foreign government or agency.144 Trips that 

are primarily for personal entertainment purposes, however, are not bona fide business expenses and may violate 

the FCPA’s anti-bribery provisions.145 Moreover, when 

expenditures, bona fide or not, are mischaracterized in a 

company’s books and records, or where unauthorized or 

improper expenditures occur due to a failure to implement adequate internal controls, they may also violate 

the FCPA’s accounting provisions. Purposeful mischaracterization of expenditures may also, of course, indicate a 

corrupt intent.

DOJ and SEC have consistently recognized that businesses, both foreign and domestic, are permitted to pay for 

reasonable expenses associated with the promotion of their 

products and services or the execution of existing contracts. 

In addition, DOJ has frequently provided guidance about 

legitimate promotional and contract-related expenses—

addressing travel and lodging expenses in particular—

through several opinion procedure releases. Under the circumstances presented in those releases,146 DOJ opined that 

the following types of expenditures on behalf of foreign 

officials did not warrant FCPA enforcement action:

•	 travel and expenses to visit company facilities or 

operations;

•	 travel and expenses for training; and

•	 product demonstration or promotional activities, 

including travel and expenses for meetings.

Whether any particular payment is a bona fide expenditure necessarily requires a fact-specific analysis. But the 

following non-exhaustive list of safeguards, compiled from 

several releases, may be helpful to businesses in evaluating 
25

What Are Facilitating or Expediting 

Payments?

The FCPA’s bribery prohibition contains a narrow 

exception for “facilitating or expediting payments” made in 

furtherance of routine governmental action.159 The facilitating payments exception applies only when a payment is 

made to further “routine governmental action” that involves 

non-discretionary acts.160 Examples of “routine governmental action” include processing visas, providing police protection or mail service, and supplying utilities like phone 

service, power, and water. Routine government action does 

not include a decision to award new business or to continue 

business with a particular party.161 Nor does it include acts 

that are within an official’s discretion or that would constitute misuse of an official’s office.162 Thus, paying an official a 

small amount to have the power turned on at a factory might 

be a facilitating payment; paying an inspector to ignore the 

fact that the company does not have a valid permit to operate 

the factory would not be a facilitating payment.

Whether a payment falls within the exception is not 

dependent on the size of the payment, though size can be 

telling, as a large payment is more suggestive of corrupt 

intent to influence a non-routine governmental action. But, 

like the FCPA’s anti-bribery provisions more generally, the 

facilitating payments exception focuses on the purpose of the 

payment rather than its value. For instance, an Oklahomabased corporation violated the FCPA when its subsidiary 

paid Argentine customs officials approximately $166,000 

to secure customs clearance for equipment and materials 

that lacked required certifications or could not be imported 

under local law and to pay a lower-than-applicable duty 

rate. The company’s Venezuelan subsidiary had also paid 

Venezuelan customs officials approximately $7,000 to permit 

the importation and exportation of equipment and materials 

not in compliance with local regulations and to avoid a full 

inspection of the imported goods.163 In another case, three 

subsidiaries of a global supplier of oil drilling products and 

services were criminally charged with authorizing an agent to 

make at least 378 corrupt payments (totaling approximately 

$2.1 million) to Nigerian Customs Service officials for preferential treatment during the customs process, including the 

reduction or elimination of customs duties.164

Labeling a bribe as a “facilitating payment” in a company’s books and records does not make it one. A Swiss 

offshore drilling company, for example, recorded payments to its customs agent in the subsidiary’s “facilitating payment” account, even though company personnel 

believed the payments were, in fact, bribes. The company 

was charged with violating both the FCPA’s anti-bribery 

and accounting provisions.165

Although true facilitating payments are not illegal under the FCPA, they may still violate local law in the 

countries where the company is operating, and the OECD’s 

Working Group on Bribery recommends that all countries 

encourage companies to prohibit or discourage facilitating 

payments, which the United States has done regularly.166

In addition, other countries’ foreign bribery laws, such as 

the United Kingdom’s, may not contain an exception for 

facilitating payments.167 Individuals and companies should 

therefore be aware that although true facilitating payments 

Examples of “Routine Governmental Action”

An action which is ordinarily and commonly 

performed by a foreign official in—

	obtaining permits, licenses, or other official 

documents to qualify a person to do business in a 

foreign country;

	processing governmental papers, such as visas and 

work orders;

	providing police protection, mail pickup and 

delivery, or scheduling inspections associated with 

contract performance or inspections related to 

transit of goods across country;

	providing phone service, power and water supply, 

loading and unloading cargo, or protecting 

perishable products or commodities from 

deterioration; or

	actions of a similar nature.
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are permissible under the FCPA, they may still subject a 

company or individual to sanctions. As with any expenditure, 

facilitating payments may still violate the FCPA if they are 

not properly recorded in an issuer’s books and records.168

Hypothetical: Facilitating Payments

Company A is a large multi-national mining company with operations in Foreign Country, where it recently identified 

a significant new ore deposit It has ready buyers for the new ore but has limited capacity to get it to market In order to 

increase the size and speed of its ore export, Company A will need to build a new road from its facility to the port that can 

accommodate larger trucks Company A retains an agent in Foreign Country to assist it in obtaining the required permits, 

including an environmental permit, to build the road The agent informs Company A’s vice president for international 

operations that he plans to make a one-time small cash payment to a clerk in the relevant government office to ensure 

that the clerk files and stamps the permit applications expeditiously, as the agent has experienced delays of three months 

when he has not made this “grease” payment The clerk has no discretion about whether to file and stamp the permit 

applications once the requisite filing fee has been paid The vice president authorizes the payment 

A few months later, the agent tells the vice president that he has run into a problem obtaining a necessary environmental 

permit. It turns out that the planned road construction would adversely impact an environmentally sensitive and protected 

local wetland. While the problem could be overcome by rerouting the road, such rerouting would cost Company A $1 

million more and would slow down construction by six months.  It would also increase the transit time for the ore and 

reduce the number of monthly shipments. The agent tells the vice president that he is good friends with the director of 

Foreign Country’s Department of Natural Resources and that it would only take a modest cash payment to the director 

and the “problem would go away.” The vice president authorizes the payment, and the agent makes it. After receiving the 

payment, the director issues the permit, and Company A constructs its new road through the wetlands.

Was the payment to the clerk a violation of the FCPA?

No. Under these circumstances, the payment to the clerk would qualify as a facilitating payment, since it is a one-time, 

small payment to obtain a routine, non-discretionary governmental service that Company A is entitled to receive (i.e., the 

stamping and filing of the permit application). However, while the payment may qualify as an exception to the FCPA’s 

anti-bribery provisions, it may violate other laws, both in Foreign Country and elsewhere. In addition, if the payment is not 

accurately recorded, it could violate the FCPA’s books and records provision.

Was the payment to the director a violation of the FCPA?

Yes. The payment to the director of the Department of Natural Resources was in clear violation of the FCPA, since it 

was designed to corruptly influence a foreign official into improperly approving a permit. The issuance of the environmental 

permit was a discretionary act, and indeed, Company A should not have received it. Company A, its vice president, and the 

local agent may all be prosecuted for authorizing and paying the bribe.
27

Does the FCPA Apply to Cases of 

Extortion or Duress?

Situations involving extortion or duress will not give 

rise to FCPA liability because a payment made in response to 

true extortionate demands under imminent threat of physical 

harm cannot be said to have been made with corrupt intent 

or for the purpose of obtaining or retaining business.169 In 

enacting the FCPA, Congress recognized that real-world 

situations might arise in which a business is compelled to pay 

an official in order to avoid threats to health and safety. As 

Congress explained, “a payment to an official to keep an oil 

rig from being dynamited should not be held to be made with 

the requisite corrupt purpose.”170

Mere economic coercion, however, does not amount to 

extortion. As Congress noted when it enacted the FCPA: 

“The defense that the payment was demanded on the part of 

a government official as a price for gaining entry into a market or to obtain a contract would not suffice since at some 

point the U.S. company would make a conscious decision 

whether or not to pay a bribe.”171 The fact that the payment 

was “first proposed by the recipient ... does not alter the corrupt purpose on the part of the person paying the bribe.”172

This distinction between extortion and economic coercion was recognized by the court in United States v. Kozeny. 

There, the court concluded that although an individual who 

makes a payment under duress (i.e., upon threat of physical harm) will not be criminally liable under the FCPA,173 a 

bribe payor who claims payment was demanded as a price for 

gaining market entry or obtaining a contract “cannot argue 

that he lacked the intent to bribe the official because he made 

the ‘conscious decision’ to pay the official.”174 While the 

bribe payor in this situation “could have turned his back and 

walked away,” in the oil rig example, “he could not.”175

Businesses operating in high-risk countries may face 

real threats of violence or harm to their employees, and 

payments made in response to imminent threats to health 

or safety do not violate the FCPA.176 If such a situation 

arises, and to ensure the safety of its employees, companies 

should immediately contact the appropriate U.S. embassy 

for assistance.

Principles of Corporate Liability for 

Anti-Bribery Violations

General principles of corporate liability apply to the 

FCPA. Thus, a company is liable when its directors, officers, 

employees, or agents, acting within the scope of their employment, commit FCPA violations intended, at least in part, to 

benefit the company.177 Similarly, just as with any other statute, DOJ and SEC look to principles of parent-subsidiary 

and successor liability in evaluating corporate liability. 

Parent-Subsidiary Liability

There are two ways in which a parent company may 

be liable for bribes paid by its subsidiary. First, a parent may 

have participated sufficiently in the activity to be directly 

liable for the conduct—as, for example, when it directed its 

subsidiary’s misconduct or otherwise directly participated 

in the bribe scheme. 

Second, a parent may be liable for its subsidiary’s conduct under traditional agency principles. The fundamental 

characteristic of agency is control.178 Accordingly, DOJ and 

SEC evaluate the parent’s control—including the parent’s 

knowledge and direction of the subsidiary’s actions, both 

generally and in the context of the specific transaction—

when evaluating whether a subsidiary is an agent of the parent. Although the formal relationship between the parent 

and subsidiary is important in this analysis, so are the practical realities of how the parent and subsidiary actually interact.

If an agency relationship exists, a subsidiary’s actions 

and knowledge are imputed to its parent.179 Moreover, 

under traditional principles of respondeat superior, a company is liable for the acts of its agents, including its employees, undertaken within the scope of their employment and 

intended, at least in part, to benefit the company.180 Thus, 

if an agency relationship exists between a parent and a 

subsidiary, the parent is liable for bribery committed by 

the subsidiary’s employees. For example, SEC brought an 

administrative action against a parent for bribes paid by the 

president of its indirect, wholly owned subsidiary. In that 

matter, the subsidiary’s president reported directly to the 

CEO of the parent issuer, and the issuer routinely identified 
chapter 2

The FCPA:

Anti-Bribery Provisions

28

the president as a member of its senior management in its 

annual filing with SEC and in annual reports. Additionally, 

the parent’s legal department approved the retention of the 

third-party agent through whom the bribes were arranged 

despite a lack of documented due diligence and an agency 

agreement that violated corporate policy; also, an official of 

the parent approved one of the payments to the third-party 

agent.181 Under these circumstances, the parent company 

had sufficient knowledge and control of its subsidiary’s 

actions to be liable under the FCPA. 

Successor Liability

Companies acquire a host of liabilities when they 

merge with or acquire another company, including those arising out of contracts, torts, regulations, and statutes. As a general legal matter, when a company merges with or acquires 

another company, the successor company assumes the predecessor company’s liabilities.182 Successor liability is an integral 

component of corporate law and, among other things, prevents companies from avoiding liability by reorganizing.183

Successor liability applies to all kinds of civil and criminal 

liabilities,184 and FCPA violations are no exception. Whether 

successor liability applies to a particular corporate transaction depends on the facts and the applicable state, federal, 

and foreign law. Successor liability does not, however, create 

liability where none existed before. For example, if an issuer 

were to acquire a foreign company that was not previously 

subject to the FCPA’s jurisdiction, the mere acquisition of 

that foreign company would not retroactively create FCPA 

liability for the acquiring issuer. 

DOJ and SEC encourage companies to conduct preacquisition due diligence and improve compliance programs and internal controls after acquisition for a variety 

of reasons. First, due diligence helps an acquiring company 

to accurately value the target company. Contracts obtained 

through bribes may be legally unenforceable, business 

obtained illegally may be lost when bribe payments are 

stopped, there may be liability for prior illegal conduct, and 

the prior corrupt acts may harm the acquiring company’s 

reputation and future business prospects. Identifying these 

issues before an acquisition allows companies to better 

evaluate any potential post-acquisition liability and thus 

properly assess the target’s value.185 Second, due diligence 

reduces the risk that the acquired company will continue to 

pay bribes. Proper pre-acquisition due diligence can identify business and regional risks and can also lay the foundation for a swift and successful post-acquisition integration 

into the acquiring company’s corporate control and compliance environment. Third, the consequences of potential 

violations uncovered through due diligence can be handled 

by the parties in an orderly and efficient manner through 

negotiation of the costs and responsibilities for the investigation and remediation. Finally, comprehensive due diligence demonstrates a genuine commitment to uncovering 

and preventing FCPA violations. 

In a significant number of instances, DOJ and 

SEC have declined to take action against companies 

that voluntarily disclosed and remediated conduct 

and cooperated with DOJ and SEC in the merger and 

acquisition context.186 And DOJ and SEC have only 

taken action against successor companies in limited circumstances, generally in cases involving egregious and 

sustained violations or where the successor company 

directly participated in the violations or failed to stop the 

misconduct from continuing after the acquisition. In one 

case, a U.S.-based issuer was charged with books and records 

and internal controls violations for continuing a kickback 

scheme originated by its predecessor.187 Another recent case 

involved a merger between two tobacco leaf merchants, 

where prior to the merger each company committed 

FCPA violations through its foreign subsidiaries, involving 

multiple countries over the course of many years. At each 

company, the bribes were directed by the parent company’s 

senior management. The two issuers then merged to form 

a new public company. Under these circumstances—the 

merger of two public companies that had each engaged in 
29

bribery—both the new entity and the foreign subsidiaries 

were liable under the FCPA. The new parent entered into 

a non-prosecution agreement with DOJ and settled a civil 

action with SEC, while the company’s subsidiaries, which 

also merged, pleaded guilty.188

More often, DOJ and SEC have pursued enforcement actions against the predecessor company (rather 

than the acquiring company), particularly when the 

acquiring company uncovered and timely remedied the 

violations or when the government’s investigation of 

the predecessor company preceded the acquisition. In 

one such case, an Ohio-based health care company’s due 

diligence of an acquisition target uncovered FCPA violations by the target’s subsidiary, and, before the merger 

was completed, the subsidiary’s violations were disclosed 

to DOJ and SEC. The subsidiary pleaded guilty and 

paid a $2 million criminal fine,189 the acquisition target 

settled with SEC and paid a $500,000 civil penalty,190

Practical Tips to Reduce FCPA Risk in Mergers and Acquisitions

Companies pursuing mergers or acquisitions can take certain steps to identify and potentially reduce FCPA risks:

	M&A Opinion Procedure Release Requests: One option is to seek an opinion from DOJ in anticipation of a 

potential acquisition, such as occurred with Opinion Release 08-02 That case involved special circumstances, 

namely, severely limited pre-acquisition due diligence available to the potential acquiring company, and, because 

it was an opinion release (i e , providing certain assurances by DOJ concerning prospective conduct), it necessarily 

imposed demanding standards and prescriptive timeframes in return for specific assurances from DOJ, which 

SEC, as a matter of discretion, also honors Thus, obtaining an opinion from DOJ can be a good way to address 

specific due diligence challenges, but, because of the nature of such an opinion, it will likely contain more stringent 

requirements than may be necessary in all circumstances 

	M&A Risk-Based FCPA Due Diligence and Disclosure: As a practical matter, most acquisitions will typically not 

require the type of prospective assurances contained in an opinion from DOJ DOJ and SEC encourage companies 

engaging in mergers and acquisitions to: (1) conduct thorough risk-based FCPA and anti-corruption due diligence 

on potential new business acquisitions; (2) ensure that the acquiring company’s code of conduct and compliance 

policies and procedures regarding the FCPA and other anti-corruption laws apply as quickly as is practicable to 

newly acquired businesses or merged entities; (3) train the directors, officers, and employees of newly acquired 

businesses or merged entities, and when appropriate, train agents and business partners, on the FCPA and other 

relevant anti-corruption laws and the company’s code of conduct and compliance policies and procedures; (4) 

conduct an FCPA-specific audit of all newly acquired or merged businesses as quickly as practicable; and (5) disclose 

any corrupt payments discovered as part of its due diligence of newly acquired entities or merged entities DOJ 

and SEC will give meaningful credit to companies who undertake these actions, and, in appropriate circumstances, 

DOJ and SEC may consequently decline to bring enforcement actions 

and no successor liability was sought against the acquiring entity. In another case, a Pennsylvania-based issuer 

that supplied heating and air conditioning products and 

services was subject to an ongoing investigation by DOJ 

and SEC at the time that it was acquired; DOJ and SEC 

resolved enforcement actions only against the predecessor 

company, which had by that time become a wholly owned 

subsidiary of the successor company.191

DOJ and SEC have also brought actions only against a 

predecessor company where its FCPA violations are discovered after acquisition. For example, when a Florida-based 

U.S. company discovered in post-acquisition due diligence 

that the telecommunications company (a domestic concern) it had acquired had engaged in foreign bribery, the 

successor company disclosed the FCPA violations to DOJ. 

It then conducted an internal investigation, cooperated 

fully with DOJ, and took appropriate remedial action—

including terminating senior management at the acquired 
chapter 2

The FCPA:

Anti-Bribery Provisions

30

company. No enforcement action was taken against the successor, but the predecessor company pleaded guilty to one 

count of violating the FCPA and agreed to pay a $2 million 

fine.192 Later, four executives from the predecessor company 

were convicted of FCPA violations, three of whom received 

terms of imprisonment.193

On occasion, when an enforcement action has 

been taken against a predecessor company, the successor seeks assurances that it will not be subject to a future 

enforcement action. In one such case, a Dutch predecessor resolved FCPA charges with DOJ through a deferred 

prosecution agreement.194 While both the predecessor 

and successor signed the agreement, which included a 

commitment to ongoing cooperation and an improved 

compliance program, only the predecessor company was 

charged; in signing the agreement, the successor company 

gained the certainty of conditional release from criminal 

liability, even though it was not being pursued for FCPA 

violations.195 In another case, after a Connecticut-based 

company uncovered FCPA violations by a California 

company it sought to acquire, both companies voluntarily 

disclosed the conduct to DOJ and SEC.196 The predecessor company resolved its criminal liability through a 

non-prosecution agreement with DOJ that included an 

$800,000 monetary penalty and also settled with SEC, 

paying a total of $1.1 million in disgorgement, pre-judgment interest, and civil penalties. The successor company 

proceeded with the acquisition and separately entered 

into a non-prosecution agreement with DOJ in which it 

agreed, among other things, to ensure full performance of 

the predecessor company’s non-prosecution agreement. 

This agreement provided certainty to the successor concerning its FCPA liability. 197

Importantly, a successor company’s voluntary disclosure, appropriate due diligence, and implementation of an 

effective compliance program may also decrease the likelihood of an enforcement action regarding an acquired company’s post-acquisition conduct when pre-acquisition due 

diligence is not possible.198
31

Hypothetical: Successor Liability Where Acquired Company Was Not Previously 

Subject to the FCPA

Company A is a Delaware corporation with its principal offices in the United States and whose shares are listed on 

a national U.S. exchange. Company A is considering acquiring Foreign Company, which is not an issuer or a domestic 

concern. Foreign Company takes no actions within the United States that would make it subject to territorial jurisdiction.

Company A’s proposed acquisition would make Foreign Company a subsidiary of Company A.

Scenario 1: 

Prior to acquiring Foreign Company, Company A engages in extensive due diligence of Foreign Company, including: (1) 

having its legal, accounting, and compliance departments review Foreign Company’s sales and financial data, its customer 

contracts, and its third-party and distributor agreements; (2) performing a risk-based analysis of Foreign Company’s customer 

base; (3) performing an audit of selected transactions engaged in by Foreign Company; and (4) engaging in discussions 

with Foreign Company’s general counsel, vice president of sales, and head of internal audit regarding all corruption risks, 

compliance efforts, and any other corruption-related issues that have surfaced at Foreign Company over the past ten years.

This due diligence aims to determine whether Foreign Company has appropriate anti-corruption and compliance policies 

in place, whether Foreign Company’s employees have been adequately trained regarding those policies, how Foreign 

Company ensures that those policies are followed, and what remedial actions are taken if the policies are violated.

During the course of its due diligence, Company A learns that Foreign Company has made several potentially 

improper payments in the form of an inflated commission to a third-party agent in connection with a government contract 

with Foreign Country. Immediately after the acquisition, Company A discloses the conduct to DOJ and SEC, suspends 

and terminates those employees and the third-party agent responsible for the payments, and makes certain that the 

illegal payments have stopped. It also quickly integrates Foreign Company into Company A’s own robust internal controls, 

including its anti-corruption and compliance policies, which it communicates to its new employees through required online 

and in-person training in the local language. Company A also requires Foreign Company’s third-party distributors and other 

agents to sign anti-corruption certifications, complete training, and sign new contracts that incorporate FCPA and anticorruption representations and warranties and audit rights.

Based on these facts, could DOJ or SEC prosecute Company A? 

No. Although DOJ and SEC have jurisdiction over Company A because it is an issuer, neither could pursue Company 

A for conduct that occurred prior to its acquisition of Foreign Company. As Foreign Company was neither an issuer nor a 

domestic concern and was not subject to U.S. territorial jurisdiction, DOJ and SEC have no jurisdiction over its pre-acquisition 

misconduct. The acquisition of a company does not create jurisdiction where none existed before.

Importantly, Company A’s extensive pre-acquisition due diligence allowed it to identify and halt the corruption. As 

there was no continuing misconduct post-acquisition, the FCPA was not violated.

Scenario 2: 

Company A performs only minimal and pro forma pre-acquisition due diligence. It does not conduct a risk-based 

analysis, and its review of Foreign Company’s data, contracts, and third-party and distributor agreements is cursory.

Company A acquires Foreign Company and makes it a wholly owned subsidiary.Although Company A circulates its 

compliance policies to all new personnel after the acquisition, it does not translate the compliance policies into the local 

language or train its new personnel or third-party agents on anti-corruption issues.

A few months after the acquisition, an employee in Company A’s international sales office (Sales Employee) learns 

from a legacy Foreign Company employee that for years the government contract that generated most of Foreign 

Company’s revenues depended on inflated commissions to a third-party agent “to make the right person happy at Foreign 

Government Agency.” Sales Employee is told that unless the payments continue the business will likely be lost, which 

would mean that Company A’s new acquisition would quickly become a financial failure. The payments continue for two 

(cont’d)
chapter 2

The FCPA:

Anti-Bribery Provisions

32

years after the acquisition. After another employee of Company A reports the long-running bribe scheme to a director at 

Foreign Government Agency, Company A stops the payments and DOJ and SEC investigate.

Based on these facts, would DOJ or SEC charge Company A? 

Yes. DOJ and SEC have prosecuted companies like Company A in similar circumstances. Any charges would not, 

however, be premised upon successor liability, but rather on Company A’s post-acquisition bribe payments, which 

themselves created criminal and civil liability for Company A.

Scenario 3: 

Under local law, Company A’s ability to conduct pre-acquisition due diligence on Foreign Company is limited. In the 

due diligence it does conduct, Company A determines that Foreign Company is doing business in high-risk countries 

and in high-risk industries but finds no red flags specific to Foreign Company’s operations. Post-acquisition, Company 

A conducts extensive due diligence and determines that Foreign Company had paid bribes to officials with Foreign 

Government Agency. Company A takes prompt action to remediate the problem, including following the measures set 

forth in Opinion Procedure Release No. 08-02. Among other actions, it voluntarily discloses the misconduct to DOJ and 

SEC, ensures all bribes are immediately stopped, takes remedial action against all parties involved in the corruption, and 

quickly incorporates Foreign Company into a robust compliance program and Company A’s other internal controls.

Based on these facts, would DOJ or SEC prosecute Company A? 

DOJ and SEC have declined to prosecute companies like Company A in similar circumstances Companies can follow 

the measures set forth in Opinion Procedure Release No 08-02, or seek their own opinions, where adequate pre-acquisition 

due diligence is not possible 

Hypothetical: Successor Liability Where Acquired Company Was Already Subject to 

the FCPA

Both Company A and Company B are Delaware corporations with their principal offices in the United States Both 

companies’ shares are listed on a national U S exchange 

Scenario 1: 

Company A is considering acquiring several of Company B’s business lines. Prior to the acquisition, Company A engages 

in extensive due diligence, including: (1) having its legal, accounting, and compliance departments review Company B’s 

sales and financial data, its customer contracts, and its third-party and distributor agreements; (2) performing a risk-based 

analysis of Company B’s customer base; (3) performing an audit of selected transactions engaged in by Company B; and 

(4) engaging in discussions with Company B’s general counsel, vice president of sales, and head of internal audit regarding 

all corruption risks, compliance efforts, and any other major corruption-related issues that have surfaced at Company B 

over the past ten years. This due diligence aims to determine whether Company B has appropriate anti-corruption and 

compliance policies in place, whether Company B’s employees have been adequately trained regarding those policies, 

how Company B ensures that those policies are followed, and what remedial actions are taken if the policies are violated.

During the course of its due diligence, Company A learns that Company B has made several potentially improper 

payments in connection with a government contract with Foreign Country. As a condition of the acquisition, Company A 

requires Company B to disclose the misconduct to the government. Company A makes certain that the illegal payments 

(cont’d)
33

have stopped and quickly integrates Company B’s business lines into Company A’s own robust internal controls, including 

its anti-corruption and compliance policies, which it communicates to its new employees through required online and inperson training in the local language. Company A also requires Company B’s third-party distributors and other agents to 

sign anti-corruption certifications, complete training, and sign new contracts that incorporate FCPA and anti-corruption 

representations and warranties and audit rights.

Based on these facts, would DOJ or SEC prosecute? 

DOJ and SEC have declined to prosecute companies like Company A in similar circumstances. DOJ and SEC 

encourage companies like Company A to conduct extensive FCPA due diligence. By uncovering the corruption, Company 

A put itself in a favorable position, and, because the corrupt payments have stopped, Company A has no continuing 

liability. Whether DOJ and SEC might charge Company B depends on facts and circumstances beyond the scope of this 

hypothetical. DOJ would consider its Principles of Federal Prosecution of Business Organizations and SEC would consider 

the factors contained in the Seaboard Report, both of which are discussed in Chapter 5. In general, the more egregious 

and long-standing the corruption, the more likely it is that DOJ and SEC would prosecute Company B. In certain limited 

circumstances, DOJ and SEC have in the past declined to bring charges against acquired companies, recognizing that 

acquiring companies may bear much of the reputational damage and costs associated with such charges.

Scenario 2: 

Company A plans to acquire Company B Although, as in Scenario 1, Company A conducts extensive due diligence, it 

does not uncover the bribery until after the acquisition Company A then makes certain that the illegal payments stop and 

voluntarily discloses the misconduct to DOJ and SEC It quickly integrates Company B into Company A’s own robust internal 

controls, including its anti-corruption and compliance policies, which it communicates to its new employees through required 

online and in-person training in the local language Company A also requires Company B’s third-party distributors and other 

agents to sign anti-corruption certifications, complete training, and sign new contracts that incorporate FCPA and anticorruption representations and warranties and audit rights 

Based on these facts, would DOJ or SEC prosecute? 

Absent unusual circumstances not contemplated by this hypothetical, DOJ and SEC are unlikely to prosecute 

Company A for the pre-acquisition misconduct of Company B, provided that Company B still exists in a form that would 

allow it to be prosecuted separately (e.g., Company B is a subsidiary of Company A). DOJ and SEC understand that no 

due diligence is perfect and that society benefits when companies with strong compliance programs acquire and improve 

companies with weak ones. At the same time, however, neither the liability for corruption—nor the harms caused by it—

are eliminated when one company acquires another. Whether DOJ and SEC will pursue a case against Company B (or, in 

unusual circumstances, Company A) will depend on consideration of all the factors in the Principles of Federal Prosecution 

of Business Organizations and the Seaboard Report, respectively.

Scenario 3: 

Company A merges with Company B, which is in the same line of business and interacts with the same Foreign 

Government customers, and forms Company C Due diligence before the merger reveals that both Company A and 

Company B have been engaging in similar bribery In both cases, the bribery was extensive and known by high-level 

management within the companies 

Based on these facts, would DOJ or SEC prosecute? 

Yes. DOJ and SEC have prosecuted companies like Company C on the basis of successor liability. Company C is a 

combination of two companies that both violated the FCPA, and their merger does not eliminate their liability. In addition, 

since Company C is an ongoing concern, DOJ and SEC may impose a monitorship to ensure that the bribery has ceased 

and a compliance program is developed to prevent future misconduct.
chapter 2

The FCPA:

Anti-Bribery Provisions

34

Additional Principles of Criminal 

Liability for Anti-Bribery Violations: 

Aiding and Abetting and Conspiracy

Under federal law, individuals or companies that aid 

or abet a crime, including an FCPA violation, are as guilty as 

if they had directly committed the offense themselves. The 

aiding and abetting statute provides that whoever “commits 

an offense against the United States or aids, abets, counsels, 

commands, induces or procures its commission,” or “willfully causes an act to be done which if directly performed 

by him or another would be an offense against the United 

States,” is punishable as a principal.199 Aiding and abetting is 

not an independent crime, and the government must prove 

that an underlying FCPA violation was committed.200

Individuals and companies, including foreign nationals and companies, may also be liable for conspiring to 

violate the FCPA—i.e., for agreeing to commit an FCPA 

violation—even if they are not, or could not be, independently charged with a substantive FCPA violation. For 

instance, a foreign, non-issuer company could be convicted 

of conspiring with a domestic concern to violate the FCPA. 

Under certain circumstances, it could also be held liable 

for the domestic concern’s substantive FCPA violations 

under Pinkerton v. United States, which imposes liability on 

a defendant for reasonably foreseeable crimes committed 

by a co-conspirator in furtherance of a conspiracy that the 

defendant joined.201

A foreign company or individual may be held liable 

for aiding and abetting an FCPA violation or for conspiring 

to violate the FCPA, even if the foreign company or individual did not take any act in furtherance of the corrupt 

payment while in the territory of the United States. In conspiracy cases, the United States generally has jurisdiction 

over all the conspirators where at least one conspirator is 

an issuer, domestic concern, or commits a reasonably foreseeable overt act within the United States.202 For example, 

if a foreign company or individual conspires to violate the 

FCPA with someone who commits an overt act within the 

United States, the United States can prosecute the foreign 

company or individual for the conspiracy. The same principle applies to aiding and abetting violations. For instance, 

even though they took no action in the United States, 

Japanese and European companies were charged with conspiring with and aiding and abetting a domestic concern’s 

FCPA violations.203

Additional Principles of Civil Liability 

for Anti-Bribery Violations: Aiding and 

Abetting and Causing

Both companies and individuals can be held civilly 

liable for aiding and abetting FCPA anti-bribery violations 

if they knowingly or recklessly provide substantial assistance to a violator.204 Similarly, in the administrative proceeding context, companies and individuals may be held 

liable for causing FCPA violations.205 This liability extends 

to the subsidiaries and agents of U.S. issuers. 

In one case, the U.S. subsidiary of a Swiss freight forwarding company was held civilly liable for paying bribes on 

behalf of its customers in several countries.206 Although the 

U.S. subsidiary was not an issuer for purposes of the FCPA, 

it was an “agent” of several U.S. issuers. By paying bribes on 

behalf of its issuers’ customers, the subsidiary both directly 

violated and aided and abetted the issuers’ FCPA violations. 

What Is the Applicable Statute of 

Limitations?

Statute of Limitations in Criminal Cases

The FCPA’s anti-bribery and accounting provisions 

do not specify a statute of limitations for criminal actions. 

Accordingly, the general five-year limitations period set 

forth in 18 U.S.C. § 3282 applies to substantive criminal 

violations of the Act.207

In cases involving FCPA conspiracies, the government may be able to reach conduct occurring before the 

five-year limitations period applicable to conspiracies 
35

under 18 U.S.C. § 371. For conspiracy offenses, the government generally need prove only that one act in furtherance 

of the conspiracy occurred during the limitations period, 

thus enabling the government to prosecute bribes paid or 

accounting violations occurring more than five years prior 

to the filing of formal charges.208

There are at least two ways in which the applicable 

limitations period is commonly extended. First, companies or individuals cooperating with DOJ may enter into 

a tolling agreement that voluntarily extends the limitations 

period. Second, under 18 U.S.C. § 3292, the government 

may seek a court order suspending the statute of limitations 

posed in a criminal case for up to three years in order to 

obtain evidence from foreign countries. Generally, the suspension period begins when the official request is made by 

the U.S. government to the foreign authority and ends on 

the date on which the foreign authority takes final action 

on the request.209

Statute of Limitations in Civil Actions

In civil cases brought by SEC, the statute of limitations is set by 28 U.S.C. § 2462, which provides for a fiveyear limitation on any “suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture.” The five-year 

period begins to run “when the claim first accrued.” The 

five-year limitations period applies to SEC actions seeking civil penalties, but it does not prevent SEC from 

seeking equitable remedies, such as an injunction or the 

disgorgement of ill-gotten gains, for conduct pre-dating 

the five-year period. In cases against individuals who are 

not residents of the United States, the statute is tolled for 

any period when the defendants are not “found within the 

United States in order that proper service may be made 

thereon.”210 Furthermore, companies or individuals cooperating with SEC may enter into tolling agreements that 

voluntarily extend the limitations period. 
chapter 2

The FCPA:

Anti-Bribery Provisions

36

chapter 3

The FCPA:

Accounting Provisions

38

THE FCPA: ACCOUNTING

PROVISIONS

In addition to the anti-bribery provisions, the FCPA contains accounting provisions applicable to public companies. The FCPA’s accounting provisions operate in tandem with the anti-bribery provisions211 and prohibit off-the-books 

accounting. Company management and investors rely on a company’s financial 

statements and internal accounting controls to ensure transparency in the financial health of the business, the risks undertaken, and the transactions between 

the company and its customers and business partners. The accounting provisions are designed to “strengthen the accuracy of the corporate books and 

records and the reliability of the audit process which constitute the foundations 

of our system of corporate disclosure.”212

The accounting provisions consist of two primary 

components. First, under the “books and records” provision, issuers must make and keep books, records, and 

accounts that, in reasonable detail, accurately and fairly 

reflect an issuer’s transactions and dispositions of an issuer’s assets.213 Second, under the “internal controls” provision, issuers must devise and maintain a system of internal 

accounting controls sufficient to assure management’s control, authority, and responsibility over the firm’s assets.214

These components, and other aspects of the accounting 

provisions, are discussed in greater detail below.

Although the accounting provisions were originally 

enacted as part of the FCPA, they do not apply only to bribery-related violations. Rather, the accounting provisions 

ensure that all public companies account for all of their 

assets and liabilities accurately and in reasonable detail, 

and they form the backbone for most accounting fraud and 

issuer disclosure cases brought by DOJ and SEC.215
39

What Is Covered by the Accounting 

Provisions? 

Books and Records Provision

Bribes, both foreign and domestic, are often mischaracterized in companies’ books and records. Section 13(b)(2)(A) of 

the Exchange Act (15 U.S.C. § 78m(b)(2)(A)), commonly 

called the “books and records” provision, requires issuers 

to “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.”216 The “in 

reasonable detail” qualification was adopted by Congress 

“in light of the concern that such a standard, if unqualified, 

might connote a degree of exactitude and precision which 

is unrealistic.”217 The addition of this phrase was intended 

to make clear “that the issuer’s records should reflect transactions in conformity with accepted methods of recording 

economic events and effectively prevent off-the-books slush 

funds and payments of bribes.”218

The term “reasonable detail” is defined in the statute 

as the level of detail that would “satisfy prudent officials in 

the conduct of their own affairs.”219 Thus, as Congress noted 

when it adopted this definition, “[t]he concept of reasonableness of necessity contemplates the weighing of a number of 

relevant factors, including the costs of compliance.”220

Although the standard is one of reasonable detail, 

it is never appropriate to mischaracterize transactions in a 

company’s books and records.221 Bribes are often concealed 

In the past, “corporate bribery has

been concealed by the falsification of 

corporate books and records” and the 

accounting provisions “remove[] this

avenue of coverup.”

Senate Report No. 95-114, at 3 (1977)

under the guise of legitimate payments, such as commissions or consulting fees.

In instances where all the elements of a violation of 

the anti-bribery provisions are not met—where, for example, there was no use of interstate commerce—companies 

nonetheless may be liable if the improper payments are inaccurately recorded. Consistent with the FCPA’s approach 

to prohibiting payments of any value that are made with a 

corrupt purpose, there is no materiality threshold under the 

books and records provision. In combination with the internal controls provision, the requirement that issuers maintain books and records that accurately and fairly reflect the 

corporation’s transactions “assure[s], among other things, 

that the assets of the issuer are used for proper corporate 

purpose[s].”222 As with the anti-bribery provisions, DOJ’s 

and SEC’s enforcement of the books and records provision 

has typically involved misreporting of either large bribe payments or widespread inaccurate recording of smaller payments made as part of a systemic pattern of bribery. 

Bribes Have Been Mischaracterized As:

	Commissions or Royalties

	Consulting Fees

	Sales and Marketing Expenses

	Scientific Incentives or Studies

	Travel and Entertainment Expenses

	Rebates or Discounts

	After Sales Service Fees 

	Miscellaneous Expenses

	Petty Cash Withdrawals

	Free Goods

	Intercompany Accounts

	Supplier / Vendor Payments

	Write-offs

	“Customs Intervention” Payments
chapter 3

The FCPA:

Accounting Provisions

40

Internal Controls Provision

The payment of bribes often occurs in companies that 

have weak internal control environments. Internal controls 

over financial reporting are the processes used by companies to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial 

statements. They include various components, such as: a 

control environment that covers the tone set by the organization regarding integrity and ethics; risk assessments; control activities that cover policies and procedures designed 

to ensure that management directives are carried out (e.g., 

approvals, authorizations, reconciliations, and segregation 

of duties); information and communication; and monitoring. Section 13(b)(2)(B) of the Exchange Act (15 U.S.C. 

§ 78m(b)(2)(B)), commonly called the “internal controls” 

provision, requires issuers to:

devise and maintain a system of internal accounting 

controls sufficient to provide reasonable assurances 

that—

(i) transactions are executed in accordance with management’s general or specific authorization;

(ii) transactions are recorded as necessary (I) to permit preparation of financial statements in conformity 

with generally accepted accounting principles or any 

other criteria applicable to such statements, and (II) 

to maintain accountability for assets;

(iii) access to assets is permitted only in accordance 

with management’s general or specific authorization; 

and

(iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals 

and appropriate action is taken with respect to any 

differences ....223

Like the “reasonable detail” requirement in the 

books and records provision, the Act defines “reasonable 

assurances” as “such level of detail and degree of assurance 

as would satisfy prudent officials in the conduct of their 

own affairs.”224

The Act does not specify a particular set of controls 

that companies are required to implement. Rather, the 

internal controls provision gives companies the flexibility 

to develop and maintain a system of controls that is appropriate to their particular needs and circumstances. 

An effective compliance program is a critical component of an issuer’s internal controls. Fundamentally, 

the design of a company’s internal controls must take into 

account the operational realities and risks attendant to the 

company’s business, such as: the nature of its products or 

services; how the products or services get to market; the 

nature of its work force; the degree of regulation; the extent 

of its government interaction; and the degree to which it 

has operations in countries with a high risk of corruption. A 

company’s compliance program should be tailored to these 

differences. Businesses whose operations expose them to a 

high risk of corruption will necessarily devise and employ 

different internal controls than businesses that have a lesser 

exposure to corruption, just as a financial services company 

would be expected to devise and employ different internal 

controls than a manufacturer. 

A 2008 case against a German manufacturer of industrial and consumer products illustrates a systemic internal 

controls problem involving bribery that was unprecedented 

in scale and geographic reach. From 2001 to 2007, the company created elaborate payment schemes—including slush 

Companies with ineffective internal

controls often face risks of embezzlement 

and self-dealing by employees, commercial 

bribery, export control problems, and 

violations of other U.S. and local laws.
41

funds, off-the-books accounts, and systematic payments to 

business consultants and other intermediaries—to facilitate 

bribery. Payments were made in ways that obscured their 

purpose and the ultimate recipients of the money. In some 

cases, employees obtained large amounts of cash from cash 

desks and then transported the cash in suitcases across international borders. Authorizations for some payments were 

placed on sticky notes and later removed to avoid any permanent record. The company made payments totaling approximately $1.36 billion through various mechanisms, including 

$805.5 million as bribes and $554.5 million for unknown 

purposes.225 The company was charged with internal controls 

and books and records violations, along with anti-bribery 

violations, and paid over $1.6 billion to resolve the case with 

authorities in the United States and Germany.226

The types of internal control failures identified in the 

above example exist in many other cases where companies 

were charged with internal controls violations.227 A 2010 

case against a multi-national automobile manufacturer 

involved bribery that occurred over a long period of time in 

multiple countries.228 In that case, the company used dozens of ledger accounts, known internally as “internal third 

party accounts,” to maintain credit balances for the benefit of government officials.229 The accounts were funded 

through several bogus pricing mechanisms, such as “price 

surcharges,” “price inclusions,” or excessive commissions.230

The company also used artificial discounts or rebates on 

sales contracts to generate the money to pay the bribes.231

The bribes also were made through phony sales intermediaries and corrupt business partners, as well as through the 

use of cash desks.232 Sales executives would obtain cash from 

the company in amounts as high as hundreds of thousands 

of dollars, enabling the company to obscure the purpose 

and recipients of the money paid to government officials.233

In addition to bribery charges, the company was charged 

with internal controls and books and records violations. 

Good internal controls can prevent not only FCPA 

violations, but also other illegal or unethical conduct by the 

company, its subsidiaries, and its employees. DOJ and SEC 

have repeatedly brought FCPA cases that also involved 

other types of misconduct, such as financial fraud,234

commercial bribery,235 export controls violations,236 and 

embezzlement or self-dealing by company employees.237

Potential Reporting and Anti-Fraud Violations

Issuers have reporting obligations under Section 

13(a) of the Exchange Act, which requires issuers to file 

an annual report that contains comprehensive information 

about the issuer. Failure to properly disclose material information about the issuer’s business, including material revenue, expenses, profits, assets, or liabilities related to bribery 

of foreign government officials, may give rise to anti-fraud 

and reporting violations under Sections 10(b) and 13(a) of 

the Exchange Act. 

For example, a California-based technology company 

was charged with reporting violations, in addition to violations of the FCPA’s anti-bribery and accounting provisions, 

when its bribery scheme led to material misstatements in its 

SEC filings.238 The company was awarded contracts procured 

through bribery of Chinese officials that generated material 

revenue and profits. The revenue and profits helped the company offset losses incurred to develop new products expected 

to become the company’s future source of revenue growth. 

The company improperly recorded the bribe payments as 

sales commission expenses in its books and records. 

Companies engaged in bribery may also be engaged 

in activity that violates the anti-fraud and reporting provisions. For example, an oil and gas pipeline company and 

its employees engaged in a long-running scheme to use the 

company’s petty cash accounts in Nigeria to make a variety of corrupt payments to Nigerian tax and court officials 

using false invoices.239 The company and its employees also 

engaged in a fraudulent scheme to minimize the company’s 

tax obligations in Bolivia by using false invoices to claim 

false offsets to its value-added tax obligations. The scheme 

resulted in material overstatements of the company’s net 

income in the company’s financial statements, which violated the Exchange Act’s anti-fraud and reporting provisions. Both schemes also violated the books and records 

and internal controls provisions. 
chapter 3

The FCPA:

Accounting Provisions

42

What Are Management’s Other Obligations?

Sarbanes-Oxley Act of 2002

In 2002, in response to a series of accounting scandals 

involving U.S. companies, Congress enacted the SarbanesOxley Act (Sarbanes-Oxley or SOX),240 which strengthened the accounting requirements for issuers. All issuers 

must comply with Sarbanes-Oxley’s requirements, several 

of which have FCPA implications.

SOX Section 302 (15 U.S.C. § 7241)—Responsibility 

of Corporate Officers for the Accuracy and Validity of 

Corporate Financial Reports 

Section 302 of Sarbanes-Oxley requires that a company’s “principal officers” (typically the Chief Executive 

Officer (CEO) and Chief Financial Officer (CFO)) take 

responsibility for and certify the integrity of their company’s financial reports on a quarterly basis. Under Exchange 

Act Rule 13a-14, which is commonly called the “SOX certification” rule, each periodic report filed by an issuer must 

include a certification signed by the issuer’s principal executive officer and principal financial officer that, among other 

things, states that: (i) based on the officer’s knowledge, the 

report contains no material misstatements or omissions; 

(ii) based on the officer’s knowledge, the relevant financial 

statements are accurate in all material respects; (iii) internal controls are properly designed; and (iv) the certifying 

officers have disclosed to the issuer’s audit committee and 

auditors all significant internal control deficiencies. 

SOX Section 404 (15 U.S.C. § 7262)—Reporting 

on the State of a Company’s Internal Controls over 

Financial Reporting

Sarbanes-Oxley also strengthened a company’s 

required disclosures concerning the state of its internal control over financial reporting. Under Section 404, issuers are 

required to present in their annual reports management’s 

conclusion regarding the effectiveness of the company’s 

internal controls over financial reporting. This statement 

must also assess the effectiveness of such internal controls 

and procedures. In addition, the company’s independent 

auditor must attest to and report on its assessment of the 

effectiveness of the company’s internal controls over financial reporting. 

As directed by Section 404, SEC has adopted 

rules requiring issuers and their independent auditors to 

report to the public on the effectiveness of the company’s internal controls over financial reporting.241 These 

internal controls include those related to illegal acts and 

fraud—including acts of bribery—that could result in a 

material misstatement of the company’s financial statements.242 In 2007, SEC issued guidance on controls over 

financial reporting.243

SOX Section 802 (18 U.S.C. §§ 1519 and 1520)—

Criminal Penalties for Altering Documents 

Section 802 of Sarbanes-Oxley prohibits altering, 

destroying, mutilating, concealing, or falsifying records, 

documents, or tangible objects with the intent to obstruct, 

impede, or influence a potential or actual federal investigation. This section also prohibits any accountant from knowingly and willfully violating the requirement that all audit 

or review papers be maintained for a period of five years.

Who Is Covered by the Accounting 

Provisions?

Civil Liability for Issuers, Subsidiaries, and Affiliates

The FCPA’s accounting provisions apply to every 

issuer that has a class of securities registered pursuant to 

Section 12 of the Exchange Act or that is required to file 

annual or other periodic reports pursuant to Section 15(d) 

of the Exchange Act.244 These provisions apply to any issuer 

whose securities trade on a national securities exchange in 

the United States, including foreign issuers with exchangetraded American Depository Receipts.245 They also apply 
43

to companies whose stock trades in the over-the-counter 

market in the United States and which file periodic reports 

with the Commission, such as annual and quarterly reports. 

Unlike the FCPA’s anti-bribery provisions, the accounting 

provisions do not apply to private companies.246

Although the FCPA’s accounting requirements are 

directed at “issuers,” an issuer’s books and records include 

those of its consolidated subsidiaries and affiliates. An issuer’s responsibility thus extends to ensuring that subsidiaries 

or affiliates under its control, including foreign subsidiaries 

and joint ventures, comply with the accounting provisions. 

For instance, DOJ and SEC brought enforcement actions 

against a California company for violating the FCPA’s 

accounting provisions when two Chinese joint ventures in 

which it was a partner paid more than $400,000 in bribes 

over a four-year period to obtain business in China.247 Sales 

personnel in China made the illicit payments by obtaining 

cash advances from accounting personnel, who recorded 

the payments on the books as “business fees” or “travel and 

entertainment” expenses. Although the payments were made 

exclusively in China by Chinese employees of the joint venture, the California company failed to have adequate internal 

controls and failed to act on red flags indicating that its affiliates were engaged in bribery. The California company paid 

$1.15 million in civil disgorgement and a criminal monetary 

penalty of $1.7 million.

Companies may not be able to exercise the same 

level of control over a minority-owned subsidiary or 

affiliate as they do over a majority or wholly owned entity. 

Therefore, if a parent company owns 50% or less of a 

subsidiary or affiliate, the parent is only required to use 

good faith efforts to cause the minority-owned subsidiary or affiliate to devise and maintain a system of internal accounting controls consistent with the issuer’s own 

obligations under the FCPA.248 In evaluating an issuer’s 

good faith efforts, all the circumstances—including “the 

relative degree of the issuer’s ownership of the domestic 

or foreign firm and the laws and practices governing the 

business operations of the country in which such firm is 

located”—are taken into account.249

Civil Liability for Individuals and Other Entities

Companies (including subsidiaries of issuers) and 

individuals may also face civil liability for aiding and abetting or causing an issuer’s violation of the accounting provisions.250 For example, in April 2010, SEC charged four

individuals—a Country Manager, a Senior Vice President 

of Sales, a Regional Financial Director, and an International 

Controller of a U.S. issuer—for their roles in schemes to

bribe Kyrgyz and Thai government officials to purchase

tobacco from their employer. The complaint alleged that,

among other things, the individuals aided and abetted the 

issuer company’s violations of the books and records and

internal controls provisions by “knowingly provid[ing]

substantial assistance to” the parent company.251 All four

executives settled the charges against them, consenting to

the entry of final judgments permanently enjoining them

from violating the accounting and anti-bribery provisions, 

with two executives paying civil penalties.252 As in other

areas of federal securities law, corporate officers also can be 

held liable as control persons.253

Similarly, in October 2011, SEC brought an administrative action against a U.S. water valve manufacturer and 

a former employee of the company’s Chinese subsidiary

for violations of the FCPA’s accounting provisions.254 The

Chinese subsidiary had made improper payments to employees of certain design institutes to create design specifications 

that favored the company’s valve products. The payments

were disguised as sales commissions in the subsidiary’s books 

and records, thereby causing the U.S. issuer’s books and

records to be inaccurate. The general manager of the subsidiary, who approved the payments and knew or should have 

known that they were improperly recorded, was ordered to 

cease-and-desist from committing or causing violations of

the accounting provisions, among other charges.255

Additionally, individuals and entities can be held

directly civilly liable for falsifying an issuer’s books and

records or for circumventing internal controls. Exchange

Act Rule 13b2-1 provides: “No person shall, directly or

indirectly, falsify or cause to be falsified, any book, record 

or account subject to [the books and records provision] of 

the Securities Exchange Act.”256 And Section 13(b)(5) of
chapter 3

The FCPA:

Accounting Provisions

44

the Exchange Act (15 U.S.C. § 78m(b)(5)) provides that 

“[n]o person shall knowingly circumvent or knowingly fail 

to implement a system of internal accounting controls or 

knowingly falsify any book, record, or account ....”257 The 

Exchange Act defines “person” to include a “natural person, 

company, government, or political subdivision, agency, or 

instrumentality of a government.”258

An issuer’s officers and directors may also be held civilly liable for making false statements to a company’s auditor. Exchange Act Rule 13b2-2 prohibits officers and directors from making (or causing to be made) materially false 

or misleading statements, including an omission of material 

facts, to an accountant. This liability arises in connection 

with any audit, review, or examination of a company’s financial statements or in connection with the filing of any document with SEC.259

Finally, the principal executive and principal financial officer, or persons performing similar functions, can 

be held liable for violating Exchange Act Rule 13a-14 by 

signing false personal certifications required by SOX. 

Thus, for example, in January 2011, SEC charged the former CEO of a U.S. issuer for his role in schemes to bribe 

Iraqi government officials in connection with the United 

Nations Oil-For-Food Programme and to bribe Iraqi and 

Indonesian officials to purchase the company’s fuel additives. There, the company used false invoices and sham consulting contracts to support large bribes that were passed 

on to foreign officials through an agent, and the bribes were 

mischaracterized as legitimate commissions and travel fees 

in the company’s books and records. The officer directed 

and authorized the bribe payments and their false recording 

in the books and records. He also signed annual and quarterly SOX certifications in which he falsely represented that 

the company’s financial statements were fairly presented 

and the company’s internal controls sufficiently designed, 

as well as annual representations to the company’s external 

auditors where he falsely stated that he complied with the 

company’s code of ethics and was unaware of any violations 

of the code of ethics by anyone else. The officer was charged 

with aiding and abetting violations of the books and records 

and internal controls provisions, circumventing internal 

controls, falsifying books and records, making false statements to accountants, and signing false certifications.260 He 

consented to the entry of an injunction and paid disgorgement and a civil penalty.261 He also later pleaded guilty in 

the United Kingdom to conspiring to corrupt Iraqi and 

Indonesian officials.262

Criminal Liability for Accounting Violations

Criminal liability can be imposed on companies 

and individuals for knowingly failing to comply with the 

FCPA’s books and records or internal controls provisions.263

As with the FCPA’s anti-bribery provisions, individuals are 

only subject to the FCPA’s criminal penalties for violations 

of the accounting provisions if they acted “willfully.”264

For example, a French company was criminally 

charged with failure to implement internal controls and 

failure to keep accurate books and records, among other 

violations.265 As part of its deferred prosecution agreement, 

the company admitted to numerous internal control failures, including failure to implement sufficient anti-bribery 

compliance policies, maintain a sufficient system for the 

selection and approval of consultants, and conduct appropriate audits of payments to purported “business consultants.”266 Likewise, a German company pleaded guilty to 

internal controls and books and records violations where, 

from 2001 through 2007, it made payments totaling 

approximately $1.36 billion through various mechanisms, 

including $805.5 million as bribes and $554.5 million for 

unknown purposes.267

Individuals can be held criminally liable for accounting 

violations. For example, a former managing director of a U.S. 

bank’s real estate business in China pleaded guilty to conspiring to evade internal accounting controls in order to transfer a multi-million dollar ownership interest in a Shanghai 

building to himself and a Chinese public official with whom 
45

he had a personal friendship. The former managing director 

repeatedly made false representations to his employer about 

the transaction and the ownership interests involved. 268

Conspiracy and Aiding and Abetting Liability 

As with the FCPA’s anti-bribery provisions, companies (including subsidiaries of issuers) and individuals may 

face criminal liability for conspiring to commit or for aiding and abetting violations of the accounting provisions. 

For example, the subsidiary of a Houston-based 

company pleaded guilty both to conspiring to commit and 

to aiding and abetting the company’s books and records 

and anti-bribery violations.269 The subsidiary paid bribes 

of over $4 million and falsely characterized the payments 

as “commissions,” “fees,” or “legal services,” consequently 

causing the company’s books and records to be inaccurate. 

Although the subsidiary was not an issuer and therefore 

could not be charged directly with an accounting violation, 

it was criminally liable for its involvement in the parent 

company’s accounting violation.

Similarly, a U.S. subsidiary of a Swiss freight forwarding company that was not an issuer was charged with 

conspiring to commit and with aiding and abetting the 

books and records violations of its customers, who were 

issuers and therefore subject to the FCPA’s accounting 

provisions.270 The U.S. subsidiary substantially assisted the 

issuer-customers in violating the FCPA’s books and records 

provision by masking the true nature of the bribe payments 

in the invoices it submitted to the issuer-customers.271 The 

subsidiary thus faced criminal liability for its involvement 

in the issuer-customers’ FCPA violations even though it 

was not itself subject to the FCPA’s accounting provisions.

Auditor Obligations

All public companies in the United States must file 

annual financial statements that have been prepared in 

conformity with U.S. Generally Accepted Accounting 

Principles (U.S. GAAP). These accounting principles are 

among the most comprehensive in the world. U.S. GAAP 

requires an accounting of all assets, liabilities, revenue, and 

expenses as well as extensive disclosures concerning the 

company’s operations and financial condition. A company’s 

financial statements should be complete and fairly represent the company’s financial condition.272 Thus, under U.S. 

GAAP, any payments to foreign government officials must 

be properly accounted for in a company’s books, records, 

and financial statements. 

U.S. laws, including SEC Rules, require issuers to 

undergo an annual external audit of their financial statements 

and to make those audited financial statements available to 

the public by filing them with SEC. SEC Rules and the rules 

and standards issued by the Public Company Accounting 

Oversight Board (PCAOB) under SEC oversight, require 

external auditors to be independent of the companies that 

they audit. Independent auditors must comply with the rules 

and standards set forth by the PCAOB when they perform 

an audit of a public company. These audit standards govern, 

for example, the auditor’s responsibility concerning material 

errors, irregularities, or illegal acts by a client and its officers, 

directors, and employees. Additionally, the auditor has a 

responsibility to obtain an understanding of an entity’s internal controls over financial reporting as part of its audit and 

must communicate all significant deficiencies and material 

weaknesses identified during the audit to management and 

the audit committee.273

Under Section 10A of the Exchange Act, independent auditors who discover an illegal act, such as the payment of bribes to domestic or foreign government officials, 

have certain obligations in connection with their audits of 

public companies. 274 Generally, Section 10A requires auditors who become aware of illegal acts to report such acts to 

appropriate levels within the company and, if the company 

fails to take appropriate action, to notify SEC.
chapter 3

The FCPA:

Accounting Provisions

46

chapter 4

Other Related 

U.S. Laws

48

OTHER RELATED U.S. LAWS

Businesses and individuals should be aware that conduct that violates the 

FCPA’s anti-bribery or accounting provisions may also violate other statutes or 

regulations. Moreover, payments to foreign government officials and intermediaries may violate these laws even if all of the elements of an FCPA violation 

are not present.

Travel Act

The Travel Act, 18 U.S.C. § 1952, prohibits travel 

in interstate or foreign commerce or using the mail or any 

facility in interstate or foreign commerce, with the intent 

to distribute the proceeds of any unlawful activity or to 

promote, manage, establish, or carry on any unlawful activity.275 “Unlawful activity” includes violations of not only 

the FCPA, but also state commercial bribery laws. Thus, 

bribery between private commercial enterprises may, in 

some circumstances, be covered by the Travel Act. Said differently, if a company pays kickbacks to an employee of a 

private company who is not a foreign official, such privateto-private bribery could possibly be charged under the 

Travel Act. 

DOJ has previously charged both individual and 

corporate defendants in FCPA cases with violations of 

the Travel Act.276 For instance, an individual investor was 

convicted of conspiracy to violate the FCPA and the Travel 

Act in 2009 where the relevant “unlawful activity” under 

the Travel Act was an FCPA violation involving a bribery 

scheme in Azerbaijan.277 Also in 2009, a California company that engaged in both bribery of foreign officials in violation of the FCPA and commercial bribery in violation of 

California state law pleaded guilty to conspiracy to violate 

the FCPA and the Travel Act, among other charges.278

Money Laundering

Many FCPA cases also involve violations of antimoney laundering statutes.279 For example, two Florida 

executives of a Miami-based telecommunications company 

were convicted of FCPA and money laundering conduct 

where they conducted financial transactions involving the 

proceeds of specified unlawful activities—violations of the 

FCPA, the criminal bribery laws of Haiti, and wire fraud—

in order to conceal and disguise these proceeds. Notably, 

although foreign officials cannot be prosecuted for FCPA 
49

violations,280 three former Haitian officials involved in the 

same scheme were convicted of money laundering.281

Mail and Wire Fraud

The mail and wire fraud statutes may also apply. In 

2006, for example, a wholly owned foreign subsidiary of 

a U.S. issuer pleaded guilty to both FCPA and wire fraud 

counts where the scheme included overbilling the subsidiary’s customers—both government and private—and 

using part of the overcharged money to pay kickbacks to the 

customers’ employees. The wire fraud charges alleged that 

the subsidiary had funds wired from its parent’s Oregon 

bank account to off-the-books bank accounts in South 

Korea that were controlled by the subsidiary. The funds, 

amounting to almost $2 million, were then paid to managers of state-owned and private steel production companies 

in China and South Korea as illegal commission payments 

and kickbacks that were disguised as refunds, commissions, 

and other seemingly legitimate expenses.282

Certification and Reporting Violations

Certain other licensing, certification, and reporting 

requirements imposed by the U.S. government can also be 

implicated in the foreign bribery context. For example, as 

a condition of its facilitation of direct loans and loan guarantees to a foreign purchaser of U.S. goods and services, 

the Export-Import Bank of the United States requires the 

U.S. supplier to make certifications concerning commissions, fees, or other payments paid in connection with the 

financial assistance and that it has not and will not violate 

the FCPA.283 A false certification may give rise to criminal 

liability for false statements.284

Similarly, manufacturers, exporters, and brokers of 

certain defense articles and services are subject to registration, licensing, and reporting requirements under the 

Arms Export Control Act (AECA), 22 U.S.C. § 2751, et

seq., and its implementing regulations, the International 

Traffic in Arms Regulations (ITAR), 22 C.F.R. § 120, et 

seq. For example, under AECA and ITAR, all manufacturers and exporters of defense articles and services must register with the Directorate of Defense Trade Controls. The 

sale of defense articles and services valued at $500,000 or 

more triggers disclosure requirements concerning fees and 

commissions, including bribes, in an aggregate amount of 

$100,000 or more.285 Violations of AECA and ITAR can 

result in civil and criminal penalties.286

Tax Violations 

Individuals and companies who violate the FCPA may 

also violate U.S. tax law, which explicitly prohibits tax deductions for bribes, such as false sales “commissions” deductions 

intended to conceal corrupt payments.287 Internal Revenue 

Service-Criminal Investigation has been involved in a number of FCPA investigations involving tax violations, as well as 

other financial crimes like money laundering.
chapter 4

Other Related 

U.S. Laws

50

chapter 5

Guiding Principles 

of Enforcement

52

GUIDING PRINCIPLES OF

ENFORCEMENT

What Does DOJ Consider When 

Deciding Whether to Open an 

Investigation or Bring Charges?

Whether and how DOJ will commence, decline, 

or otherwise resolve an FCPA matter is guided by the 

Principles of Federal Prosecution in the case of individuals, and the Principles of Federal Prosecution of Business 

Organizations in the case of companies.

DOJ Principles of Federal Prosecution

The Principles of Federal Prosecution, set forth in 

Chapter 9-27.000 of the U.S. Attorney’s Manual,288 provide guidance for DOJ prosecutors regarding initiating 

or declining prosecution, selecting charges, and plea-bargaining. The Principles of Federal Prosecution provide that 

prosecutors should recommend or commence federal prosecution if the putative defendant’s conduct constitutes a 

federal offense and the admissible evidence will probably be 

sufficient to obtain and sustain a conviction unless (1) no 

substantial federal interest would be served by prosecution; 

(2) the person is subject to effective prosecution in another 

jurisdiction; or (3) an adequate non-criminal alternative to 

prosecution exists. In assessing the existence of a substantial 

federal interest, the prosecutor is advised to “weigh all relevant considerations,” including the nature and seriousness 

of the offense; the deterrent effect of prosecution; the person’s culpability in connection with the offense; the person’s history with respect to criminal activity; the person’s 

willingness to cooperate in the investigation or prosecution of others; and the probable sentence or other consequences if the person is convicted. The Principles of Federal 

Prosecution also set out the considerations to be weighed 

when deciding whether to enter into a plea agreement with 

an individual defendant, including the nature and seriousness of the offense and the person’s willingness to cooperate, 

as well as the desirability of prompt and certain disposition 

of the case and the expense of trial and appeal.289

DOJ Principles of Federal Prosecution of Business 

Organizations

The Principles of Federal Prosecution of Business 

Organizations, set forth in Chapter 9-28.000 of the U.S.

torney’s Manual,290 provide guidance regarding the resolun of cases involving corporate wrongdoing. The Principles

Federal Prosecution of Business Organizations recognize

At

tio

of 

that resolution of corporate criminal cases by means other 
53

than indictment, including non-prosecution and deferred 

prosecution agreements, may be appropriate in certain circumstances. Nine factors are considered in conducting an 

investigation, determining whether to charge a corporation, 

and negotiating plea or other agreements:

•	 the nature and seriousness of the offense, including 

the risk of harm to the public;

•	 the pervasiveness of wrongdoing within the corporation, including the complicity in, or the condoning of, the wrongdoing by corporate management;

•	 the corporation’s history of similar misconduct, 

including prior criminal, civil, and regulatory 

enforcement actions against it;

•	 the corporation’s timely and voluntary disclosure of 

wrongdoing and its willingness to cooperate in the 

investigation of its agents;

•	 the existence and effectiveness of the corporation’s 

pre-existing compliance program;

•	 the corporation’s remedial actions, including any 

efforts to implement an effective corporate compliance program or improve an existing one, replace 

responsible management, discipline or terminate 

wrongdoers, pay restitution, and cooperate with the 

relevant government agencies;

•	 collateral consequences, including whether there 

is disproportionate harm to shareholders, pension 

holders, employees, and others not proven personally culpable, as well as impact on the public arising 

from the prosecution;

•	 the adequacy of the prosecution of individuals 

responsible for the corporation’s malfeasance; and

•	 the adequacy of remedies such as civil or regulatory 

enforcement actions.

As these factors illustrate, in many investigations it 

will be appropriate for a prosecutor to consider a corporation’s pre-indictment conduct, including voluntary disclosure, cooperation, and remediation, in determining whether 

to seek an indictment. In assessing a corporation’s cooperation, prosecutors are prohibited from requesting attorneyclient privileged materials with two exceptions—when a 

corporation or its employee asserts an advice-of-counsel 

defense and when the attorney-client communications were 

in furtherance of a crime or fraud. Otherwise, an organization’s cooperation may only be assessed on the basis of 

whether it disclosed the relevant facts underlying an investigation—and not on the basis of whether it has waived its 

attorney-client privilege or work product protection.291

What Does SEC Consider When 

Deciding Whether to Open an 

Investigation or Bring Charges?

SEC’s Enforcement Manual, published by SEC’s 

Enforcement Division and available on SEC’s website,292

sets forth information about how SEC conducts investigations, as well as the guiding principles that SEC staff 

considers when determining whether to open or close an 

investigation and whether civil charges are merited. There 

are various ways that potential FCPA violations come to 

the attention of SEC staff, including: tips from informants 

or whistleblowers; information developed in other investigations; self-reports or public disclosures by companies; 

referrals from other offices or agencies; public sources, such 

as media reports and trade publications; and proactive 

investigative techniques, including risk-based initiatives. 

Investigations can be formal, such as where SEC has issued 

a formal order of investigation that authorizes its staff to 

issue investigative subpoenas for testimony and documents, 

or informal, such as where the staff proceeds with the investigation without the use of investigative subpoenas. 

In determining whether to open an investigation and, 

if so, whether an enforcement action is warranted, SEC 

staff considers a number of factors, including: the statutes 

or rules potentially violated; the egregiousness of the potential violation; the potential magnitude of the violation; 

whether the potentially harmed group is particularly vulnerable or at risk; whether the conduct is ongoing; whether 

the conduct can be investigated efficiently and within the 

statute of limitations period; and whether other authorities, 

including federal or state agencies or regulators, might be 

better suited to investigate the conduct. SEC staff also may 
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consider whether the case involves a possibly widespread 

industry practice that should be addressed, whether the 

case involves a recidivist, and whether the matter gives SEC 

an opportunity to be visible in a community that might not 

otherwise be familiar with SEC or the protections afforded 

by the securities laws.

For more information about the Enforcement 

Division’s procedures concerning investigations, enforcement actions, and cooperation with other regulators, see 

the Enforcement Manual at http://www.sec.gov/divisions/

enforce.shtml. 

Self-Reporting, Cooperation, and 

Remedial Efforts

While the conduct underlying any FCPA investigation is obviously a fundamental and threshold consideration in deciding what, if any, action to take, both DOJ 

and SEC place a high premium on self-reporting, along 

with cooperation and remedial efforts, in determining the 

appropriate resolution of FCPA matters. 

Criminal Cases

Under DOJ’s Principles of Federal Prosecution of 

Business Organizations, federal prosecutors

company’s cooperation in determining how 

corporate criminal case. Specifically, prosecut

whether the company made a voluntary an

closure as well as the company’s willingness to

 consider a 

to resolve a 

ors consider 

d timely dis-

 provide relevant information and evidence and identify relevant actors 

inside and outside the company, including senior executives. In addition, prosecutors may consider a company’s 

remedial actions, including efforts to improve an existing 

compliance program or appropriate disciplining of wrongdoers.293 A company’s remedial measures should be meaningful and illustrate its recognition of the seriousness of the 

misconduct, for example, by taking steps to implement the 

personnel, operational, and organizational changes necessary to establish an awareness among employees that criminal conduct will not be tolerated.294

The Principles of Federal Prosecution similarly provide 

that prosecutors may consider an individual’s willingness 

to cooperate in deciding whether a prosecution should 

be undertaken and how it should be resolved. Although a 

willingness to cooperate will not, by itself, generally relieve 

a person of criminal liability, it may be given “serious consideration” in evaluating whether to enter into a plea agreement with a defendant, depending on the nature and value 

of the cooperation offered.295

The U.S. Sentencing Guidelines similarly take into 

account an individual defendant’s cooperation and voluntary disclosure. Under § 5K1.1, a defendant’s cooperation, 

if sufficiently substantial, may justify the government filing 

a motion for a reduced sentence. And under §  5K2.16, a 

defendant’s voluntary disclosure of an offense prior to its 

discovery—if the offense was unlikely to have been discovered otherwise—may warrant a downward departure in 

certain circumstances. 

Chapter 8 of the Sentencing Guidelines, which governs the sentencing of organizations, takes into account an 

organization’s remediation as part of an “effective compliance and ethics program.” One of the seven elements of 

such a program provides that after the detection of criminal conduct, “the organization shall take reasonable steps 

to respond appropriately to the criminal conduct and to 

prevent further similar criminal conduct, including making any necessary modifications to the organization’s 

compliance and ethics program.”296 Having an effective 

compliance and ethics program may lead to a three-point 

reduction in an organization’s culpability score under 

§ 8C2.5, which affects the fine calculation under the 

Guidelines. Similarly, an organization’s self-reporting, 

cooperation, and acceptance of responsibility may lead to 

fine reductions under § 8C2.5(g) by decreasing the culpability score. Conversely, an organization will not qualify 

for the compliance program reduction when it unreasonably delayed reporting the offense.297 Similar to § 5K1.1 
55

for individuals, organizations can qualify for departures 

pursuant to § 8C4.1 of the Guidelines for cooperating in 

the prosecution of others.

Civil Cases

SEC’s Framework for Evaluating Cooperation by 

Companies 

SEC’s framework for evaluating cooperation by companies is set forth in its 2001 Report of Investigation Pursuant 

to Section 21(a) of the Securities Exchange Act of 1934 and 

Commission Statement on the Relationship of Cooperation to 

Agency Enforcement Decisions, which is commonly known 

as the Seaboard Report.

298 The report, which explained the 

Commission’s decision not to take enforcement action 

against a public company for certain accounting violations 

caused by its subsidiary, details the many factors SEC considers in determining whether, and to what extent, it grants leniency to companies for cooperating in its investigations and 

for related good corporate citizenship. Specifically, the report 

identifies four broad measures of a company’s cooperation: 

•	 self-policing prior to the discovery of the misconduct, including establishing effective compliance 

procedures and an appropriate tone at the top;

•	 self-reporting of misconduct when it is discovered, 

including conducting a thorough review of the 

nature, extent, origins, and consequences of the misconduct, and promptly, completely, and effectively 

disclosing the misconduct to the public, to regulatory agencies, and to self-regulatory organizations;

•	 remediation, including dismissing or appropriately 

disciplining wrongdoers, modifying and improving internal controls and procedures to prevent 

recurrence of the misconduct, and appropriately 

compensating those adversely affected; and

•	 cooperation with law enforcement authorities, 

including providing SEC staff with all information relevant to the underlying violations and the 

company’s remedial efforts.

Since every enforcement matter is different, this analytical framework sets forth general principles but does not 

limit SEC’s broad discretion to evaluate every case individually on its own unique facts and circumstances. Similar 

to SEC’s treatment of cooperating individuals, credit 

for cooperation by companies may range from taking no 

enforcement action to pursuing reduced sanctions in connection with enforcement actions.

SEC’s Framework for Evaluating Cooperation by 

Individuals

In 2010, SEC announced a new cooperation program 

for individuals.299 SEC staff has a wide range of tools to 

facilitate and reward cooperation by individuals, from taking no enforcement action to pursuing reduced sanctions in 

connection with enforcement actions. Although the evaluation of cooperation depends on the specific circumstances, 

SEC generally evaluates four factors to determine whether, 

to what extent, and in what manner to credit cooperation 

by individuals:

•	 the assistance provided by the cooperating individual in SEC’s investigation or related enforcement actions, including, among other things: the 

value and timeliness of the cooperation, including 

whether the individual was the first to report the 

misconduct to SEC or to offer his or her cooperation; whether the investigation was initiated based 

upon the information or other cooperation by the 

individual; the quality of the cooperation, including whether the individual was truthful and the 

cooperation was complete; the time and resources 

conserved as a result of the individual’s cooperation; and the nature of the cooperation, such as the 

type of assistance provided; 

•	 the importance of the matter in which the individual provided cooperation;

•	 the societal interest in ensuring that the cooperating individual is held accountable for his or her 

misconduct, including the severity of the individual’s misconduct, the culpability of the individual, 

and the efforts undertaken by the individual to 

remediate the harm; and
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•	 the appropriateness of a cooperation credit in light 

of the profile of the cooperating individual.

Corporate Compliance Program

In a global marketplace, an effective compliance program is a critical component of a company’s internal controls and is essential to detecting and preventing FCPA violations.300 Effective compliance programs are tailored to the 

company’s specific business and to the risks associated with 

that business. They are dynamic and evolve as the business 

and the markets change.

An effective compliance program promotes “an organizational culture that encourages ethical conduct and a 

commitment to compliance with the law.”301 Such a program 

protects a company’s reputation, ensures investor value and 

confidence, reduces uncertainty in business transactions, and 

secures a company’s assets.302 A well-constructed, thoughtfully implemented, and consistently enforced compliance 

and ethics program helps prevent, detect, remediate, and 

report misconduct, including FCPA violations.

In addition to considering whether a company has 

self-reported, cooperated, and taken appropriate remedial 

actions, DOJ and SEC also consider the adequacy of a 

company’s compliance program when deciding what, if any, 

action to take. The program may influence whether or not 

charges should be resolved through a deferred prosecution 

agreement (DPA) or non-prosecution agreement (NPA), 

as well as the appropriate length of any DPA or NPA, or 

the term of corporate probation. It will often affect the 

penalty amount and the need for a monitor or self-reporting.303 As discussed above, SEC’s Seaboard Report focuses, 

among other things, on a company’s self-policing prior to 

the discovery of the misconduct, including whether it had 

established effective compliance procedures.304 Likewise, 

three of the nine factors set forth in DOJ’s Principles of 

Federal Prosecution of Business Organizations relate, either 

directly or indirectly, to a compliance program’s design and 

implementation, including the pervasiveness of wrongdoing within the company, the existence and effectiveness of 

the company’s pre-existing compliance program, and the 

company’s remedial actions.305 DOJ also considers the U.S. 

Sentencing Guidelines’ elements of an effective compliance 

program, as set forth in § 8B2.1 of the Guidelines. 

These considerations reflect the recognition that 

a company’s failure to prevent every single violation does 

not necessarily mean that a particular company’s compliance program was not generally effective. DOJ and SEC 

understand that “no compliance program can ever prevent 

all criminal activity by a corporation’s employees,”306 and 

they do not hold companies to a standard of perfection. An 

assessment of a company’s compliance program, including 

its design and good faith implementation and enforcement, 

is an important part of the government’s assessment of 

whether a violation occurred, and if so, what action should 

be taken. In appropriate circumstances, DOJ and SEC may 

decline to pursue charges against a company based on the 

company’s effective compliance program, or may otherwise 

seek to reward a company for its program, even when that 

program did not prevent the particular underlying FCPA 

violation that gave rise to the investigation.307

DOJ and SEC have no formulaic requirements 

regarding compliance programs. Rather, they employ a 

common-sense and pragmatic approach to evaluating compliance programs, making inquiries related to three basic 

questions:

•	 Is the company’s compliance program well 

designed?

•	 Is it being applied in good faith?

•	 Does it work?308

This guide contains information regarding some of 

the basic elements DOJ and SEC consider when evaluating 

compliance programs. Although the focus is on compliance 

with the FCPA, given the existence of anti-corruption 

laws in many other countries, businesses should consider 

designing programs focused on anti-corruption compliance more broadly.309
57

Hallmarks of Effective Compliance 

Programs

Individual companies may have different compliance 

needs depending on their size and the particular risks associated with their businesses, among other factors. When it 

comes to compliance, there is no one-size-fits-all program. 

Thus, the discussion below is meant to provide insight into 

the aspects of compliance programs that DOJ and SEC 

assess, recognizing that companies may consider a variety 

of factors when making their own determination of what 

is appropriate for their specific business needs.310 Indeed, 

small- and medium-size enterprises likely will have different 

compliance programs from large multi-national corporations, a fact DOJ and SEC take into account when evaluating companies’ compliance programs.

Compliance programs that employ a “check-the-box” 

approach may be inefficient and, more importantly, ineffective. Because each compliance program should be tailored 

to an organization’s specific needs, risks, and challenges, 

the information provided below should not be considered 

a substitute for a company’s own assessment of the corporate compliance program most appropriate for that particular business organization. In the end, if designed carefully, 

implemented earnestly, and enforced fairly, a company’s 

compliance program—no matter how large or small the 

organization—will allow the company generally to prevent 

violations, detect those that do occur, and remediate them 

promptly and appropriately.

Commitment from Senior Management and a 

Clearly Articulated Policy Against Corruption

Within a business organization, compliance begins 

with the board of directors and senior executives setting 

the proper tone for the rest of the company. Managers and 

employees take their cues from these corporate leaders. 

Thus, DOJ and SEC consider the commitment of corporate leaders to a “culture of compliance”311 and look to see 

if this high-level commitment is also reinforced and implemented by middle managers and employees at all levels of 

a business. A well-designed compliance program that is 

not enforced in good faith, such as when corporate management explicitly or implicitly encourages employees to 

engage in misconduct to achieve business objectives, will be 

ineffective. DOJ and SEC have often encountered companies with compliance programs that are strong on paper but 

that nevertheless have significant FCPA violations because 

management has failed to effectively implement the program even in the face of obvious signs of corruption. This 

may be the result of aggressive sales staff preventing compliance personnel from doing their jobs effectively and of 

senior management, more concerned with securing a valuable business opportunity than enforcing a culture of compliance, siding with the sales team. The higher the financial 

stakes of the transaction, the greater the temptation for 

management to choose profit over compliance. 

A strong ethical culture directly supports a strong 

compliance program. By adhering to ethical standards, 

senior managers will inspire middle managers to reinforce 

those standards. Compliant middle managers, in turn, will 

encourage employees to strive to attain those standards 

throughout the organizational structure.312

In short, compliance with the FCPA and ethical rules 

must start at the top. DOJ and SEC thus evaluate whether 

senior management has clearly articulated company standards, communicated them in unambiguous terms, adhered 

to them scrupulously, and disseminated them throughout 

the organization. 

Code of Conduct and Compliance Policies and 

Procedures

A company’s code of conduct is often the foundation 

upon which an effective compliance program is built. As 

DOJ has repeatedly noted in its charging documents, the 

most effective codes are clear, concise, and accessible to all 

employees and to those conducting business on the company’s behalf. Indeed, it would be difficult to effectively 

implement a compliance program if it was not available in 

the local language so that employees in foreign subsidiaries 

can access and understand it. When assessing a compliance 

program, DOJ and SEC will review whether the company 
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has taken steps to make certain that the code of conduct 

remains current and effective and whether a company has 

periodically reviewed and updated its code. 

Whether a company has policies and procedures that 

outline responsibilities for compliance within the company, 

detail proper internal controls, auditing practices, and documentation policies, and set forth disciplinary procedures 

will also be considered by DOJ and SEC. These types of 

policies and procedures will depend on the size and nature 

of the business and the risks associated with the business. 

Effective policies and procedures require an in-depth 

understanding of the company’s business model, including its products and services, third-party agents, customers, government interactions, and industry and geographic 

risks. Among the risks that a company may need to address 

include the nature and extent of transactions with foreign 

governments, including payments to foreign officials; use 

of third parties; gifts, travel, and entertainment expenses; 

charitable and political donations; and facilitating and 

expediting payments. For example, some companies with 

global operations have created web-based approval processes to review and approve routine gifts, travel, and entertainment involving foreign officials and private customers 

with clear monetary limits and annual limitations. Many of 

these systems have built-in flexibility so that senior management, or in-house legal counsel, can be apprised of and, in 

appropriate circumstances, approve unique requests. These 

types of systems can be a good way to conserve corporate 

resources while, if properly implemented, preventing and 

detecting potential FCPA violations.

Regardless of the specific policies and procedures 

implemented, these standards should apply to personnel at 

all levels of the company.

Oversight, Autonomy, and Resources

In appraising a compliance program, DOJ and SEC 

also consider whether a company has assigned responsibility for the oversight and implementation of a company’s compliance program to one or more specific senior 

executives within an organization.313 Those individuals 

must have appropriate authority within the organization, 

adequate autonomy from management, and sufficient 

resources to ensure that the company’s compliance program 

is implemented effectively.314 Adequate autonomy generally includes direct access to an organization’s governing 

authority, such as the board of directors and committees 

of the board of directors (e.g., the audit committee).315

Depending on the size and structure of an organization, 

it may be appropriate for day-to-day operational responsibility to be delegated to other specific individuals within 

a company.316 DOJ and SEC recognize that the reporting 

structure will depend on the size and complexity of an 

organization. Moreover, the amount of resources devoted 

to compliance will depend on the company’s size, complexity, industry, geographical reach, and risks associated with 

the business. In assessing whether a company has reasonable 

internal controls, DOJ and SEC typically consider whether 

the company devoted adequate staffing and resources to the 

compliance program given the size, structure, and risk profile of the business.

Risk Assessment

Assessment of risk is fundamental to developing a 

strong compliance program, and is another factor DOJ 

and SEC evaluate when assessing a company’s compliance 

program.317 One-size-fits-all compliance programs are 

generally ill-conceived and ineffective because resources 

inevitably are spread too thin, with too much focus on lowrisk markets and transactions to the detriment of high-risk 

areas. Devoting a disproportionate amount of time policing modest entertainment and gift-giving instead of focusing on large government bids, questionable payments to 

third-party consultants, or excessive discounts to resellers 

and distributors may indicate that a company’s compliance program is ineffective. A $50 million contract with a 

government agency in a high-risk country warrants greater 
59

scrutiny than modest and routine gifts and entertainment. 

Similarly, performing identical due diligence on all thirdparty agents, irrespective of risk factors, is often counterproductive, diverting attention and resources away from 

those third parties that pose the most significant risks. 

DOJ and SEC will give meaningful credit to a company 

that implements in good faith a comprehensive, risk-based 

compliance program, even if that program does not prevent an infraction in a low risk area because greater attention and resources had been devoted to a higher risk area. 

Conversely, a company that fails to prevent an FCPA violation on an economically significant, high-risk transaction 

because it failed to perform a level of due diligence commensurate with the size and risk of the transaction is likely 

to receive reduced credit based on the quality and effectiveness of its compliance program.

As a company’s risk for FCPA violations increases, 

that business should consider increasing its compliance 

procedures, including due diligence and periodic internal 

audits. The degree of appropriate due diligence is fact-specific and should vary based on industry, country, size, and 

nature of the transaction, and the method and amount of 

third-party compensation. Factors to consider, for instance, 

include risks presented by: the country and industry sector, 

the business opportunity, potential business partners, level 

of involvement with governments, amount of government 

regulation and oversight, and exposure to customs and 

immigration in conducting business affairs. When assessing 

a company’s compliance program, DOJ and SEC take into 

account whether and to what degree a company analyzes 

and addresses the particular risks it faces.

Training and Continuing Advice

Compliance policies cannot work unless effectively 

communicated throughout a company. Accordingly, DOJ 

and SEC will evaluate whether a company has taken steps to 

ensure that relevant policies and procedures have been communicated throughout the organization, including through 

periodic training and certification for all directors, officers, 

relevant employees, and, where appropriate, agents and 

business partners.318 For example, many larger companies 

have implemented a mix of web-based and in-person training conducted at varying intervals. Such training typically 

covers company policies and procedures, instruction on 

applicable laws, practical advice to address real-life scenarios, and case studies. Regardless of how a company chooses 

to conduct its training, however, the information should 

be presented in a manner appropriate for the targeted audience, including providing training and training materials 

in the local language. For example, companies may want to 

consider providing different types of training to their sales 

personnel and accounting personnel with hypotheticals 

or sample situations that are similar to the situations they 

might encounter. In addition to the existence and scope of 

a company’s training program, a company should develop 

appropriate measures, depending on the size and sophistication of the particular company, to provide guidance and 

advice on complying with the company’s ethics and compliance program, including when such advice is needed 

urgently. Such measures will help ensure that the compliance program is understood and followed appropriately at 

all levels of the company.

Incentives and Disciplinary Measures

In addition to evaluating the design and implementation of a compliance program throughout an organization, 

enforcement of that program is fundamental to its effectiveness.319 A compliance program should apply from the 

board room to the supply room—no one should be beyond 

its reach. DOJ and SEC will thus consider whether, when 

enforcing a compliance program, a company has appropriate and clear disciplinary procedures, whether those procedures are applied reliably and promptly, and whether they 

are commensurate with the violation. Many companies 

have found that publicizing disciplinary actions internally, 

where appropriate under local law, can have an important 

deterrent effect, demonstrating that unethical and unlawful 

actions have swift and sure consequences.

DOJ and SEC recognize that positive incentives can 

also drive compliant behavior. These incentives can take many 
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forms such as personnel evaluations and promotions, rewards 

for improving and developing a company’s compliance program, and rewards for ethics and compliance leadership.320

Some organizations, for example, have made adherence to 

compliance a significant metric for management’s bonuses so 

that compliance becomes an integral part of management’s 

everyday concern. Beyond financial incentives, some companies have highlighted compliance within their organizations 

by recognizing compliance professionals and internal audit 

staff. Others have made working in the company’s compliance organization a way to advance an employee’s career. 

SEC, for instance, has encouraged companies to embrace 

methods to incentivize ethical and lawful behavior:

[M]ake integrity, ethics and compliance part of the 

promotion, compensation and evaluation processes 

as well. For at the end of the day, the most effective 

way to communicate that “doing the right thing” is a 

priority, is to reward it. Conversely, if employees are 

led to believe that, when it comes to compensation 

and career advancement, all that counts is short-term 

profitability, and that cutting ethical corners is an acceptable way of getting there, they’ll perform to that 

measure. To cite an example from a different walk 

of life: a college football coach can be told that the 

graduation rates of his players are what matters, but 

he’ll know differently if the sole focus of his contract 

extension talks or the decision to fire him is his winloss record. 321

No matter what the disciplinary scheme or potential 

incentives a company decides to adopt, DOJ and SEC will 

consider whether they are fairly and consistently applied 

across the organization. No executive should be above compliance, no employee below compliance, and no person 

within an organization deemed too valuable to be disciplined, if warranted. Rewarding good behavior and sanctioning bad behavior reinforces a culture of compliance and 

ethics throughout an organization.

Third-Party Due Diligence and Payments

DOJ’s and SEC’s FCPA enforcement actions demonstrate that third parties, including agents, consultants, 

and distributors, are commonly used to conceal the payment of bribes to foreign officials in international business 

transactions. Risk-based due diligence is particularly important with third parties and will also be considered by DOJ 

and SEC in assessing the effectiveness of a company’s compliance program. 

Although the degree of appropriate due diligence 

may vary based on industry, country, size and nature of the 

transaction, and historical relationship with the third-party, 

some guiding principles always apply. 

First, as part of risk-based due diligence, companies 

should understand the qualifications and associations of 

its third-party partners, including its business reputation, 

and relationship, if any, with foreign officials. The degree of 

scrutiny should increase as red flags surface. 

Second, companies should have an understanding of 

the business rationale for including the third party in the 

transaction. Among other things, the company should 

understand the role of and need for the third party and 

ensure that the contract terms specifically describe the services to be performed. Additional considerations include 

payment terms and how those payment terms compare to 

typical terms in that industry and country, as well as the 

timing of the third party’s introduction to the business. 

Moreover, companies may want to confirm and document 

that the third party is actually performing the work for 

which it is being paid and that its compensation is commensurate with the work being provided. 

Third, companies should undertake some form of 

ongoing monitoring of third-party relationships.322 Where 

appropriate, this may include updating due diligence periodically, exercising audit rights, providing periodic training, and requesting annual compliance certifications by the 

third party. 

In addition to considering a company’s due diligence on third parties, DOJ and SEC also assess whether 

the company has informed third parties of the company’s 
61

compliance program and commitment to ethical and lawful business practices and, where appropriate, whether it 

has sought assurances from third parties, through certifications and otherwise, of reciprocal commitments. These can 

be meaningful ways to mitigate third-party risk. 

Confidential Reporting and Internal Investigation

An effective compliance program should include a 

mechanism for an organization’s employees and others to 

report suspected or actual misconduct or violations of the 

company’s policies on a confidential basis and without fear of 

retaliation.323 Companies may employ, for example, anonymous hotlines or ombudsmen. Moreover, once an allegation 

is made, companies should have in place an efficient, reliable, 

Compliance Program Case Study

Recent DOJ and SEC actions relating to a financial institution’s real estate transactions with a government agency 

in China illustrate the benefits of implementing and enforcing a comprehensive risk-based compliance program. The 

case involved a joint venture real estate investment in the Luwan District of Shanghai, China, between a U.S.-based 

financial institution and a state-owned entity that functioned as the District’s real estate arm. The government entity 

conducted the transactions through two special purpose vehicles (“SPVs”), with the second SPV purchasing a 12% 

stake in a real estate project.

The financial institution, through a robust compliance program, frequently trained its employees, imposed a 

comprehensive payment-approval process designed to prevent bribery, and staffed a compliance department with 

a direct reporting line to the board of directors. As appropriate given the industry, market, and size and structure of 

the transactions, the financial institution (1) provided extensive FCPA training to the senior executive responsible for 

the transactions and (2) conducted extensive due diligence on the transactions, the local government entity, and the 

SPVs. Due diligence on the entity included reviewing Chinese government records; speaking with sources familiar 

with the Shanghai real estate market; checking the government entity’s payment records and credit references; 

conducting an on-site visit and placing a pretextual telephone call to the entity’s offices; searching media sources; 

and conducting background checks on the entity’s principals. The financial institution vetted the SPVs by obtaining 

a letter with designated bank account information from a Chinese official associated with the government entity (the 

“Chinese Official”); using an international law firm to request and review 50 documents from the SPVs’ Canadian 

attorney; interviewing the attorney; and interviewing the SPVs’ management.

Notwithstanding the financial institution’s robust compliance program and good faith enforcement of it, the 

company failed to learn that the Chinese Official personally owned nearly 50% of the second SPV (and therefore a 

nearly 6% stake in the joint venture) and that the SPV was used as a vehicle for corrupt payments. This failure was 

due, in large part, to misrepresentations by the Chinese Official, the financial institution’s executive in charge of 

the project, and the SPV’s attorney that the SPV was 100% owned and controlled by the government entity. DOJ 

and SEC declined to take enforcement action against the financial institution, and its executive pleaded guilty to 

conspiracy to violate the FCPA’s internal control provisions and also settled with SEC.

and properly funded process for investigating the allegation 

and documenting the company’s response, including any 

disciplinary or remediation measures taken. Companies will 

want to consider taking “lessons learned” from any reported 

violations and the outcome of any resulting investigation to 

update their internal controls and compliance program and 

focus future training on such issues, as appropriate. 

Continuous Improvement: Periodic Testing and 

Review

Finally, a good compliance program should constantly 

evolve. A company’s business changes over time, as do the 

environments in which it operates, the nature of its customers, the laws that govern its actions, and the standards of its 
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industry. In addition, compliance programs that do not just 

exist on paper but are followed in practice will inevitably 

uncover compliance weaknesses and require enhancements. 

Consequently, DOJ and SEC evaluate whether companies 

regularly review and improve their compliance programs 

and not allow them to become stale. 

According to one survey, 64% of general counsel whose 

companies are subject to the FCPA say there is room for 

improvement in their FCPA training and compliance programs.324 An organization should take the time to review and 

test its controls, and it should think critically about its potential weaknesses and risk areas. For example, some companies 

have undertaken employee surveys to measure their compliance culture and strength of internal controls, identify best 

practices, and detect new risk areas. Other companies periodically test their internal controls with targeted audits to make 

certain that controls on paper are working in practice. DOJ 

and SEC will give meaningful credit to thoughtful efforts 

to create a sustainable compliance program if a problem is 

later discovered. Similarly, undertaking proactive evaluations 

before a problem strikes can lower the applicable penalty 

range under the U.S. Sentencing Guidelines.325 Although the 

nature and the frequency of proactive evaluations may vary 

depending on the size and complexity of an organization, the 

idea behind such efforts is the same: continuous improvement and sustainability.326

Mergers and Acquisitions: Pre-Acquisition Due 

Diligence and Post-Acquisition Integration

In the context of the FCPA, mergers and acquisitions present both risks and opportunities. A company 

that does not perform adequate FCPA due diligence prior 

to a merger or acquisition may face both legal and business 

risks.327 Perhaps most commonly, inadequate due diligence 

can allow a course of bribery to continue—with all the 

attendant harms to a business’s profitability and reputation, 

as well as potential civil and criminal liability.

In contrast, companies that conduct effective FCPA 

due diligence on their acquisition targets are able to evaluate more accurately each target’s value and negotiate for the 

costs of the bribery to be borne by the target. In addition, 

such actions demonstrate to DOJ and SEC a company’s 

commitment to compliance and are taken into account 

when evaluating any potential enforcement action. For 

example, DOJ and SEC declined to take enforcement 

action against an acquiring issuer when the issuer, among 

other things, uncovered the corruption at the company 

being acquired as part of due diligence, ensured that the 

corruption was voluntarily disclosed to the government, 

cooperated with the investigation, and incorporated the 

acquired company into its compliance program and internal controls. On the other hand, SEC took action against 

the acquired company, and DOJ took action against a subsidiary of the acquired company.328 When pre-acquisition 

due diligence is not possible, DOJ has described procedures, contained in Opinion Procedure Release No. 08-02, 

pursuant to which companies can nevertheless be rewarded 

if they choose to conduct thorough post-acquisition FCPA 

due diligence.329

FCPA due diligence, however, is normally only a 

portion of the compliance process for mergers and acquisitions. DOJ and SEC evaluate whether the acquiring company promptly incorporated the acquired company into all 

of its internal controls, including its compliance program. 

Companies should consider training new employees, reevaluating third parties under company standards, and, where 

appropriate, conducting audits on new business units. 

For example, as a result of due diligence conducted 

by a California-based issuer before acquiring the majority 

interest in a joint venture, the issuer learned of corrupt payments to obtain business. However, the issuer only implemented its internal controls “halfway” so as not to “choke 

the sales engine and cause a distraction for the sales guys.” 

As a result, the improper payments continued, and the 

issuer was held liable for violating the FCPA’s internal controls and books and records provisions.330
63

Other Guidance on Compliance and 

International Best Practices

In addition to this guide, the U.S. Departments of 

Commerce and State have both issued publications that contain 

guidance regarding compliance programs. The Department 

of Commerce’s International Trade Administration has published Business Ethics: A Manual for Managing a Responsible 

Business Enterprise in Emerging Market Economies,

331 and the 

Department of State has published Fighting Global Corruption: 

Business Risk Management.

332

There is also an emerging international consensus on 

compliance best practices, and a number of inter-governmental and non-governmental organizations have issued 

guidance regarding best practices for compliance.333 Most 

notably, the OECD’s 2009 Anti-Bribery Recommendation 

and its Annex II, Good Practice Guidance on Internal 

Controls, Ethics, and Compliance,

334 published in February 

2010, were drafted based on consultations with the private 

sector and civil society and set forth specific good practices 

for ensuring effective compliance programs and measures 

for preventing and detecting foreign bribery. In addition, 

businesses may wish to refer to the following resources:

•	 Asia-Pacific Economic Cooperation—AntiCorruption Code of Conduct for Business;

335

•	 International Chamber of Commerce—ICC Rules 

on Combating Corruption;

336

•	 Transparency International—Business Principles for 

Countering Bribery;

337

•	 United Nations Global Compact—The Ten 

Principles;

338

•	 World Bank—Integrity Compliance 

Guidelines;

339and

•	 World Economic Forum—Partnering Against 

Corruption–Principles for Countering Bribery.340

Hypothetical: Third-Party Vetting

Part 1: Consultants

Company A, a U.S. issuer headquartered in Delaware, wants to start doing business in a country that poses high risks 

of corruption.  Company A learns about a potential $50 million contract with the country’s Ministry of Immigration. This 

is a very attractive opportunity to Company A, both for its profitability and to open the door to future projects with the 

government. At the suggestion of the company’s senior vice president of international sales (Sales Executive), Company A 

hires a local businessman who assures them that he has strong ties to political and government leaders in the country and 

can help them win the contract. Company A enters into a consulting contract with the local businessman (Consultant). The 

agreement requires Consultant to use his best efforts to help the company win the business and provides for Consultant to 

receive a significant monthly retainer as well as a success fee of 3% of the value of any contract the company wins.

What steps should Company A consider taking before hiring Consultant?

There are several factors here that might lead Company A to perform heightened FCPA-related due diligence prior 

to retaining Consultant: (1) the market (high-risk country); (2) the size and significance of the deal to the company; (3) the 

company’s first time use of this particular consultant; (4) the consultant’s strong ties to political and government leaders; 

(5) the success fee structure of the contract; and (6) the vaguely-defined services to be provided. In order to minimize the 

likelihood of incurring FCPA liability, Company A should carefully vet Consultant and his role in the transaction, including 

close scrutiny of the relationship between Consultant and any Ministry of Immigration officials or other government officials.

Although there is nothing inherently illegal about contracting with a third party that has close connections to politicians 

and government officials to perform legitimate services on a transaction, this type of relationship can be susceptible to 

corruption. Among other things, Company A may consider conducting due diligence on Consultant, including background 

(cont’d)
chapter 5

Guiding Principles 

of Enforcement

64

and reference checks; ensuring that the contract spells out exactly what services and deliverables (such as written status 

reports or other documentation) Consultant is providing; training Consultant on the FCPA and other anti-corruption laws; 

requiring Consultant to represent that he will abide by the FCPA and other anti-corruption laws; including audit rights in the 

contract (and exercising those rights); and ensuring that payments requested by Consultant have the proper supporting 

documentation before they are approved for payment.

Part 2: Distributors and Local Partners

Assume the following alternative facts:

Instead of hiring Consultant, Company A retains an often-used local distributor (Distributor) to sell Company A’s 

products to the Ministry of Immigration In negotiating the pricing struc

to Company A, claims that the standard discount price to Distributor 

warehousing, distribution, installation, marketing, and training costs an

the alternative, a contribution to its marketing efforts, either in the for

ture, Distributor, which had introduced the project 

creates insufficient margin for Distributor to cover 

d requests an additional discount or rebate, or, in 

m of a lump sum or as a percentage of the total 

contract. The requested discount/allowance is significantly larger than usual, although there is precedent at Company 

A for granting this level of discount in unique circumstances. Distributor further advises Company A that the Ministry’s 

procurement officials responsible for awarding the contract have expressed a strong preference for including a particular 

local company (Local Partner) in the transaction as a subcontractor of Company A to perform installation, training, and 

other services that would normally have been performed by Distributor or Company A. According to Distributor, the 

Ministry has a solid working relationship with Local Partner, and it would cause less disruption for Local Partner to perform 

most of the on-site work at the Ministry. One of the principals (Principal 1) of the Local Partner is an official in another 

government ministry.

What additional compliance considerations do these alternative facts raise?

As with Consultant in the first scenario above, Company A should carefully vet Distributor and Local Partner and their 

roles in the transaction in order to minimize the likelihood of incurring FCPA liability. While Company A has an established 

relationship with Distributor, the fact that Distributor has requested an additional discount warrants further inquiry into 

the economic justification for the change, particularly where, as here, the proposed transaction structure contemplates 

paying Local Partner to provide many of the same services that Distributor would otherwise provide. In many cases, it may 

be appropriate for distributors to receive larger discounts to account for unique circumstances in particular transactions.

That said, a common mechanism to create additional margin for bribe payments is through excessive discounts or rebates 

to distributors. Accordingly, when a company has pre-existing relationships with distributors and other third parties, 

transaction-specific due diligence—including an analysis of payment terms to confirm that the payment is commensurate 

with the work being performed—can be critical even in circumstances where due diligence of the distributor or other third 

party raises no initial red flags.

Company A should carefully scrutinize the relationship among Local Partner, Distributor, and Ministry of Immigration 

officials. While there is nothing inherently illegal about contracting with a third party that is recommended by the end-user, 

or even hiring a government official to perform legitimate services on a transaction unrelated to his or her government 

job, these facts raise additional red flags that warrant significant scrutiny. Among other things, Company A would be 

well-advised to require Principal 1 to verify that he will have no role in the Ministry of Immigration’s decision to award 

the contract to Company A, notify the Ministry of Immigration and his own ministry of his proposed involvement in the 

transaction, and certify that he will abide by the FCPA and other anti-corruption laws and that his involvement in the 

transaction is permitted under local law.

(cont’d)
65

Assume the following additional facts:

Under its company policy for a government transaction of this size, Company A requires both finance and compliance 

approval. The finance officer is concerned that the discounts to Distributor are significantly larger than what they have 

approved for similar work and will cut too deeply into Company A’s profit margin. The finance officer is also skeptical about 

including Local Partner to perform some of the same services that Company A is paying Distributor to perform. Unsatisfied 

with Sales Executive’s explanation, she requests a meeting with Distributor and Principal 1. At the meeting, Distributor 

and Principal 1 offer vague and inconsistent justifications for the payments and fail to provide any supporting analysis, and 

Principal 1 seems to have no real expertise in the industry. During a coffee break, Distributor comments to Sales Executive 

that the finance officer is naïve about “how business is done in my country.” Following the meeting, Sales Executive 

dismisses the finance officer’s concerns, assuring her that the proposed transaction structure is reasonable and legitimate.

Sales Executive also reminds the finance officer that “the deal is key to their growth in the industry.”

The compliance officer focuses his due diligence on vetting Distributor and Local Partner and hires a business investigative 

firm to conduct a background check. Distributor appears reputable, capable, and financially stable and is willing to take on 

real risk in the project, financial and otherwise. However, the compliance officer learns that Distributor has established an 

off-shore bank account for the transaction. The compliance officer further learns that Local Partner’s business was organized 

two years ago and appears financially stable but has no expertise in the industry and has established an off-shore shell 

company and bank account to conduct this transaction. The background check also reveals that Principal 1 is a former college 

roommate of a senior official of the Ministry of Immigration. The Sales Executive dismisses the compliance officer’s concerns, 

commenting that what Local Partner does with its payments “isn’t our problem.” Sales Executive also strongly objects to the 

compliance officer’s request to meet with Principal 1 to discuss the off-shore company and account, assuring him that it was 

done for legitimate tax purposes and complaining that if Company A continues to “harass” Local Partner and Distributor, they 

would partner with Company A’s chief competitor. The compliance officer and the finance officer discuss their concerns with 

each other but ultimately sign off on the deal even though their questions had not been answered. Their decision is motivated 

in large part by their conversation with Sales Executive, who told them that this was the region’s most important contract 

and that the detailed FCPA questionnaires and robust anti-corruption representations in the contracts placed the burden on 

Distributor and Local Partner to act ethically.

Company A goes forward with the Distributor and Local Partner agreements and wins the contract after six months. The 

finance officer approves Company A’s payments to Local Partner via the offshore account, even though Local Partner’s invoices 

did not contain supporting detail or documentation of any services provided. Company A recorded the payments as legitimate 

operational expenses on its books and records. Sales Executive received a large year-end bonus due to the award of the contract.

In fact, Local Partner and Distributor used part of the payments and discount margin, respectively, to funnel bribe payments 

to several Ministry of Immigration officials, including Principal 1’s former college roommate, in exchange for awarding the 

contract to Company A. Thousands of dollars are also wired to the personal offshore bank account of Sales Executive.

How would DOJ and SEC evaluate the potential FCPA liability of Company A and its employees?

This is not the case of a single “rogue employee” circumventing an otherwise robust compliance program. Although 

Company A’s finance and compliance officers had the correct instincts to scrutinize the structure and economics of the 

transaction and the role of the third parties, their due diligence was incomplete. When the initial inquiry identified significant 

red flags, they approved the transaction despite knowing that their concerns were unanswered or the answers they received 

raised additional concerns and red flags. Relying on due diligence questionnaires and anti-corruption representations is 

insufficient, particularly when the risks are readily apparent. Nor can Company A or its employees shield themselves from 

liability because it was Distributor and Local Partner—rather than Company A directly—that made the payments.

The facts suggest that Sales Executive had actual knowledge of or was willfully blind to the consultant’s payment of 

the bribes. He also personally profited from the scheme (both from the kickback and from the bonus he received from the 

company) and intentionally discouraged the finance and compliance officers from learning the full story. Sales Executive is 

therefore subject to liability under the anti-bribery, books and records, and internal controls provisions of the FCPA, and 

others may be as well. Company A may also be liable for violations of the anti-bribery, books and records, and internal 

controls provisions of the FCPA given the number and significance of red flags that established a high probability of bribery 

and the role of employees and agents acting on the company’s behalf.
chapter 5

Guiding Principles 

of Enforcement

66

chapter 6

FCPA Penalties, 

Sanctions, and 

Remedies

68

FCPA PENALTIES, SANCTIONS, 

AND REMEDIES

What Are the Potential Consequences 

for Violations of the FCPA?

The FCPA provides for different criminal and civil 

penalties for companies and individuals.

Criminal Penalties

For each violation of the anti-bribery provisions, the 

FCPA provides that corporations and other business entities are subject to a fine of up to $2 million.341 Individuals, 

including officers, directors, stockholders, and agents of 

companies, are subject to a fine of up to $100,000 and 

imprisonment for up to five years.342

For each violation of the accounting provisions, the 

FCPA provides that corporations and other business entities are subject to a fine of up to $25 million.343 Individuals 

are subject to a fine of up to $5 million and imprisonment 

for up to 20 years.344

Under the Alternative Fines Act, 18 U.S.C. § 3571(d), 

courts may impose significantly higher fines than those provided by the FCPA—up to twice the benefit that the defendant sought to obtain by making the corrupt payment, as 

long as the facts supporting the increased fines are included 

in the indictment and either proved to the jury beyond a 

reasonable doubt or admitted in a guilty plea proceeding.345

Fines imposed on individuals may not be paid by their 

employer or principal.346

U.S. Sentencing Guidelines

When calculating penalties for violations of the FCPA, 

DOJ focuses its analysis on the U.S. Sentencing Guidelines 

(Guidelines)347 in all of its resolutions, including guilty pleas, 

DPAs, and NPAs. The Guidelines provide a very detailed and 

predictable structure for calculating penalties for all federal 

crimes, including violations of the FCPA. To determine the 

appropriate penalty, the “offense level” is first calculated by 

examining both the severity of the crime and facts specific to 

the crime, with appropriate reductions for cooperation and 

acceptance of responsibility, and, for business entities, additional factors such as voluntary disclosure, cooperation, preexisting compliance programs, and remediation. 

The Guidelines provide for different penalties for the 

different provisions of the FCPA. The initial offense level 

for violations of the anti-bribery provisions is determined 

under § 2C1.1, while violations of the accounting provisions are assessed under § 2B1.1. For individuals, the initial 

offense level is modified by factors set forth in Chapters 3, 

4, and 5 of the Guidelines348 to identify a final offense level. 

This final offense level, combined with other factors, is used 
69

to determine whether the Guidelines would recommend 

that incarceration is appropriate, the length of any term of 

incarceration, and the appropriate amount of any fine. For 

corporations, the offense level is modified by factors particular to organizations as described in Chapter 8 to determine the applicable organizational penalty.

For example, violations of the anti-bribery provisions are calculated pursuant to § 2C1.1. The offense level 

is determined by first identifying the base offense level;349

adding additional levels based on specific offense characteristics, including whether the offense involved more than 

one bribe, the value of the bribe or the benefit that was conferred, and the level of the public official;350 adjusting the 

offense level based on the defendant’s role in the offense;351

and using the total offense level as well as the defendant’s 

criminal history category to determine the advisory guideline range.352 For violations of the accounting provisions 

assessed under § 2B1.1, the procedure is generally the 

same, except that the specific offense characteristics differ. 

For instance, for violations of the FCPA’s accounting provisions, the offense level may be increased if a substantial 

part of the scheme occurred outside the United States or if 

the defendant was an officer or director of a publicly traded 

company at the time of the offense.353

For companies, the offense level is calculated pursuant to §§ 2C1.1 or 2B1.1 in the same way as for an 

individual—by starting with the base offense level and 

increasing it as warranted by any applicable specific 

offense characteristics. The organizational guidelines 

found in Chapter 8, however, provide the structure for 

determining the final advisory guideline fine range for 

organizations. The base fine consists of the greater of the 

amount corresponding to the total offense level, calculated pursuant to the Guidelines, or the pecuniary gain or 

loss from the offense.354 This base fine is then multiplied 

by a culpability score that can either reduce the fine to as 

little as five percent of the base fine or increase the recommended fine to up to four times the amount of the base 

fine.355 As described in § 8C2.5, this culpability score is 

calculated by taking into account numerous factors such 

as the size of the organization committing the criminal 

acts; the involvement in or tolerance of criminal activity by high-level personnel within the organization; and 

prior misconduct or obstructive behavior. The culpability 

score is reduced if the organization had an effective preexisting compliance program to prevent violations and if 

the organization voluntarily disclosed the offense, cooperated in the investigation, and accepted responsibility for 

the criminal conduct.356

Civil Penalties

Although only DOJ has the authority to pursue criminal actions, both DOJ and SEC have civil enforcement 

authority under the FCPA. DOJ may pursue civil actions 

for anti-bribery violations by domestic concerns (and their 

officers, directors, employees, agents, or stockholders) and 

foreign nationals and companies for violations while in the 

United States, while SEC may pursue civil actions against 

issuers and their officers, directors, employees, agents, or 

stockholders for violations of the anti-bribery and the 

accounting provisions.357

For violations of the anti-bribery provisions, corporations and other business entities are subject to a civil 

penalty of up to $16,000 per violation.358 Individuals, 

including officers, directors, stockholders, and agents of 

companies, are similarly subject to a civil penalty of up to 

$16,000 per violation,359 which may not be paid by their 

employer or principal.360

For violations of the accounting provisions, SEC may 

obtain a civil penalty not to exceed the greater of (a) the 

gross amount of the pecuniary gain to the defendant as a 

result of the violations or (b) a specified dollar limitation. 

The specified dollar limitations are based on the egregiousness of the violation, ranging from $7,500 to $150,000 for 

an individual and $75,000 to $725,000 for a company.361

SEC may obtain civil penalties both in actions filed in federal court and in administrative proceedings.362

Collateral Consequences

In addition to the criminal and civil penalties described 

above, individuals and companies who violate the FCPA may 

face significant collateral consequences, including suspension 
chapter 6

FCPA Penalties, 

Sanctions, and

Remedies

70

or debarment from contracting with the federal government, 

cross-debarment by multilateral development banks, and the 

suspension or revocation of certain export privileges.

Debarment

Under federal guidelines governing procurement, 

an individual or company that violates the FCPA or other 

criminal statutes may be barred from doing business with the 

federal government. The Federal Acquisition Regulations 

(FAR) provide for the potential suspension or debarment 

of companies that contract with the government upon 

conviction of or civil judgment for bribery, falsification or 

destruction of records, the making of false statements, or 

“[c]ommission of any other offense indicating a lack of business integrity or business honesty that seriously and directly 

affects the present responsibility of a Government contractor or subcontractor.”363 These measures are not intended 

to be punitive and may be imposed only if “in the public’s 

interest for the Government’s protection.”364

Under the FAR, a decision to debar or suspend is discretionary. The decision is not made by DOJ prosecutors or 

SEC staff, but instead by independent debarment authorities 

within each agency, such as the Department of Defense or 

the General Services Administration, which analyze a number of factors to determine whether a company should be suspended, debarred, or otherwise determined to be ineligible 

for government contracting. Such factors include whether 

the contractor has effective internal control systems in place, 

self-reported the misconduct in a timely manner, and has 

taken remedial measures.365 If a cause for debarment exists, 

the contractor has the burden of demonstrating to the satisfaction of the debarring official that it is presently responsible 

and that debarment is not necessary.366 Each federal department and agency determines the eligibility of contractors 

with whom it deals. However, if one department or agency 

debars or suspends a contractor, the debarment or suspension 

applies to the entire executive branch of the federal government, unless a department or agency shows compelling reasons not to debar or suspend the contractor.367

Although guilty pleas, DPAs, and NPAs do not result 

in automatic debarment from U.S. government contracting, 

committing a federal crime and the factual admissions 

underlying a resolution are factors that the independent 

debarment authorities may consider. Moreover, indictment 

alone can lead to suspension of the right to do business 

with the government.368 The U.S. Attorney’s Manual also 

provides that when a company engages in fraud against the 

government, a prosecutor may not negotiate away an agency’s right to debar or delist the company as part of the plea 

bargaining process.369 In making debarment determinations, contracting agencies, including at the state and local 

level, may consult with DOJ in advance of awarding a contract. Depending on the circumstances, DOJ may provide 

information to contracting authorities in the context of 

the corporate settlement about the facts and circumstances 

underlying the criminal conduct and remediation measures 

undertaken by the company, if any. This information sharing is not advocacy, and the ultimate debarment decisions 

are squarely within the purview of the independent debarment authorities. In some situations, the contracting agency 

may impose its own oversight requirements in order for a 

company that has admitted to violations of federal law to be 

awarded federal contracts, such as the Corporate Integrity 

Agreements often required by the Department of Health 

and Human Services.

Cross-Debarment by Multilateral Development 

Banks

Multilateral Development Banks (MDBs), like the 

World Bank, also have the ability to debar companies and 

individuals for corrupt practices.370 Each MDB has its own 

process for evaluating alleged corruption in connection 

with MDB-funded projects. When appropriate, DOJ and 

SEC work with MDBs to share evidence and refer cases. 

On April 9, 2010, the African Development Bank Group, 

the Asian Development Bank, the European Bank for 
71

Reconstruction and Development, the Inter-American 

Development Bank Group, and the World Bank Group 

entered into an agreement under which entities debarred 

by one MDB will be sanctioned for the same misconduct 

by other signatory MDBs.371 This cross-debarment agreement means that if a company is debarred by one MDB, it 

is debarred by all.372

Loss of Export Privileges

Companies and individuals who violate the FCPA 

may face consequences under other regulatory regimes, 

such as the Arms Export Control Act (AECA), 22 U.S.C. 

§ 2751, et seq., and its implementing regulations, the 

International Traffic in Arms Regulations (ITAR), 22 

C.F.R. § 120, et seq. AECA and ITAR together provide 

for the suspension, revocation, amendment, or denial of an 

arms export license if an applicant has been indicted or convicted for violating the FCPA.373 They also set forth certain 

factors for the Department of State’s Directorate of Defense 

Trade Controls (DDTC)374 to consider when determining 

whether to grant, deny, or return without action license 

applications for certain types of defense materials. One of 

those factors is whether there is reasonable cause to believe 

that an applicant for a license has violated (or conspired 

to violate) the FCPA; if so, the Department of State “may 

disapprove the application.”375 In addition, it is the policy 

of the Department of State not to consider applications for 

licenses involving any persons who have been convicted of 

violating the AECA or convicted of conspiracy to violate 

the AECA.376 In an action related to the criminal resolution of a U.K. military products manufacturer, the DDTC 

imposed a “policy of denial” for export licenses on three of 

the company’s subsidiaries that were involved in violations 

of AECA and ITAR.377

When Is a Compliance Monitor or 

Independent Consultant Appropriate?

One of the primary goals of both criminal prosecutions and civil enforcement actions against companies that 

violate the FCPA is ensuring that such conduct does not 

occur again. As a consequence, enhanced compliance and 

reporting requirements may be part of criminal and civil 

resolutions of FCPA matters. The amount of enhanced 

compliance and kind of reporting required varies according 

to the facts and circumstances of individual cases. 

In criminal cases, a company’s sentence, or a DPA or 

NPA with a company, may require the appointment of an 

independent corporate monitor. Whether a monitor is 

appropriate depends on the specific facts and circumstances 

of the case. In 2008, DOJ issued internal guidance regarding the selection and use of corporate monitors in DPAs 

and NPAs with companies. Additional guidance has since 

been issued.378 A monitor is an independent third party who 

assesses and monitors a company’s adherence to the compliance requirements of an agreement that was designed to 

reduce the risk of recurrence of the company’s misconduct. 

Appointment of a monitor is not appropriate in all circumstances, but it may be appropriate, for example, where a company does not already have an effective internal compliance 

program or needs to establish necessary internal controls. In 

addition, companies are sometimes allowed to engage in selfmonitoring, typically in cases when the company has made 

a voluntary disclosure, has been fully cooperative, and has 

demonstrated a genuine commitment to reform.

Factors DOJ and SEC Consider 

When Determining Whether a Compliance 

Monitor Is Appropriate Include:

	Seriousness of the offense

	Duration of the misconduct

	Pervasiveness of the misconduct, including 

whether the conduct cuts across geographic and/

or product lines

	Nature and size of the company

	Quality of the company’s compliance program at 

the time of the misconduct

	Subsequent remediation efforts
chapter 6

FCPA Penalties, 

Sanctions, and

Remedies

72

In civil cases, a company may similarly be required 

to retain an independent compliance consultant or monitor to provide an independent, third-party review of the 

company’s internal controls. The consultant recommends 

improvements, to the extent necessary, which the company 

must adopt. When both DOJ and SEC require a company to retain a monitor, the two agencies have been able 

to coordinate their requirements so that the company can 

retain one monitor to fulfill both sets of requirements.

The most successful monitoring relationships are 

those in which the company embraces the monitor or consultant. If the company takes the recommendations and 

suggestions seriously and uses the monitoring period as a 

time to find and fix any outstanding compliance issues, the 

company can emerge from the monitorship with a stronger, 

long-lasting compliance program.

chapter 7

Resolutions

74

RESOLUTIONS

What Are the Different Types of 

Resolutions with DOJ?

Criminal Complaints, Informations, and Indictments

Charges against individuals and companies are 

brought in three different ways under the Federal Rules of 

Criminal Procedure: criminal complaints, criminal informations, and indictments. 

DOJ may agree to resolve criminal FCPA matters against companies either through a declination or, in 

appropriate cases, a negotiated resolution resulting in a plea 

agreement, deferred prosecution agreement, or non-prosecution agreement. For individuals, a negotiated resolution 

will generally take the form of a plea agreement, which may 

include language regarding cooperation, or a non-prosecution cooperation agreement. When negotiated resolutions 

cannot be reached with companies or individuals, the matter may proceed to trial.

Plea Agreements

Plea agreements—whether with companies or 

individuals—are governed by Rule 11 of the Federal 

Rules of Criminal Procedure. The defendant generally admits to the facts supporting the charges, admits 

guilt, and is convicted of the charged crimes when the 

plea agreement is presented to and accepted by a court. 

The plea agreement may jointly recommend a sentence 

or fine, jointly recommend an analysis under the U.S. 

Sentencing Guidelines, or leave such items open for 

argument at the time of sentencing. 

Deferred Prosecution Agreements

Under a deferred prosecution agreement, or a DPA 

as it is commonly known, DOJ files a charging document 

with the court,379 but it simultaneously requests that the 

prosecution be deferred, that is, postponed for the purpose of allowing the company to demonstrate its good 

conduct. DPAs generally require a defendant to agree to 

pay a monetary penalty, waive the statute of limitations, 

cooperate with the government, admit the relevant facts, 

and enter into certain compliance and remediation commitments, potentially including a corporate compliance 

monitor. DPAs describe the company’s conduct, cooperation, and remediation, if any, and provide a calculation of 

the penalty pursuant to the U.S. Sentencing Guidelines. 

In addition to being publicly filed, DOJ places all of its 

DPAs on its website. If the company successfully completes the term of the agreement (typically two or three 

years), DOJ will then move to dismiss the filed charges. A 

company’s successful completion of a DPA is not treated 

as a criminal conviction.
75

Non-Prosecution Agreements

Under a non-prosecution agreement, or an NPA as 

it is commonly known, DOJ maintains the right to file 

charges but refrains from doing so to allow the company 

to demonstrate its good conduct during the term of the 

NPA. Unlike a DPA, an NPA is not filed with a court but is 

instead maintained by the parties. In circumstances where 

an NPA is with a company for FCPA-related offenses, it is 

made available to the public through DOJ’s website. The 

requirements of an NPA are similar to those of a DPA, 

and generally require a waiver of the statute of limitations, 

ongoing cooperation, admission of the material facts, and 

compliance and remediation commitments, in addition to 

payment of a monetary penalty. If the company complies 

with the agreement throughout its term, DOJ does not file 

criminal charges. If an individual complies with the terms 

of his or her NPA, namely, truthful and complete cooperation and continued law-abiding conduct, DOJ will not pursue criminal charges.

Declinations

As discussed above, DOJ’s decision to bring or decline 

to bring an enforcement action under the FCPA is made 

pursuant to the Principles of Federal Prosecution, in the case 

of individuals, and the Principles of Federal Prosecution 

of Business Organizations, in the case of companies. As 

described, in the case of individuals, the Principles of Federal 

Prosecution advise prosecutors to weigh all relevant considerations, including:

•	 federal law enforcement priorities;

•	 the nature and seriousness of the offense;

•	 the deterrent effect of prosecution;

•	 the person’s culpability in connection with the 

offense;

•	 the person’s history of criminal activity;

•	 the person’s willingness to cooperate in the investigation or prosecution of others; and

•	 the probable sentence or other consequences if the 

person is convicted.380

The Principles of Federal Prosecution provide additional commentary about each of these factors. For 

instance, they explain that prosecutors should take into 

account federal law enforcement priorities because federal 

law enforcement and judicial resources are not sufficient 

to permit prosecution of every alleged offense over which 

federal jurisdiction exists. The deterrent effect of prosecution should also be kept in mind because some offenses, 

“although seemingly not of great importance by themselves, 

if commonly committed would have a substantial cumulative impact on the community.”381

As discussed above, the Principles of Federal 

Prosecution of Business Organizations require prosecutors to 

consider nine factors when determining whether to prosecute a corporate entity for an FCPA violation, including the 

nature and seriousness of the offense; the pervasiveness of 

wrongdoing within the company; the company’s history of 

similar conduct; the existence and effectiveness of the company’s pre-existing compliance program; and the adequacy 

of remedies, such as civil or regulatory enforcement actions.

Pursuant to these guidelines, DOJ has declined to 

prosecute both individuals and corporate entities in numerous cases based on the particular facts and circumstances 

presented in those matters, taking into account the available evidence.382 To protect the privacy rights and other 

interests of the uncharged and other potentially interested 

parties, DOJ has a long-standing policy not to provide, 

without the party’s consent, non-public information on 

matters it has declined to prosecute. To put DOJ’s declinations in context, however, in the past two years alone, DOJ 

has declined several dozen cases against companies where 

potential FCPA violations were alleged.

As mentioned above, there are rare occasions in 

which, in conjunction with the public filing of charges 

against an individual, it is appropriate to disclose that a 

company is not also being prosecuted. That was done in a 

recent case where a former employee was charged but the 

former corporate employer was not.383
chapter 7

Resolutions

76

What Are the Different Types of 

Resolutions with SEC?

Civil Injunctive Actions and Remedies

In a civil injunctive action, SEC seeks a court order 

compelling the defendant to obey the law in the future. 

Violating such an order can result in civil or criminal contempt proceedings. Civil contempt sanctions, brought by 

SEC, are remedial rather than punitive in nature and serve 

one of two purposes: to compensate the party injured as a 

result of the violation of the injunction or force compliance 

with the terms of the injunction.

Where a defendant has profited from a violation of 

law, SEC can obtain the equitable relief of disgorgement 

of ill-gotten gains and pre-judgment interest and can also 

obtain civil money penalties pursuant to Sections 21(d)(3) 

and 32(c) of the Exchange Act. SEC may also seek ancillary 

relief (such as an accounting from a defendant). Pursuant 

to Section 21(d)(5), SEC also may seek, and any federal 

court may grant, any other equitable relief that may be 

appropriate or necessary for the benefit of investors, such 

as enhanced remedial measures or the retention of an independent compliance consultant or monitor.

Civil Administrative Actions and Remedies

SEC has the ability to institute various types of administrative proceedings against a person or an entity that it 

believes has violated the law. This type of enforcement action 

is brought by SEC’s Enforcement Division and is litigated 

before an SEC administrative law judge (ALJ). The ALJ’s 

decision is subject to appeal directly to the Securities and 

Exchange Commission itself, and the Commission’s decision 

is in turn subject to review by a U.S. Court of Appeals. 

Administrative proceedings provide for a variety of 

relief. For regulated persons and entities, such as brokerdealers and investment advisers and persons associated with 

them, sanctions include censure, limitation on activities, 

suspension of up to twelve months, and bar from association or revocation of registration. For professionals such as 

attorneys and accountants, SEC can order in Rule 102(e) 

proceedings that the professional be censured, suspended, 

or barred from practicing before SEC.384 SEC staff can seek 

an order from an administrative law judge requiring the 

respondent to cease and desist from any current or future 

violations of the securities laws. In addition, SEC can obtain 

disgorgement, pre-judgment interest, and civil money penalties in administrative proceedings under Section 21B 

of the Exchange Act, and also can obtain other equitable 

relief, such as enhanced remedial measures or the retention 

of an independent compliance consultant or monitor. 

Deferred Prosecution Agreements 

A deferred prosecution agreement is a written agreement between SEC and a potential cooperating individual 

or company in which SEC agrees to forego an enforcement 

action against the individual or company if the individual 

or company agrees to, among other things: (1) cooperate truthfully and fully in SEC’s investigation and related 

enforcement actions; (2) enter into a long-term tolling 

agreement; (3) comply with express prohibitions and/

or undertakings during a period of deferred prosecution; 

and (4) under certain circumstances, agree either to admit 

or not to contest underlying facts that SEC could assert 

to establish a violation of the federal securities laws. If the 

agreement is violated during the period of deferred prosecution, SEC staff may recommend an enforcement action to 

the Commission against the individual or company for the 

original misconduct as well as any additional misconduct. 

Furthermore, if the Commission authorizes the enforcement action, SEC staff may use any factual admissions 

made by the cooperating individual or company in support 

of a motion for summary judgment, while maintaining the 

ability to bring an enforcement action for any additional 

misconduct at a later date.
77

In May of 2011, SEC entered into its first deferred 

prosecution agreement against a company for violating the 

FCPA.385 In that case, a global manufacturer of steel pipe 

products violated the FCPA by bribing Uzbekistan government officials during a bidding process to supply pipelines 

for transporting oil and natural gas. The company made 

almost $5 million in profits when it was subsequently 

awarded several contracts by the Uzbekistan government. 

The company discovered the misconduct during a worldwide review of its operations and brought it to the government’s attention. In addition to self-reporting, the company 

conducted a thorough internal investigation; provided 

complete, real-time cooperation with SEC and DOJ staff; 

and undertook extensive remediation, including enhanced 

anti-corruption procedures and training. Under the terms 

of the DPA, the company paid $5.4 million in disgorgement and prejudgment interest. The company also paid a 

$3.5 million monetary penalty to resolve a criminal investigation by DOJ through an NPA.386

For further information about deferred prosecution 

agreements, see SEC’s Enforcement Manual.

387

Non-Prosecution Agreements

A non-prosecution agreement is a written agreement 

between SEC and a potential cooperating individual or company, entered into in limited and appropriate circumstances, 

that provides that SEC will not pursue an enforcement 

action against the individual or company if the individual or 

company agrees to, among other things: (1) cooperate truthfully and fully in SEC’s investigation and related enforcement actions; and (2) comply, under certain circumstances, 

with express undertakings. If the agreement is violated, SEC 

staff retains its ability to recommend an enforcement action 

to the Commission against the individual or company.

For further information about non-prosecution 

agreements, see SEC’s Enforcement Manual.

388

Termination Letters and Declinations

As discussed above, SEC’s decision to bring or 

decline to bring an enforcement action under the FCPA is 

made pursuant to the guiding principles set forth in SEC’s 

Enforcement Manual. The same factors that apply to SEC 

staff ’s determination of whether to recommend an enforcement action against an individual or entity apply to the 

decision to close an investigation without recommending 

enforcement action.389

Generally, SEC staff considers, among other things: 

•	 the seriousness of the conduct and potential violations;

•	 the resources available to SEC staff to pursue the 

investigation; 

•	 the sufficiency and strength of the evidence; 

•	 the extent of potential investor harm if an action is 

not commenced; and

•	 the age of the conduct underlying the potential 

violations.

SEC has declined to take enforcement action against 

both individuals and companies based on the facts and circumstances present in those matters, where, for example, 

the conduct was not egregious, the company fully cooperated, and the company identified and remediated the 

misconduct quickly. SEC Enforcement Division policy is 

to notify individuals and entities at the earliest opportunity when the staff has determined not to recommend an 

enforcement action against them to the Commission. This 

notification takes the form of a termination letter.

In order to protect the privacy rights and other interests of the uncharged and other potentially interested parties, SEC does not provide non-public information on matters it has declined to prosecute.

What Are Some Examples of Past 

Declinations by DOJ and SEC?

Neither DOJ nor SEC typically publicizes declinations but, to provide some insight into the process, the following are recent, anonymized examples of matters DOJ 

and SEC have declined to pursue: 

Example 1: Public Company Declination

DOJ and SEC declined to take enforcement action 

against a public U.S. company. Factors taken into consideration included:
chapter 7

Resolutions

78

•	 The company discovered that its employees had 

received competitor bid information from a third 

party with connections to the foreign government.

•	 The company began an internal investigation, 

withdrew its contract bid, terminated the employees 

involved, severed ties to the third-party agent, and 

voluntarily disclosed the conduct to DOJ’s Antitrust 

Division, which also declined prosecution.

•	 During the internal investigation, the company 

uncovered various FCPA red flags, including prior 

concerns about the third-party agent, all of which 

the company voluntarily disclosed to DOJ and SEC.

•	 The company immediately took substantial steps to 

improve its compliance program.

Example 2: Public Company Declination

DOJ and SEC declined to take enforcement action 

against a public U.S. company. Factors taken into consideration included:

•	 With knowledge of employees of the company’s 

subsidiary, a retained construction company 

paid relatively small bribes, which were wrongly 

approved by the company’s local law firm, to foreign building code inspectors.

•	 When the company’s compliance department 

learned of the bribes, it immediately ended the 

conduct, terminated its relationship with the construction company and law firm, and terminated or 

disciplined the employees involved.

•	 The company completed a thorough internal investigation and voluntarily disclosed to DOJ and SEC.

•	 The company reorganized its compliance department, appointed a new compliance officer dedicated to anti-corruption, improved the training 

and compliance program, and undertook a 

review of all of the company’s international thirdparty relationships.

Example 3: Public Company Declination

DOJ and SEC declined to take enforcement action 

against a U.S. publicly held industrial services company for 

bribes paid by a small foreign subsidiary. Factors taken into 

consideration included:

•	 The company self-reported the conduct to DOJ 

and SEC.

•	 The total amount of the improper payments was 

relatively small, and the activity appeared to be 

an isolated incident by a single employee at the 

subsidiary.

•	 The profits potentially obtained from the improper 

payments were very small.

•	 The payments were detected by the company’s 

existing internal controls. The company’s audit 

committee conducted a thorough independent 

internal investigation. The results of the investigation were provided to the government.

•	 The company cooperated fully with investigations 

by DOJ and SEC.

•	 The company implemented significant remedial 

actions and enhanced its internal control structure. 

Example 4: Public Company Declination

DOJ and SEC declined to take enforcement action 

against a U.S. publicly held oil-and-gas services company 

for small bribes paid by a foreign subsidiary’s customs agent. 

Factors taken into consideration included:

•	 The company’s internal controls timely detected a 

potential bribe before a payment was made.

•	 When company management learned of the 

potential bribe, management immediately reported 

the issue to the company’s General Counsel and 

Audit Committee and prevented the payment from 

occurring.

•	 Within weeks of learning of the attempted bribe, 

the company provided in-person FCPA training 

to employees of the subsidiary and undertook 
79

an extensive internal investigation to determine 

whether any of the company’s subsidiaries in the 

same region had engaged in misconduct. 

•	 The company self-reported the misconduct and the 

results of its internal investigation to DOJ and SEC.

•	 The company cooperated fully with investigations 

by DOJ and SEC.

•	 In addition to the immediate training at the relevant 

subsidiary, the company provided comprehensive 

FCPA training to all of its employees and conducted 

an extensive review of its anti-corruption compliance 

program. 

•	 The company enhanced its internal controls and 

record-keeping policies and procedures, including requiring periodic internal audits of customs 

payments.

•	 As part of its remediation, the company directed that 

local lawyers rather than customs agents be used to 

handle its permits, with instructions that “no matter 

what, we don’t pay bribes”—a policy that resulted in 

a longer and costlier permit procedure.

Example 5: Public Company Declination

DOJ and SEC declined to take enforcement action 

against a U.S. publicly held consumer products company 

in connection with its acquisition of a foreign company. 

Factors taken into consideration included:

•	 The company identified the potential improper 

payments to local government officials as part of its 

pre-acquisition due diligence.

•	 The company promptly developed a comprehensive plan to investigate, correct, and remediate any 

FCPA issues after acquisition.

•	 The company promptly self-reported the issues prior 

to acquisition and provided the results of its investigation to the government on a real-time basis.

•	 The acquiring company’s existing internal controls 

and compliance program were robust.

•	 After the acquisition closed, the company implemented a comprehensive remedial plan, ensured 

that all improper payments stopped, provided 

extensive FCPA training to employees of the new 

subsidiary, and promptly incorporated the new 

subsidiary into the company’s existing internal 

controls and compliance environment.

Example 6: Private Company Declination

In 2011, DOJ declined to take prosecutorial action 

against a privately held U.S. company and its foreign subsidiary. Factors taken into consideration included:

•	 The company voluntarily disclosed bribes paid to 

social security officials in a foreign country.

•	 The total amount of the bribes was small.

•	 When discovered, the corrupt practices were immediately terminated.

•	 The conduct was thoroughly investigated, and the 

results of the investigation were promptly provided 

to DOJ.

•	 All individuals involved were either terminated 

or disciplined. The company also terminated its 

relationship with its foreign law firm.

•	 The company instituted improved training and 

compliance programs commensurate with its size 

and risk exposure.
chapter 7

Resolutions

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chapter 8

Whistleblower 

Provisions and 

Protections

82

WHISTLEBLOWER PROVISIONS 

AND PROTECTIONS

Assistance and information from a whistleblower who knows of possible securities law violations can be among the most powerful weapons in the law enforcement arsenal. Through their knowledge of the circumstances and individuals involved, whistleblowers can help SEC and DOJ identify potential violations 

much earlier than might otherwise have been possible, thus allowing SEC and 

DOJ to minimize the harm to investors, better preserve the integrity of the 

U.S. capital markets, and more swiftly hold accountable those responsible for 

unlawful conduct.

The Sarbanes-Oxley Act of 2002 and the Dodd-Frank 

Act of 2010 both contain provisions affecting whistleblowers who report FCPA violations. Sarbanes-Oxley prohibits 

issuers from retaliating against whistleblowers and provides 

that employees who are retaliated against for reporting possible securities law violations may file a complaint with the 

Department of Labor, for which they would be eligible to 

receive reinstatement, back pay, and other compensation.390

Sarbanes-Oxley also prohibits retaliation against employee 

whistleblowers under the obstruction of justice statute.391

In 2010, the Dodd-Frank Act added Section 21F to 

the Exchange Act, addressing whistleblower incentives and 

protections. Section 21F authorizes SEC to provide monetary awards to eligible individuals who voluntarily come 

forward with high quality, original information that leads 

to an SEC enforcement action in which over $1,000,000 in 

sanctions is ordered. 392 The awards range is between 10% 

and 30% of the monetary sanctions recovered by the government. The Dodd-Frank Act also prohibits employers 

from retaliating against whistleblowers and creates a private 

right of action for employees who are retaliated against.393

Furthermore, businesses should be aware that retaliation against a whistleblower may also violate state, local, 

and foreign laws that provide protection of whistleblowers. 
83

SEC Office of the Whistleblower

100 F Street NE, Mail Stop 5971

Washington, DC 20549

Facsimile: (703) 813-9322

Online Report Form: http://www.sec.gov/

whistleblower

On August 12, 2011, the final rules for SEC’s 

Whistleblower Program became effective. These rules set 

forth the requirements for whistleblowers to be eligible for 

awards consideration, the factors that SEC will use to determine the amount of the award, the categories of individuals 

who are excluded from award consideration, and the categories of individuals who are subject to limitations in award 

considerations.394 The final rules strengthen incentives for 

employees to report the suspected violations internally 

through internal compliance programs when appropriate, 

although it does not require an employee to do so in order 

to qualify for an award.395

Individuals with information about a possible violation of the federal securities laws, including FCPA violations, should submit that information to SEC either online 

through SEC’s Tips, Complaints, and Referrals (TCR) 

Intake and Resolution System (available at https://denebleo.sec.gov/TCRExternal/disclaimer.xhtml) or by mailing or faxing a completed Form TCR to the Commission’s 

Office of the Whistleblower. 

Whistleblowers can submit information anonymously. To be considered under SEC’s whistleblower program as eligible for a reward, however, the information 

must be submitted on an anonymous whistleblower’s behalf 

by an attorney.396 Whether or not a whistleblower reports 

anonymously, SEC is committed to protecting the identity 

of a whistleblower to the fullest extent possible under the 

statute.397 SEC’s Office of the Whistleblower administers 

SEC’s Whistleblower Program and answers questions from 

the public regarding the program. Additional information regarding SEC’s Whistleblower Program, including 

answers to frequently asked questions, is available online at 

http://www.sec.gov/whistleblower.
chapter 8

Whistleblower 

Provisions and 

Protections

84

chapter 9

DOJ Opinion 

Procedure

86

DOJ OPINION PROCEDURE

DOJ’s opinion procedure is a valuable mechanism for companies and individuals to determine whether proposed conduct would be prosecuted by DOJ 

under the FCPA.398 Generally speaking, under the opinion procedure process, 

parties submit information to DOJ, after which DOJ issues an opinion about 

whether the proposed conduct falls within its enforcement policy. All of DOJ’s 

prior opinions are available online.399 Parties interested in obtaining such an 

opinion should follow these steps:400

First, those seeking an opinion should evaluate whether 

their question relates to actual, prospective conduct.401 The 

opinion procedure cannot be used to obtain opinions on 

purely historical conduct or on hypothetical questions. DOJ 

will not consider a request unless that portion of the transaction for which an opinion is sought involves only prospective 

conduct, although the transaction as a whole may have components that already have occurred. An executed contract 

is not a prerequisite and, in most—if not all—instances, an 

opinion request should be made before the requestor commits to proceed with a transaction.402 Those seeking requests 

should be aware that FCPA opinions relate only to the 

FCPA’s anti-bribery provisions.403

Second, before making the request, the company or 

individual should check that they are either an issuer or a 

domestic concern, as only those categories of parties can 

receive an opinion.404 If the transaction involves more than 

one issuer or domestic concern, consider making a request 

for an opinion jointly, as opinions only apply to the parties 

that request them.405

Third, those seeking an opinion must put their request 

in writing. The request must be specific and accompanied 

by all relevant and material information bearing on the conduct and circumstances for which an opinion is requested. 

Material information includes background information, 

complete copies of all operative documents, and detailed 

statements of all collateral or oral understandings, if any. 

Those seeking opinions are under an affirmative obligation 

to make full and true disclosures.406 Materials disclosed to 

DOJ will not be made public without the consent of the 

party submitting them.407
87

Fourth, the request must be signed. For corporate 

requestors, the signatory should be an appropriate senior 

officer with operational responsibility for the conduct that is 

the subject of the request and who has been designated by the 

corporation’s chief executive officer. In appropriate cases, DOJ 

also may require the chief executive officer to sign the request. 

Those signing the request must certify that it contains a true, 

correct, and complete disclosure with respect to the proposed 

conduct and the circumstances of the conduct. 408

Fifth, an original and five copies of the request should 

be addressed to the Assistant Attorney General in charge of 

the Criminal Division, Attention: FCPA Opinion Group.409

The mailing address is P.O. Box 28188 Central Station, 

Washington, D.C. 20038. DOJ also asks that you send an 

electronic courtesy copy to FCPA.Fraud@usdoj.gov. 

DOJ will evaluate the request for an FCPA opinion.410

A party may withdraw a request for an opinion at any time 

prior to the release of an opinion.411 If the request is complete 

and all the relevant information has been submitted, DOJ will 

respond to the request by issuing an opinion within 30 days.412

If the request is incomplete, DOJ will identify for the requestor 

what additional information or documents are required for 

DOJ to review the request. Such information must be provided to DOJ promptly. Once the additional information has 

been received, DOJ will issue an opinion within 30 days of 

receipt of that additional information.413 DOJ’s FCPA opinions state whether, for purposes of DOJ’s present enforcement 

policy, the prospective conduct would violate either the issuer 

or domestic concern anti-bribery provisions of the FCPA.414

DOJ also may take other positions in the opinion as it considers appropriate.415 To the extent that the opinion concludes 

that the proposed conduct would not violate the FCPA, a 

rebuttable presumption is created that the requestor’s conduct that was the basis of the opinion is in compliance with 

the FCPA.416 In order to provide non-binding guidance to the 

business community, DOJ makes versions of its opinions publicly available on its website.417

If, after receiving an opinion, a party is concerned about 

prospective conduct that is beyond the scope of conduct specified in a previous request, the party may submit an additional 

request for an opinion using the procedures outlined above.418
chapter 9

DOJ Opinion 

Procedure

88

chapter 10

Conclusion

90

CONCLUSION

The FCPA was designed to prevent corrupt practices, protect investors, 

and provide a fair playing field for those honest companies trying to win business based on quality and price rather than bribes. Following Congress’ leadership in enacting the FCPA 35 years ago, and through determined international 

diplomatic and law enforcement efforts in the time since, laws like the FCPA 

prohibiting foreign bribery have been enacted by most of the United States’ 

major trading partners.  

This guide is designed to provide practical advice about, and useful insights into, our enforcement considerations. For businesses desiring to compete fairly in foreign markets, it is our goal to maximize those businesses’ ability 

to comply with the FCPA in the most effective and efficient way suitable to their 

business and the markets in which they operate. Through our ongoing efforts 

with the U.S. and international business and legal communities and nongovernmental organizations, DOJ and SEC can continue effectively to protect 

the integrity of our markets and reduce corruption around the world.

APPENDIX

The Foreign

Corrupt

Practices Act

92

THE FOREIGN CORRUPT

PRACTICES ACT:

15 U.S.C. §§ 78dd-1, 78dd-2, 78dd-3, 78m, 78ff

15 U.S.C. § 78dd-1 [Section 30A of the Securities Exchange Act of 

1934] Prohibited foreign trade practices by issuers

(a) Prohibition

It shall be unlawful for any issuer which has a class of securities registered pursuant to section 78l of this title or which is required to file 

reports under section 78o(d) of this title, or for any officer, director, 

employee, or agent of such issuer or any stockholder thereof acting 

on behalf of such issuer, to make use of the mails or any means or 

instrumentality of interstate commerce corruptly in furtherance of an 

offer, payment, promise to pay, or authorization of the payment of any 

money, or offer, gift, promise to give, or authorization of the giving of 

anything of value to—

(1) any foreign official for purposes of—

(A) (i) influencing any act or decision of such foreign official in his 

official capacity, (ii) inducing such foreign official to do or omit to do 

any act in violation of the lawful duty of such official, or (iii) securing 

any improper advantage; or

(B) inducing such foreign official to use his influence with a foreign 

government or instrumentality thereof to affect or influence any act 

or decision of such government or instrumentality, in order to assist 

such issuer in obtaining or retaining business for or with, or directing 

business to, any person;

(2) any foreign political party or official thereof or any candidate for 

foreign political office for purposes of—

(A) (i) influencing any act or decision of such party, official, or candidate in its or his official capacity, (ii) inducing such party, official, or 

candidate to do or omit to do an act in violation of the lawful duty of 

such party, official, or candidate, or (iii) securing any improper advantage; or

(B) inducing such party, official, or candidate to use its or his influence with a foreign government or instrumentality thereof to affect or 

influence any act or decision of such government or instrumentality, 

in order to assist such issuer in obtaining or retaining business for or 

with, or directing business to, any person; or

(3) 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 any foreign official, to any foreign political party or official thereof, 

or to any candidate for foreign political office, for purposes of—

(A) (i) influencing any act or decision of such foreign official, political party, party official, or candidate in his or its official capacity, (ii) 

inducing such foreign official, political party, party official, or candidate to do or omit to do any act in violation of the lawful duty of 

such foreign official, political party, party official, or candidate, or (iii) 

securing any improper advantage; or

(B) inducing such foreign official, political party, party official, or 
93

candidate to use his or its influence with a foreign government or 

instrumentality thereof to affect or influence any act or decision of 

such government or instrumentality, in order to assist such issuer in 

obtaining or retaining business for or with, or directing business to, 

any person.

(b) Exception for routine governmental action

Subsections (a) and (g) of this section shall not apply to any facilitating or expediting payment to a foreign official, political party, or party 

official the purpose of which is to expedite or to secure the performance of a routine governmental action by a foreign official, political 

party, or party official.

(c) Affirmative defenses

It shall be an affirmative defense to actions under subsection (a) or (g) 

of this section that—

(1) the payment, gift, offer, or promise of anything of value that was 

made, was lawful under the written laws and regulations of the foreign 

official’s, political party’s, party official’s, or candidate’s country; or

(2) the payment, gift, offer, or promise of anything of value that was 

made, was a reasonable and bona fide expenditure, such as travel and 

lodging expenses, incurred by or on behalf of a foreign official, party, 

party official, or candidate and was directly related to—

(A) the promotion, demonstration, or explanation of products or services; or

(B) the execution or performance of a contract with a foreign government or agency thereof.

(d) Guidelines by Attorney General

Not later than one year after August 23, 1988, the Attorney General, 

after consultation with the Commission, the Secretary of Commerce, 

the United States Trade Representative, the Secretary of State, and the 

Secretary of the Treasury, and after obtaining the views of all interested 

persons through public notice and comment procedures, shall determine to what extent compliance with this section would be enhanced 

and the business community would be assisted by further clarification of 

the preceding provisions of this section and may, based on such determination and to the extent necessary and appropriate, issue—

(1) guidelines describing specific types of conduct, associated with 

common types of export sales arrangements and business contracts, 

which for purposes of the Department of Justice’s present enforcement policy, the Attorney General determines would be in conformance with the preceding provisions of this section; and

(2) general precautionary procedures which issuers may use on a voluntary basis to conform their conduct to the Department of Justice’s 

present enforcement policy regarding the preceding provisions of this 

section. The Attorney General shall issue the guidelines and procedures 

referred to in the preceding sentence in accordance with the provisions 

of subchapter II of chapter 5 of Title 5 and those guidelines and procedures shall be subject to the provisions of chapter 7 of that title.

(e) Opinions of Attorney General

(1) The Attorney General, after consultation with appropriate departments and agencies of the United States and after obtaining the views 

of all interested persons through public notice and comment procedures, shall establish a procedure to provide responses to specific 

inquiries by issuers concerning conformance of their conduct with the 

Department of Justice’s present enforcement policy regarding the preceding provisions of this section. The Attorney General shall, within 

30 days after receiving such a request, issue an opinion in response 

to that request. The opinion shall state whether or not certain specified prospective conduct would, for purposes of the Department of 

Justice’s present enforcement policy, violate the preceding provisions 

of this section. Additional requests for opinions may be filed with the 

Attorney General regarding other specified prospective conduct that 

is beyond the scope of conduct specified in previous requests. In any 

action brought under the applicable provisions of this section, there 

shall be a rebuttable presumption that conduct, which is specified in a 

request by an issuer and for which the Attorney General has issued an 

opinion that such conduct is in conformity with the Department of 

Justice’s present enforcement policy, is in compliance with the preceding provisions of this section. Such a presumption may be rebutted by 

a preponderance of the evidence. In considering the presumption for 

purposes of this paragraph, a court shall weight all relevant factors, 

including but not limited to whether the information submitted to 

the Attorney General was accurate and complete and whether it was 

within the scope of the conduct specified in any request received by 

the Attorney General. The Attorney General shall establish the procedure required by this paragraph in accordance with the provisions 

of subchapter II of chapter 5 of Title 5 and that procedure shall be 

subject to the provisions of chapter 7 of that title.

(2) Any document or other material which is provided to, received by, 

or prepared in the Department of Justice or any other department or 

agency of the United States in connection with a request by an issuer 

under the procedure established under paragraph (1), shall be exempt 

from disclosure under section 552 of Title 5 and shall not, except 

with the consent of the issuer, be made publicly available, regardless of 

whether the Attorney General responds to such a request or the issuer 

withdraws such request before receiving a response.

(3) Any issuer who has made a request to the Attorney General 

under paragraph (1) may withdraw such request prior to the time the 

Attorney General issues an opinion in response to such request. Any 

request so withdrawn shall have no force or effect.

(4) The Attorney General shall, to the maximum extent practicable, 

provide timely guidance concerning the Department of Justice’s 
APPENDIX

The Foreign

Corrupt

Practices Act

94

present enforcement policy with respect to the preceding provisions of this section to potential exporters and small businesses that 

are unable to obtain specialized counsel on issues pertaining to such 

provisions. Such guidance shall be limited to responses to requests 

under paragraph (1) concerning conformity of specified prospective 

conduct with the Department of Justice’s present enforcement policy 

regarding the preceding provisions of this section and general explanations of compliance responsibilities and of potential liabilities under 

the preceding provisions of this section.

(f ) Definitions

For purposes of this section:

(1)(A) The term “foreign official” means any officer or employee of 

a foreign government or any department, agency, or instrumentality 

thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or 

department, agency, or instrumentality, or for or on behalf of any such 

public international organization.

(B) For purposes of subparagraph (A), the term “public international 

organization” means—

(i) an organization that is designated by Executive Order pursuant 

to section 1 of the International Organizations Immunities Act (22 

U.S.C. § 288); or

(ii) any other international organization that is designated by the 

President by Executive order for the purposes of this section, effective 

as of the date of publication of such order in the Federal Register.

(2) (A) A person’s state of mind is “knowing” with respect to conduct, 

a circumstance, or a result if—

(i) such person is aware that such person is engaging in such conduct, 

that such circumstance exists, or that such result is substantially certain to occur; or

(ii) such person has a firm belief that such circumstance exists or that 

such result is substantially certain to occur.

(B) When knowledge of the existence of a particular circumstance is 

required for an offense, such knowledge is established if a person is 

aware of a high probability of the existence of such circumstance, unless 

the person actually believes that such circumstance does not exist.

(3)(A) The term “routine governmental action” means only an action 

which is ordinarily and commonly performed by a foreign official in—

(i) obtaining permits, licenses, or other official documents to qualify a 

person to do business in a foreign country;

(ii) processing governmental papers, such as visas and work orders;

(iii) providing police protection, mail pick-up and delivery, or scheduling inspections associated with contract performance or inspections 

related to transit of goods across country;

(iv) providing phone service, power and water supply, loading and 

unloading cargo, or protecting perishable products or commodities 

from deterioration; or

(v) actions of a similar nature.

(B) The term “routine governmental action” does not include any 

decision by a foreign official whether, or on what terms, to award 

new business to or to continue business with a particular party, or 

any action taken by a foreign official involved in the decision-making 

process to encourage a decision to award new business to or continue 

business with a particular party.

(g) Alternative Jurisdiction

(1) It shall also be unlawful for any issuer organized under the laws of 

the United States, or a State, territory, possession, or commonwealth 

of the United States or a political subdivision thereof and which has 

a class of securities registered pursuant to section 78l of this title or 

which is required to file reports under section 78o(d)) of this title, or 

for any United States person that is an officer, director, employee, or 

agent of such issuer or a stockholder thereof acting on behalf of such 

issuer, to corruptly do any act outside the United States in furtherance 

of an offer, payment, promise to pay, or authorization of the payment 

of any money, or offer, gift, promise to give, or authorization of the 

giving of anything of value to any of the persons or entities set forth 

in paragraphs (1), (2), and (3) of this subsection (a) of this section 

for the purposes set forth therein, irrespective of whether such issuer 

or such officer, director, employee, agent, or stockholder makes use 

of the mails or any means or instrumentality of interstate commerce 

in furtherance of such offer, gift, payment, promise, or authorization.

(2) As used in this subsection, the term “United States person” means 

a national of the United States (as defined in section 101 of the 

Immigration and Nationality Act (8 U.S.C. § 1101)) or any corporation, partnership, association, joint-stock company, business trust, 

unincorporated organization, or sole proprietorship organized under 

the laws of the United States or any State, territory, possession, or commonwealth of the United States, or any political subdivision thereof.

15 U.S.C. § 78dd-2 Prohibited foreign trade practices by domestic 

concerns

(a) Prohibition

It shall be unlawful for any domestic concern, other than an issuer 

which is subject to section 78dd-1 of this title, or for any officer, director, employee, or agent of such domestic concern or any stockholder 

thereof acting on behalf of such domestic concern, to make use of 

the mails or any means or instrumentality of interstate commerce 
95

corruptly in furtherance of an offer, payment, promise to pay, or 

authorization of the payment of any money, or offer, gift, promise to 

give, or authorization of the giving of anything of value to—

(1) any foreign official for purposes of—

(A) (i) influencing any act or decision of such foreign official in his 

official capacity, (ii) inducing such foreign official to do or omit to do 

any act in violation of the lawful duty of such official, or (iii) securing 

any improper advantage; or

(B) inducing such foreign official to use his influence with a foreign 

government or instrumentality thereof to affect or influence any act 

or decision of such government or instrumentality, in order to assist 

such domestic concern in obtaining or retaining business for or with, 

or directing business to, any person; or

(2) any foreign political party or official thereof or any candidate for 

foreign political office for purposes of—

(A) (i) influencing any act or decision of such party, official, or candidate in its or his official capacity, (ii) inducing such party, official, or candidate to do or omit to do an act in violation of the lawful duty of such 

party, official, or candidate, or (iii) securing any improper advantage; or

(B) inducing such party, official, or candidate to use its or his influence with a foreign government or instrumentality thereof to affect or 

influence any act or decision of such government or instrumentality, 

in order to assist such domestic concern in obtaining or retaining business for or with, or directing business to, any person;

(3) 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 any foreign official, to any foreign political party or official thereof, 

or to any candidate for foreign political office, for purposes of—

(A) (i) influencing any act or decision of such foreign official, political party, party official, or candidate in his or its official capacity, (ii) 

inducing such foreign official, political party, party official, or candidate to do or omit to do any act in violation of the lawful duty of 

such foreign official, political party, party official, or candidate, or (iii) 

securing any improper advantage; or

(B) inducing such foreign official, political party, party official, or 

candidate to use his or its influence with a foreign government or 

instrumentality thereof to affect or influence any act or decision of 

such government or instrumentality, in order to assist such domestic 

concern in obtaining or retaining business for or with, or directing 

business to, any person.

(b) Exception for routine governmental action

Subsections (a) and (i) of this section shall not apply to any facilitating or expediting payment to a foreign official, political party, or party 

official the purpose of which is to expedite or to secure the performance of a routine governmental action by a foreign official, political 

party, or party official.

(c) Affirmative defenses

It shall be an affirmative defense to actions under subsection (a) or (i) 

of this section that—

(1) the payment, gift, offer, or promise of anything of value that was 

made, was lawful under the written laws and regulations of the foreign 

official’s, political party’s, party official’s, or candidate’s country; or

(2) the payment, gift, offer, or promise of anything of value that was 

made, was a reasonable and bona fide expenditure, such as travel and 

lodging expenses, incurred by or on behalf of a foreign official, party, 

party official, or candidate and was directly related to—

(A) the promotion, demonstration, or explanation of products or services; or

(B) the execution or performance of a contract with a foreign government or agency thereof.

(d) Injunctive relief

(1) When it appears to the Attorney General that any domestic concern to which this section applies, or officer, director, employee, agent, 

or stockholder thereof, is engaged, or about to engage, in any act or 

practice constituting a violation of subsection (a) or (i) of this section, the Attorney General may, in his discretion, bring a civil action 

in an appropriate district court of the United States to enjoin such act 

or practice, and upon a proper showing, a permanent injunction or a 

temporary restraining order shall be granted without bond.

(2) For the purpose of any civil investigation which, in the opinion of 

the Attorney General, is necessary and proper to enforce this section, 

the Attorney General or his designee are empowered to administer 

oaths and affirmations, subpoena witnesses, take evidence, and require 

the production of any books, papers, or other documents which the 

Attorney General deems relevant or material to such investigation. 

The attendance of witnesses and the production of documentary evidence may be required from any place in the United States, or any 

territory, possession, or commonwealth of the United States, at any 

designated place of hearing.

(3) In case of contumacy by, or refusal to obey a subpoena issued to, 

any person, the Attorney General may invoke the aid of any court of 

the United States within the jurisdiction of which such investigation 

or proceeding is carried on, or where such person resides or carries 

on business, in requiring the attendance and testimony of witnesses 

and the production of books, papers, or other documents. Any such 

court may issue an order requiring such person to appear before the 

Attorney General or his designee, there to produce records, if so 
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ordered, or to give testimony touching the matter under investigation. 

Any failure to obey such order of the court may be punished by such 

court as a contempt thereof. All process in any such case may be served 

in the judicial district in which such person resides or may be found. 

The Attorney General may make such rules relating to civil investigations as may be necessary or appropriate to implement the provisions 

of this subsection.

(e) Guidelines by Attorney General

Not later than 6 months after August 23, 1988, the Attorney General, 

after consultation with the Securities and Exchange Commission, the 

Secretary of Commerce, the United States Trade Representative, the 

Secretary of State, and the Secretary of the Treasury, and after obtaining the views of all interested persons through public notice and comment procedures, shall determine to what extent compliance with 

this section would be enhanced and the business community would 

be assisted by further clarification of the preceding provisions of this 

section and may, based on such determination and to the extent necessary and appropriate, issue—

(1) guidelines describing specific types of conduct, associated with 

common types of export sales arrangements and business contracts, 

which for purposes of the Department of Justice’s present enforcement policy, the Attorney General determines would be in conformance with the preceding provisions of this section; and

(2) general precautionary procedures which domestic concerns may 

use on a voluntary basis to conform their conduct to the Department 

of Justice’s present enforcement policy regarding the preceding provisions of this section. 

The Attorney General shall issue the guidelines and procedures 

referred to in the preceding sentence in accordance with the provisions of subchapter II of chapter 5 of Title 5 and those guidelines and 

procedures shall be subject to the provisions of chapter 7 of that title.

(f ) Opinions of Attorney General

(1) The Attorney General, after consultation with appropriate departments and agencies of the United States and after obtaining the views of 

all interested persons through public notice and comment procedures, 

shall establish a procedure to provide responses to specific inquiries by 

domestic concerns concerning conformance of their conduct with the 

Department of Justice’s present enforcement policy regarding the preceding provisions of this section. The Attorney General shall, within 

30 days after receiving such a request, issue an opinion in response to 

that request. The opinion shall state whether or not certain specified 

prospective conduct would, for purposes of the Department of Justice’s 

present enforcement policy, violate the preceding provisions of this section. Additional requests for opinions may be filed with the Attorney 

General regarding other specified prospective conduct that is beyond 

the scope of conduct specified in previous requests. In any action 

brought under the applicable provisions of this section, there shall be 

a rebuttable presumption that conduct, which is specified in a request 

by a domestic concern and for which the Attorney General has issued 

an opinion that such conduct is in conformity with the Department of 

Justice’s present enforcement policy, is in compliance with the preceding provisions of this section. Such a presumption may be rebutted by a 

preponderance of the evidence. In considering the presumption for purposes of this paragraph, a court shall weigh all relevant factors, including 

but not limited to whether the information submitted to the Attorney 

General was accurate and complete and whether it was within the 

scope of the conduct specified in any request received by the Attorney 

General. The Attorney General shall establish the procedure required 

by this paragraph in accordance with the provisions of subchapter II of 

chapter 5 of Title 5 and that procedure shall be subject to the provisions 

of chapter 7 of that title.

(2) Any document or other material which is provided to, received by, 

or prepared in the Department of Justice or any other department or 

agency of the United States in connection with a request by a domestic concern under the procedure established under paragraph (1), shall 

be exempt from disclosure under section 552 of Title 5 and shall not, 

except with the consent of the domestic concern, by made publicly 

available, regardless of whether the Attorney General response to 

such a request or the domestic concern withdraws such request before 

receiving a response.

(3) Any domestic concern who has made a request to the Attorney 

General under paragraph (1) may withdraw such request prior to 

the time the Attorney General issues an opinion in response to such 

request. Any request so withdrawn shall have no force or effect.

(4) The Attorney General shall, to the maximum extent practicable, 

provide timely guidance concerning the Department of Justice’s present enforcement policy with respect to the preceding provisions of 

this section to potential exporters and small businesses that are unable 

to obtain specialized counsel on issues pertaining to such provisions. 

Such guidance shall be limited to responses to requests under paragraph (1) concerning conformity of specified prospective conduct 

with the Department of Justice’s present enforcement policy regarding the preceding provisions of this section and general explanations 

of compliance responsibilities and of potential liabilities under the 

preceding provisions of this section.

(g) Penalties

(1)(A) Any domestic concern that is not a natural person and that 

violates subsection (a) or (i) of this section shall be fined not more 

than $2,000,000.
97

(B) Any domestic concern that is not a natural person and that violates subsection (a) or (i) of this section shall be subject to a civil penalty of not more than $10,000 imposed in an action brought by the 

Attorney General.

(2)(A) Any natural person that is an officer, director, employee, or 

agent of a domestic concern, or stockholder acting on behalf of such 

domestic concern, who willfully violates subsection (a) or (i) of this 

section shall be fined not more than $100,000 or imprisoned not 

more than 5 years, or both.

(B) Any natural person that is an officer, director, employee, or agent 

of a domestic concern, or stockholder acting on behalf of such domestic concern, who violates subsection (a) or (i) of this section shall be 

subject to a civil penalty of not more than $10,000 imposed in an 

action brought by the Attorney General.

(3) Whenever a fine is imposed under paragraph (2) upon any officer, 

director, employee, agent, or stockholder of a domestic concern, such 

fine may not be paid, directly or indirectly, by such domestic concern.

(h) Definitions

For purposes of this section:

(1) The term “domestic concern” means—

(A) any individual who is a citizen, national, or resident of the United 

States; and

(B) any corporation, partnership, association, joint-stock company, 

business trust, unincorporated organization, or sole proprietorship 

which has its principal place of business in the United States, or which 

is organized under the laws of a State of the United States or a territory, possession, or commonwealth of the United States.

(2)(A) The term “foreign official” means any officer or employee of 

a foreign government or any department, agency, or instrumentality 

thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or 

department, agency, or instrumentality, or for or on behalf of any such 

public international organization.

(B) For purposes of subparagraph (A), the term “public international 

organization” means—

(i) an organization that has been designated by Executive order pursuant to Section 1 of the International Organizations Immunities Act 

(22 U.S.C. § 288); or

(ii) any other international organization that is designated by the 

President by Executive order for the purposes of this section, effective 

as of the date of publication of such order in the Federal Register.

(3)(A) A person’s state of mind is “knowing” with respect to conduct, 

a circumstance, or a result if—

(i) such person is aware that such person is engaging in such conduct, 

that such circumstance exists, or that such result is substantially certain to occur; or

(ii) such person has a firm belief that such circumstance exists or that 

such result is substantially certain to occur.

(B) When knowledge of the existence of a particular circumstance 

is required for an offense, such knowledge is established if a person 

is aware of a high probability of the existence of such circumstance, 

unless the person actually believes that such circumstance does not 

exist.

(4)(A) The term “routine governmental action” means only an action 

which is ordinarily and commonly performed by a foreign official in—

(i) obtaining permits, licenses, or other official documents to qualify a 

person to do business in a foreign country;

(ii) processing governmental papers, such as visas and work orders;

(iii) providing police protection, mail pick-up and delivery, or scheduling inspections associated with contract performance or inspections 

related to transit of goods across country;

(iv) providing phone service, power and water supply, loading and 

unloading cargo, or protecting perishable products or commodities 

from deterioration; or

(v) actions of a similar nature.

(B) The term “routine governmental action” does not include any 

decision by a foreign official whether, or on what terms, to award 

new business to or to continue business with a particular party, or 

any action taken by a foreign official involved in the decision-making 

process to encourage a decision to award new business to or continue 

business with a particular party.

(5) The term “interstate commerce” means trade, commerce, transportation, or communication among the several States, or between any 

foreign country and any State or between any State and any place or 

ship outside thereof, and such term includes the intrastate use of—

(A) a telephone or other interstate means of communication, or

(B) any other interstate instrumentality.

(i) Alternative Jurisdiction

(1) It shall also be unlawful for any United States person to corruptly 

do any act outside the United States in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, 

or offer, gift, promise to give, or authorization of the giving of anything of value to any of the persons or entities set forth in paragraphs 

(1), (2), and (3) of subsection (a), for the purposes set forth therein, 

irrespective of whether such United States person makes use of the 

mails or any means or instrumentality of interstate commerce in furtherance of such offer, gift, payment, promise, or authorization.
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(2) As used in this subsection, a “United States person” means 

a national of the United States (as defined in section 101 of the 

Immigration and Nationality Act (8 U.S.C. § 1101)) or any corporation, partnership, association, joint-stock company, business trust, 

unincorporated organization, or sole proprietorship organized under 

the laws of the United States or any State, territory, possession, or commonwealth of the United States, or any political subdivision thereof.

15 U.S.C. § 78dd-3 Prohibited foreign trade practices by persons 

other than issuers or domestic concerns

(a) Prohibition

It shall be unlawful for any person other than an issuer that is subject 

to section 78dd-1 [Section 30A of the Exchange Act] of this title or 

a domestic concern, or for any officer, director, employee, or agent of 

such person or any stockholder thereof acting on behalf of such person, while in the territory of the United States, corruptly to make use 

of the mails or any means or instrumentality of interstate commerce or 

to do any other act in furtherance of an offer, payment, promise to pay, 

or authorization of the payment of any money, or offer, gift, promise 

to give, or authorization of the giving of anything of value to—

(1) any foreign official for purposes of—

(A) (i) influencing any act or decision of such foreign official in his 

official capacity, (ii) inducing such foreign official to do or omit to do 

any act in violation of the lawful duty of such official, or (iii) securing 

any improper advantage; or

(B) inducing such foreign official to use his influence with a foreign 

government or instrumentality thereof to affect or influence any act 

or decision of such government or instrumentality, in order to assist 

such person in obtaining or retaining business for or with, or directing 

business to, any person;

(2) any foreign political party or official thereof or any candidate for 

foreign political office for purposes of—

(A) (i) influencing any act or decision of such party, official, or candidate in its or his official capacity, (ii) inducing such party, official, or candidate to do or omit to do an act in violation of the lawful duty of such 

party, official, or candidate, or (iii) securing any improper advantage; or

(B) inducing such party, official, or candidate to use its or his influence with a foreign government or instrumentality thereof to affect or 

influence any act or decision of such government or instrumentality, 

in order to assist such person in obtaining or retaining business for or 

with, or directing business to, any person; or

(3) 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 any foreign official, to any foreign political party or official thereof, 

or to any candidate for foreign political office, for purposes of—

(A) (i) influencing any act or decision of such foreign official, political party, party official, or candidate in his or its official capacity, (ii) 

inducing such foreign official, political party, party official, or candidate to do or omit to do any act in violation of the lawful duty of 

such foreign official, political party, party official, or candidate, or (iii) 

securing any improper advantage; or

(B) inducing such foreign official, political party, party official, or candidate to use his or its influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality, in order to assist such person in obtaining 

or retaining business for or with, or directing business to, any person.

(b) Exception for routine governmental action

Subsection (a) of this section shall not apply to any facilitating or 

expediting payment to a foreign official, political party, or party official the purpose of which is to expedite or to secure the performance 

of a routine governmental action by a foreign official, political party, 

or party official.

(c) Affirmative defenses

It shall be an affirmative defense to actions under subsection (a) of this 

section that—

(1) the payment, gift, offer, or promise of anything of value that was 

made, was lawful under the written laws and regulations of the foreign 

official’s, political party’s, party official’s, or candidate’s country; or

(2) the payment, gift, offer, or promise of anything of value that was 

made, was a reasonable and bona fide expenditure, such as travel and 

lodging expenses, incurred by or on behalf of a foreign official, party, 

party official, or candidate and was directly related to—

(A) the promotion, demonstration, or explanation of products or services; or

(B) the execution or performance of a contract with a foreign government or agency thereof.

(d) Injunctive relief

(1) When it appears to the Attorney General that any person to which 

this section applies, or officer, director, employee, agent, or stockholder thereof, is engaged, or about to engage, in any act or practice 
99

constituting a violation of subsection (a) of this section, the Attorney 

General may, in his discretion, bring a civil action in an appropriate district court of the United States to enjoin such act or practice, 

and upon a proper showing, a permanent injunction or a temporary 

restraining order shall be granted without bond.

(2) For the purpose of any civil investigation which, in the opinion of 

the Attorney General, is necessary and proper to enforce this section, 

the Attorney General or his designee are empowered to administer 

oaths and affirmations, subpoena witnesses, take evidence, and require 

the production of any books, papers, or other documents which the 

Attorney General deems relevant or material to such investigation. 

The attendance of witnesses and the production of documentary evidence may be required from any place in the United States, or any 

territory, possession, or commonwealth of the United States, at any 

designated place of hearing.

(3) In case of contumacy by, or refusal to obey a subpoena issued to, 

any person, the Attorney General may invoke the aid of any court of 

the United States within the jurisdiction of which such investigation 

or proceeding is carried on, or where such person resides or carries 

on business, in requiring the attendance and testimony of witnesses 

and the production of books, papers, or other documents. Any such 

court may issue an order requiring such person to appear before the 

Attorney General or his designee, there to produce records, if so 

ordered, or to give testimony touching the matter under investigation. 

Any failure to obey such order of the court may be punished by such 

court as a contempt thereof.

(4) All process in any such case may be served in the judicial district 

in which such person resides or may be found. The Attorney General 

may make such rules relating to civil investigations as may be necessary 

or appropriate to implement the provisions of this subsection.

(e) Penalties

(1)(A) Any juridical person that violates subsection (a) of this section 

shall be fined not more than $2,000,000.

(B) Any juridical person that violates subsection (a) of this section 

shall be subject to a civil penalty of not more than $10,000 imposed in 

an action brought by the Attorney General.

(2)(A) Any natural person who willfully violates subsection (a) of 

this section shall be fined not more than $100,000 or imprisoned not 

more than 5 years, or both.

(B) Any natural person who violates subsection (a) of this section shall 

be subject to a civil penalty of not more than $10,000 imposed in an 

action brought by the Attorney General.

(3) Whenever a fine is imposed under paragraph (2) upon any officer, 

director, employee, agent, or stockholder of a person, such fine may 

not be paid, directly or indirectly, by such person.

(f ) Definitions

For purposes of this section:

(1) The term “person,” when referring to an offender, means any natural person other than a national of the United States (as defined in 

8 U.S.C. § 1101) or any corporation, partnership, association, jointstock company, business trust, unincorporated organization, or sole 

proprietorship organized under the law of a foreign nation or a political subdivision thereof

(2)(A) The term “foreign official” means any officer or employee of 

a foreign government or any department, agency, or instrumentality 

thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or 

department, agency, or instrumentality, or for or on behalf of any such 

public international organization.

For purposes of subparagraph (A), the term “public international 

organization” means—

(i) an organization that has been designated by Executive Order pursuant to Section 1 of the International Organizations Immunities Act 

(22 U.S.C. § 288); or

(ii) any other international organization that is designated by the 

President by Executive order for the purposes of this section, effective 

as of the date of publication of such order in the Federal Register.

(3)(A) A person’s state of mind is “knowing” with respect to conduct, 

a circumstance, or a result if—

(i) such person is aware that such person is engaging in such conduct, 

that such circumstance exists, or that such result is substantially certain to occur; or

(ii) such person has a firm belief that such circumstance exists or that 

such result is substantially certain to occur.

(B) When knowledge of the existence of a particular circumstance 

is required for an offense, such knowledge is established if a person 

is aware of a high probability of the existence of such circumstance, 

unless the person actually believes that such circumstance does not 

exist.

(4)(A) The term “routine governmental action” means only an action 

which is ordinarily and commonly performed by a foreign official in—

(i) obtaining permits, licenses, or other official documents to qualify a 

person to do business in a foreign country;

(ii) processing governmental papers, such as visas and work orders;

(iii) providing police protection, mail pick-up and delivery, or scheduling inspections associated with contract performance or inspections 

related to transit of goods across country;

(iv) providing phone service, power and water supply, loading and 

unloading cargo, or protecting perishable products or commodities 

from deterioration; or

(v) actions of a similar nature.
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(B) The term “routine governmental action” does not include any 

decision by a foreign official whether, or on what terms, to award 

new business to or to continue business with a particular party, or 

any action taken by a foreign official involved in the decision-making 

process to encourage a decision to award new business to or continue 

business with a particular party.

(5) The term “interstate commerce” means trade, commerce, transportation, or communication among the several States, or between any 

foreign country and any State or between any State and any place or 

ship outside thereof, and such term includes the intrastate use of—

(A) a telephone or other interstate means of communication, or

(B) any other interstate instrumentality.

* * *

15 U.S.C. § 78m [Section 13 of the Securities Exchange Act of 

1934] 

Periodical and other reports

(a) Reports by issuer of security; contents

Every issuer of a security registered pursuant to section 78l of this title 

shall file with the Commission, in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate 

for the proper protection of investors and to insure fair dealing in the 

security—

(1) such information and documents (and such copies thereof ) as the 

Commission shall require to keep reasonably current the information 

and documents required to be included in or filed with an application or registration statement filed pursuant to section 78l of this title, 

except that the Commission may not require the filing of any material 

contract wholly executed before July 1, 1962.

(2) such annual reports (and such copies thereof ), certified if required 

by the rules and regulations of the Commission by independent public accountants, and such quarterly reports (and such copies thereof ), 

as the Commission may prescribe.

Every issuer of a security registered on a national securities exchange 

shall also file a duplicate original of such information, documents, 

and reports with the exchange. In any registration statement, periodic 

report, or other reports to be filed with the Commission, an emerging 

growth company need not present selected financial data in accordance with section 229.301 of title 17, Code of Federal Regulations, 

for any period prior to the earliest audited period presented in connection with its first registration statement that became effective 

under this chapter or the Securities Act of 1933 [15 U.S.C. §§ 77a, 

et seq.] and, with respect to any such statement or reports, an emerging growth company may not be required to comply with any new 

or revised financial accounting standard until such date that a company that is not an issuer (as defined under section 7201 of this title) 

is required to comply with such new or revised accounting standard, if 

such standard applies to companies that are not issuers.

(b) Form of report; books, records, and internal accounting; directives

(1) The Commission may prescribe, in regard to reports made pursuant to this chapter, the form or forms in which the required information shall be set forth, the items or details to be shown in the balance 

sheet and the earnings statement, and the methods to be followed in 

the preparation of reports, in the appraisal or valuation of assets and 

liabilities, in the determination of depreciation and depletion, in the 

differentiation of recurring and nonrecurring income, in the differentiation of investment and operating income, and in the preparation, 

where the Commission deems it necessary or desirable, of separate 

and/or consolidated balance sheets or income accounts of any person 

directly or indirectly controlling or controlled by the issuer, or any 

person under direct or indirect common control with the issuer; but 

in the case of the reports of any person whose methods of accounting 

are prescribed under the provisions of any law of the United States, 

or any rule or regulation thereunder, the rules and regulations of the 

Commission with respect to reports shall not be inconsistent with 

the requirements imposed by such law or rule or regulation in respect 

of the same subject matter (except that such rules and regulations of 

the Commission may be inconsistent with such requirements to the 

extent that the Commission determines that the public interest or the 

protection of investors so requires).

(2) Every issuer which has a class of securities registered pursuant to 

section 78l of this title and every issuer which is required to file reports 

pursuant to section 78o(d) of this title shall—

(A) 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; 

(B) devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that—

(i) transactions are executed in accordance with management’s general 

or specific authorization;

(ii) transactions are recorded as necessary (I) to permit preparation of 

financial statements in conformity with generally accepted accounting 
101

principles or any other criteria applicable to such statements, and (II) 

to maintain accountability for assets;

(iii) access to assets is permitted only in accordance with management’s general or specific authorization; and

(iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with 

respect to any differences; and

(C) notwithstanding any other provision of law, pay the allocable 

share of such issuer of a reasonable annual accounting support fee or 

fees, determined in accordance with section 7219 of this title.

(3)(A) With respect to matters concerning the national security of the 

United States, no duty or liability under paragraph (2) of this subsection shall be imposed upon any person acting in cooperation with the 

head of any Federal department or agency responsible for such matters 

if such act in cooperation with such head of a department or agency 

was done upon the specific, written directive of the head of such 

department or agency pursuant to Presidential authority to issue such 

directives. Each directive issued under this paragraph shall set forth 

the specific facts and circumstances with respect to which the provisions of this paragraph are to be invoked. Each such directive shall, 

unless renewed in writing, expire one year after the date of issuance.

(B) Each head of a Federal department or agency of the United States 

who issues such a directive pursuant to this paragraph shall maintain a complete file of all such directives and shall, on October 1 of 

each year, transmit a summary of matters covered by such directives 

in force at any time during the previous year to the Permanent Select 

Committee on Intelligence of the House of Representatives and the 

Select Committee on Intelligence of the Senate.

(4) No criminal liability shall be imposed for failing to comply with 

the requirements of paragraph (2) of this subsection except as provided in paragraph (5) of this subsection.

(5) No person shall knowingly circumvent or knowingly fail to implement a system of internal accounting controls or knowingly falsify any 

book, record, or account described in paragraph (2).

(6) Where an issuer which has a class of securities registered pursuant to section 78l of this title or an issuer which is required to file 

reports pursuant to section 78o(d) of this title holds 50 per centum 

or less of the voting power with respect to a domestic or foreign firm, 

the provisions of paragraph (2) require only that the issuer proceed 

in good faith to use its influence, to the extent reasonable under the 

issuer’s circumstances, to cause such domestic or foreign firm to devise 

and maintain a system of internal accounting controls consistent with 

paragraph (2). Such circumstances include the relative degree of the 

issuer’s ownership of the domestic or foreign firm and the laws and 

practices governing the business operations of the country in which 

such firm is located. An issuer which demonstrates good faith efforts 

to use such influence shall be conclusively presumed to have complied 

with the requirements of paragraph (2).

(7) For the purpose of paragraph (2) of this subsection, the terms “reasonable assurances” and “reasonable detail” mean such level of detail 

and degree of assurance as would satisfy prudent officials in the conduct of their own affairs.

* * *

15 U.S.C. § 78ff Penalties [Section 32 of the Securities Exchange 

Act of 1934]

(a) Willful violations; false and misleading statements

Any person who willfully violates any provision of this chapter (other 

than section 78dd-1 of this title [Section 30A of the Exchange Act]), 

or any rule or regulation thereunder the violation of which is made 

unlawful or the observance of which is required under the terms of 

this chapter, or any person who willfully and knowingly makes, or 

causes to be made, any statement in any application, report, or document required to be filed under this chapter or any rule or regulation 

thereunder or any undertaking contained in a registration statement 

as provided in subsection (d) of section 78o of this title, or by any 

self-regulatory organization in connection with an application for 

membership or participation therein or to become associated with a 

member thereof, which statement was false or misleading with respect 

to any material fact, shall upon conviction be fined not more than 

$5,000,000, or imprisoned not more than 20 years, or both, except 

that when such person is a person other than a natural person, a fine 

not exceeding $25,000,000 may be imposed; but no person shall be 

subject to imprisonment under this section for the violation of any 

rule or regulation if he proves that he had no knowledge of such rule 

or regulation.

(b) Failure to file information, documents, or reports

Any issuer which fails to file information, documents, or reports 

required to be filed under subsection (d) of section 78o of this title or 

any rule or regulation thereunder shall forfeit to the United States the 

sum of $100 for each and every day such failure to file shall continue. 

Such forfeiture, which shall be in lieu of any criminal penalty for such 

failure to file which might be deemed to arise under subsection (a) of 

this section, shall be payable into the Treasury of the United States 

and shall be recoverable in a civil suit in the name of the United States.

(c) Violations by issuers, officers, directors, stockholders, employees, 

or agents of issuers

(1)(A) Any issuer that violates subsection (a) or (g) of section 78dd-1 

[Section 30A of the Exchange Act] of this title shall be fined not more 

than $2,000,000.

(B) Any issuer that violates subsection (a) or (g) of section 78dd-1 
APPENDIX

The Foreign

Corrupt

Practices Act

102

[Section 30A of the Exchange Act]of this title shall be subject to a 

civil penalty of not more than $10,000 imposed in an action brought 

by the Commission.

(2)(A) Any officer, director, employee, or agent of an issuer, or stockholder acting on behalf of such issuer, who willfully violates subsection (a) or (g) of section 78dd-1 [Section 30A of the Exchange Act] 

of this title shall be fined not more than $100,000, or imprisoned not 

more than 5 years, or both.

(B) Any officer, director, employee, or agent of an issuer, or stockholder acting on behalf of such issuer, who violates subsection (a) or 

(g) of section 78dd-1 [Section 30A of the Exchange Act] of this title 

shall be subject to a civil penalty of not more than $10,000 imposed in 

an action brought by the Commission.

(3) Whenever a fine is imposed under paragraph (2) upon any officer, 

director, employee, agent, or stockholder of an issuer, such fine may 

not be paid, directly or indirectly, by such issuer.

APPENDIX

Endnotes

104

ENDNOTES

1 S. Rep. No. 95-114, at 4 (1977) [hereinafter S. Rep. No. 95-114], 

available at http://www.justice.gov/criminal/fraud/fcpa/history/1977/

senaterpt-95-114.pdf. 

2 Id.; H.R. Rep. No. 95-640, at 4-5 (1977) [hereinafter H. R. Rep. No. 

95-640], available at http://www.justice.gov/criminal/fraud/fcpa/

history/1977/houseprt-95-640.pdf. The House Report made clear 

Congress’s concerns:

The payment of bribes to influence the acts or 

decisions of foreign officials, foreign political parties 

or candidates for foreign political office is unethical. 

It is counter to the moral expectations and values of 

the American public. But not only is it unethical, it 

is bad business as well. It erodes public confidence 

in the integrity of the free market system. It shortcircuits the marketplace by directing business to 

those companies too inefficient to compete in terms 

of price, quality or service, or too lazy to engage in 

honest salesmanship, or too intent upon unloading 

marginal products. In short, it rewards corruption 

instead of efficiency and puts pressure on ethical 

enterprises to lower their standards or risk losing 

business.

Id. 3 See, e.g., U.S. Agency for Int’l Dev., USAID Anticorruption 

Strategy 5-6 (2005), available at http://transition.usaid.gov/policy/

ads/200/200mbo.pdf. The growing recognition that corruption poses 

a severe threat to domestic and international security has galvanized 

efforts to combat it in the United States and abroad. See, e.g., Int’l AntiCorruption and Good Governance Act of 2000, Pub. L. No. 106-309, 

§ 202, 114 Stat. 1090 (codified as amended at 22 U.S.C. §§ 2151-2152 

(2000)) (noting that “[w]idespread corruption endangers the stability 

and security of societies, undermines democracy, and jeopardizes the 

social, political, and economic development of a society. . . . [and that] 

[c]orruption facilitates criminal activities, such as money laundering, 

hinders economic development, inflates the costs of doing business, and 

undermines the legitimacy of the government and public trust”).

4 See Maryse Tremblay & Camille Karbassi, Corruption and Human 

Trafficking 4 (Transparency Int’l, Working Paper No. 3, 2011), available 

at http://issuu.com/transparencyinternational/docs/ti-working_paper_

human_trafficking_28_jun_2011; U.S. Agency for Int’l Dev., 

Foreign Aid in the National Interest 40 (2002), available at

http://pdf.usaid.gov/pdf_docs/PDABW900.pdf (“No problem does 

more to alienate citizens from their political leaders and institutions, 

and to undermine political stability and economic development, than 

endemic corruption among the government, political party leaders, 

judges, and bureaucrats. The more endemic the corruption is, the more 

likely it is to be accompanied by other serious deficiencies in the rule of 

law: smuggling, drug trafficking, criminal violence, human rights abuses, 

and personalization of power.”).

5 President George W. Bush observed in 2006 that “the culture of 

corruption has undercut development and good governance and 

. . . . impedes our efforts to promote freedom and democracy, end 

poverty, and combat international crime and terrorism.” President’s 

Statement on Kleptocracy, 2 Pub. Papers 1504 (Aug. 10, 2006), 

available at http://georgewbush-whitehouse.archives.gov/news/

releases/2006/08/20060810.html. The administrations of former 

President George W. Bush and President Barack Obama both recognized 

the threats posed to security and stability by corruption. For instance, 

in issuing a proclamation restricting the entry of certain corrupt foreign 

public officials, former President George W. Bush recognized “the 

serious negative effects that corruption of public institutions has on the 

United States’ efforts to promote security and to strengthen democratic 

institutions and free market systems. . . .” Proclamation No. 7750, 69 

Fed. Reg. 2287 ( Jan. 14, 2004). Similarly, President Barack Obama’s 

National Security Strategy paper, released in May 2010, expressed the 

administration’s efforts and commitment to promote the recognition that 

“pervasive corruption is a violation of basic human rights and a severe 

impediment to development and global security.” The White House, 

National Security Strategy 38 (2010), available at http://

www.whitehouse.gov/sites/default/files/rss_viewer/national_security_

strategy.pdf. 6 See, e.g., Int’l Chamber of Commerce, et al., Clean Business 

Is Good Business: The Business Case Against Corruption 

(2008), available at http://www.unglobalcompact.org/docs/news_

events/8.1/clean_business_is_good_business.pdf; World Health Org., 

Fact Sheet No. 335, Medicines: Corruption and Pharmaceuticals (Dec. 

2009), available at http://www.who.int/mediacentre/factsheets/fs335/

en/; Daniel Kaufmann, Corruption: The Facts, Foreign Pol’y, Summer 

1997, at 119-20; Paolo Mauro, Corruption and Growth, 110 Q. J. Econ. 

681, 683, 705 (1995) (finding that “corruption lowers private investment 

. . . [and] reduc[es] economic growth . . .”); The World Bank, The 

Data Revolution: Measuring Governance and Corruption, 

(Apr. 8, 2004), available at http://go.worldbank.org/87JUY8GJH0. 7 See, e.g., The Corruption Eruption, Economist (Apr. 29, 2010), 

available at http://www.economist.com/node/16005114 (“The hidden 

costs of corruption are almost always much higher than companies 

imagine. Corruption inevitably begets ever more corruption: bribe-takers 

keep returning to the trough and bribe-givers open themselves up to 

blackmail.”); Daniel Kaufmann and Shang-Jin Wei, Does “Grease Money” 

Speed Up the Wheels of Commerce? 2 (Nat’l Bureau of Econ. Research, 

Working Paper No. 7093, 1999), available at http://www.nber.org/

papers/w7093.pdf (“Contrary to the ‘efficient grease’ theory, we find 
105

that firms that pay more bribes are also likely to spend more, not less, 

management time with bureaucrats negotiating regulations, and face 

higher, not lower, cost of capital.”).

8 For example, in a number of recent enforcement actions, the same 

employees who were directing or controlling the bribe payments were 

also enriching themselves at the expense of the company. See, e.g., 

Complaint, SEC v. Peterson, No. 12-cv-2033 (E.D.N.Y. 2012), ECF 

No. 1, available at http://www.sec.gov/litigation/complaints/2012/

comp-pr2012-78.pdf; Criminal Information, United States v. Peterson, 

No. 12-cr-224 (E.D.N.Y. 2012), ECF No. 7 [hereinafter United States v. 

Peterson], available at http://www.justice.gov/criminal/fraud/fcpa/cases/

petersong/petersong-information.pdf; Plea Agreement, United States v. 

Stanley, No. 08-cr-597 (S.D. Tex. 2008), ECF No. 9 [hereinafter United 

States v. Stanley], available at http://www.justice.gov/criminal/fraud/

fcpa/cases/stanleya/09-03-08stanley-plea-agree.pdf; Plea Agreement, 

United States v. Sapsizian, No. 06-cr-20797 (S.D. Fla. 2007), ECF No. 42 

[hereinafter United States v. Sapsizian], available at http://www.justice.

gov/criminal/fraud/fcpa/cases/sapsizianc/06-06-07sapsizian-plea.pdf.

9 See, e.g., Complaint, SEC v. Tyco Int’l Ltd., 06-cv-2942 (S.D.N.Y. 2006), 

ECF No. 1 [hereinafter SEC v. Tyco Int’l], available at http://www.sec.

gov/litigation/complaints/2006/comp19657.pdf; Complaint, SEC 

v. Willbros Group, Inc., No. 08-cv-1494 (S.D. Tex. 2008), ECF No. 1 

[hereinafter SEC v. Willbros], available at http://www.sec.gov/litigation/

complaints/2008/comp20571.pdf.

10 See Plea Agreement, United States v. Bridgestone Corp., No. 11-cr651 (S.D. Tex. 2011), ECF No. 21, available at http://www.justice.gov/

criminal/fraud/fcpa/cases/bridgestone/10-05-11bridgestone-plea.pdf. 

11 See S. Rep. No. 95-114, at 6; H.R. Rep. 95-640, at 4; see also A. Carl 

Kotchian, The Payoff: Lockheed’s 70-Day Mission to Tokyo, Saturday 

Rev., Jul. 9, 1977, at 7. 12 U.S. Sec. and Exchange Comm., Report of the Securities 

and Exchange Commission on Questionable and Illegal 

Corporate Payments and Practices 2-3 (1976).

13 See H.R. Rep. No. 95-640, at 4-5; S. Rep. No. 95-114, at 3-4. 14 H.R. Rep. No. 95-640, at 4-5; S. Rep. No. 95-114, at 4. The Senate 

Report observed, for instance, that “[m]anagements which resort to 

corporate bribery and the falsification of records to enhance their 

business reveal a lack of confidence about themselves,” while citing the 

Secretary of the Treasury’s testimony that “‘[p]aying bribes—apart from 

being morally repugnant and illegal in most countries—is simply not 

necessary for the successful conduct of business here or overseas.’” Id. 15 See S. Rep. No. 100-85, at 46 (1987) (recounting FCPA’s historical 

background and explaining that “a strong antibribery statute could help 

U.S. corporations resist corrupt demands . . . .”) [hereinafter S. Rep. No. 

100-85].

16 S. Rep. No. 95-114, at 7.

17 Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-

418, § 5003, 102 Stat. 1107, 1415-25 (1988); see also H.R. Rep. No. 

100-576, at 916-24 (1988) (discussing FCPA amendments, including 

changes to standard of liability for acts of third parties) [hereinafter H.R. 

Rep. No. 100-576]. 18 See Omnibus Trade and Competitiveness Act of 1988, § 5003(d). The 

amended statute included the following directive:

It is the sense of the Congress that the President 

should pursue the negotiation of an international 

agreement, among the members of the Organization 

of Economic Cooperation and Development, to 

govern persons from those countries concerning 

acts prohibited with respect to issuers and domestic 

concerns by the amendments made by this section. 

Such international agreement should include a 

process by which problems and conflicts associated 

with such acts could be resolved. 

Id.; see also S. Rep. No. 105-277, at 2 (1998) (describing efforts by 

Executive Branch to encourage U.S. trading partners to enact legislation 

similar to FCPA following 1988 amendments) [hereinafter S. Rep. No. 

105-277]. 

19 Convention on Combating Bribery of Foreign Public Officials in 

International Business Transactions art. 1.1, Dec. 18, 1997, 37 I.L.M. 1 

[hereinafter Anti-Bribery Convention]. The Anti-Bribery Convention 

requires member countries to make it a criminal offense “for any person 

intentionally to offer, promise or give any undue pecuniary or other 

advantage, whether directly or through intermediaries, to a foreign 

public official, for that official or for a third party, in order that the 

official act or refrain from acting in relation to the performance of 

official duties, in order to obtain or retain business or other improper 

advantage in the conduct of international business.” The Convention 

and its commentaries also call on all parties (a) to ensure that aiding and 

abetting and authorization of an act of bribery are criminal offenses, (b) 

to assert territorial jurisdiction “broadly so that an extensive physical 

connection to the bribery act is not required,” and (c) to assert nationality 

jurisdiction consistent with the general principles and conditions of each 

party’s legal system. Id. at art. 1.2, cmts. 25, 26. 20 See International Anti-Bribery and Fair Competition Act of 1998, Pub. 

L. 105-366, 112 Stat. 3302 (1998); see also S. Rep. No. 105-277, at 2-3 

(describing amendments to “the FCPA to conform it to the requirements 

of and to implement the OECD Convention”).

21 There is no private right of action under the FCPA. See, e.g., Lamb v. 

Phillip Morris, Inc., 915 F.2d 1024, 1028-29 (6th Cir. 1990); McLean v. 

Int’l Harvester Co., 817 F.2d 1214, 1219 (5th Cir. 1987).

22 U.S. Dept. of Justice, U.S. Attorneys’ Manual § 9-47.110 

(2008) [hereinafter USAM], available at http://www.justice.gov/usao/

eousa/foia_reading_room/usam/. 23 Go to http://export.gov/worldwide_us/index.asp for more 

information.

24 Additional information about publicly available market research 

and due diligence assistance is available online. See In’l Trade Admin., 

Market Research and Due Diligence, available at http://export.gov/

salesandmarketing/eg_main_018204.asp. The International Company 

Profile reports include a listing of the potential partner’s key officers 

and senior management; banking relationships and other financial 

information about the company; and market information, including 

sales and profit figures and potential liabilities. They are not, however, 

intended to substitute for a company’s own due diligence, and the 

Commercial Service does not offer ICP in countries where Dun & 

Bradstreet or other private sector vendors are already performing this 

service. See In’l Trade Admin., International Company Profile, available at

http://export.gov/salesandmarketing/eg_main_018198.asp. 25 The Commercial Services’ domestic and foreign offices can also be 

found at http://export.gov/usoffices/index.asp and http://export.gov/

worldwide_us/index.asp. 26 This form can be located at http://tcc.export.gov/Report_a_Barrier/

index.asp. 27 See In’l Trade Admin., “Doing Business In” Guides, available at

http://export.gov/about/eg_main_016806.asp. 28 The Business Ethics Manual is available at 

http://www.ita.doc.gov/goodgovernance/business_ethics/manual.asp. 29 Information about the Advocacy Center can be found at http://export.

gov/advocacy. 30 Reports on U.S. compliance with these treaties can be found at http://

www.justice.gov/criminal/fraud/fcpa/intlagree/. 31 See Statement on Signing the International Anti-Bribery and Fair 

Competition Act of 1998, 34 Weekly Comp. Pres. Doc. 2290, 2291 

(Nov. 10, 1998) (“U.S. companies have had to compete on an uneven 

playing field . . . . The OECD Convention . . . is designed to change all 

that. Under the Convention, our major competitors will be obligated to 

criminalize the bribery of foreign public officials in international business 

transactions.”).

32 Colombia is also a member of the Working Group and is expected to 

accede to the Anti-Bribery Convention.

33 OECD, Country Monitoring of the OECD Anti-Bribery Convention, 

available at http://www.oecd.org/document/12/0,3746,

en_2649_34859_35692940_1_1_1_1,00.html. 34 OECD, Phase 3 Country Monitoring of the OECD Anti-Bribery 

Convention, available at http://www.oecd.org/document/31/0,3746,

en_2649_34859_44684959_1_1_1_1,00.html. 35 OECD, Country Reports on the Implementation of the OECD AntiBribery Convention, available at http://www.oecd.org/document/24/0,3

746,en_2649_34859_1933144_1_1_1_1,00.html. 36 The OECD Phase 1, 2, and 3 reports on the United States, as well as 

the U.S. responses to questionnaires, are available at http://www.justice.

gov/criminal/fraud/fcpa/intlagree. 37 See OECD Working Group on Bribery, United States: Phase 3, Report 

on the Application of the Convention on Combating Bribery of Foreign 
APPENDIX

Endnotes

106

Public Officials in International Business Transactions and the 2009 

Revised Recommendation on Combating Bribery in International Business 

Transactions, Oct. 2010, at 61-62 (recommending that the United States 

“[c]onsolidate and summarise publicly available information on the 

application of the FCPA in relevant sources”), available at http://www.

oecd.org/dataoecd/10/49/46213841.pdf. 38 United Nations Convention Against Corruption, Oct. 31, 2003, S. 

Treaty Doc. No. 109-6, 2349 U.N.T.S. 41, available at http://www.

unodc.org/documents/treaties/UNCAC/Publications/Convention/08-

50026_E.pdf [hereinafter UNCAC]. 39 For more information about the UNCAC review mechanism, see 

Mechanism for the Review of Implementation of the United Nations 

Convention Against Corruption, United Nations Office on Drugs 

and Crime, available at http://www.unodc.org/documents/treaties/

UNCAC/Publications/ReviewMechanism-BasicDocuments/

Mechanism_for_the_Review_of_Implementation_-_Basic_

Documents_-_E.pdf. 40 For information about the status of UNCAC, see United Nations 

Office on Drugs and Crime, UNCAC Signature and Ratification Status as 

of 12 July 2012, available at http://www.unodc.org/unodc/en/treaties/

CAC/signatories.html. 41 Organization of American States, Inter-American Convention Against 

Corruption, Mar. 29, 1996, 35 I.L.M. 724, available at http://www.oas.

org/juridico/english/treaties/b-58.html. For additional information 

about the status of the IACAC, see Organization of American States, 

Signatories and Ratifications, available at http://www.oas.org/juridico/

english/Sigs/b-58.html. 42 Council of Europe, Criminal Law Convention on Corruption, Jan. 27, 

1999, 38 I.L.M. 505, available at http://conventions.coe.int/Treaty/en/

Treaties/html/173.htm. 43 For additional information about GRECO, see Council of Europe, 

Group of States Against Corruption, available at http://www.coe.int/t/

dghl/monitoring/greco/default_EN.asp. The United States has not yet 

ratified the GRECO convention. 

44 The text of the FCPA statute is set forth in the appendix. See also Jury 

Instructions at 21-27, United States v. Esquenazi, No. 09-cr-21010 (S.D. 

Fla. Aug. 5, 2011), ECF No. 520 [hereinafter United States v. Esquenazi] 

(FCPA jury instructions); Jury Instructions at 14-25, United States v. 

Kay, No. 01-cr-914 (S.D. Tex. Oct. 6, 2004), ECF No. 142 (same), aff ’d, 

513 F.3d 432, 446-52 (5th Cir. 2007), reh’g denied, 513 F.3d 461 (5th 

Cir. 2008) [hereinafter United States v. Kay]; Jury Instructions at 76-87, 

United States v. Jefferson, No. 07-cr-209 (E.D. Va. July 30, 2009), ECF 

No. 684 [hereinafter United States v. Jefferson] (same); Jury Instructions 

at 8-10, United States v. Green, No. 08-cr-59 (C.D. Cal. Sept. 11, 

2009), ECF No. 288 [hereinafter United States v. Green] (same); Jury 

Instructions at 23-29, United States v. Bourke, No. 05-cr-518 (S.D.N.Y. 

July 2009) [hereinafter United States v. Bourke] (same, not docketed); 

Jury Instructions at 2-8, United States v. Mead, No. 98-cr-240 (D.N.J. 

Oct. 1998) [hereinafter United States v. Mead] (same). 45 The provisions of the FCPA applying to issuers are part of the Securities 

Exchange Act of 1934 [hereinafter Exchange Act]. The anti-bribery 

provisions can be found at Section 30A of the Exchange Act, 15 U.S.C. 

§ 78dd-1.

46 15 U.S.C. § 78l. 47 15 U.S.C. § 78o(d). 48 SEC enforcement actions have involved a number of foreign 

issuers. See, e.g., Complaint, SEC v. Magyar Telekom Plc., et al., No. 

11-cv-9646 (S.D.N.Y. Dec. 29, 2011), ECF No. 1 (German and 

Hungarian companies), available at http://www.sec.gov/litigation/

complaints/2011/comp22213-co.pdf; Complaint, SEC v. AlcatelLucent, S.A., No. 10-cv-24620 (S.D. Fla. Dec. 27, 2010), ECF No. 

1 [hereinafter SEC v. Alcatel-Lucent] (French company), available at

http://www.sec.gov/litigation/complaints/2010/comp21795.pdf; 

Complaint, SEC v. ABB, Ltd., No. 10-cv-1648 (D.D.C. Sept. 29, 2010), 

ECF No. 1 [hereinafter SEC v. ABB] (Swiss company), available at

http://www.sec.gov/litigation/complaints/2010/comp-pr2010-175.

pdf; Complaint, SEC v. Daimler AG, No. 10-cv-473 (D.D.C. Apr. 1, 

2010), ECF No. 1 [hereinafter SEC v. Daimler AG] (German company), 

available at http://sec.gov/litigation/complaints/2010/comppr2010-51.pdf; Complaint, SEC v. Siemens Aktiengesellschaft, No. 08-

cv-2167 (D.D.C. Dec. 12, 2008), ECF No. 1 [hereinafter SEC v. Siemens

AG] (Germany company), available at http://www.sec.gov/litigation/

complaints/2008/comp20829.pdf. Certain DOJ enforcement actions 

have likewise involved foreign issuers. See, e.g., Criminal Information, 

United States v. Magyar Telekom, Plc., No. 11-cr-597 (E.D. Va. Dec. 29, 

2011), ECF No. 1, available at http://www.justice.gov/criminal/fraud/

fcpa/cases/magyar-telekom/2011-12-29-information-magyar-telekom.

pdf; Non-Pros. Agreement, In re Deutsche Telekom AG (Dec. 29, 2011), 

available at http://www.justice.gov/criminal/fraud/fcpa/cases/deutschetelekom/2011-12-29-deustche-telekom-npa.pdf; Criminal Information, 

United States v. Alcatel-Lucent, S.A., No. 10-cr-20907 (S.D. Fla. Dec. 

27, 2010), ECF No. 1 [hereinafter United States v. Alcatel-Lucent, S.A.], 

available at http://www.justice.gov/criminal/fraud/fcpa/cases/alcateletal/12-27-10alcatel-et-al-info.pdf; Criminal Information, United 

States v. Daimler AG, No. 10-cr-63 (D.D.C. Mar. 22, 2010), ECF No. 

1 [hereinafter United States v. Daimler AG], available at http://www.

justice.gov/criminal/fraud/fcpa/cases/daimler/03-22-10daimlerag-info.

pdf; Criminal Information, United States v. Siemens Aktiengesellschaft, 

No. 08-cr-367 (D.D.C. Dec. 12, 2008), ECF No. 1 [hereinafter United 

States v. Siemens AG], available at http://www.justice.gov/criminal/

fraud/fcpa/cases/siemens/12-12-08siemensakt-info.pdf.

49 See http://www.sec.gov/divisions/corpfin/internatl/companies.shtml. 50 See, e.g., Complaint, SEC v. Turner, et al., No. 10-cv-1309 (D.D.C. 

Aug. 4, 2010), ECF No. 1 [hereinafter, SEC v. Turner] (charging a 

Lebansese/Canadian agent of a UK company listed on U.S. exchange 

with violating the FCPA for bribes of Iraqi officials), available at http://

www.sec.gov/litigation/complaints/2010/comp21615.pdf; Indictment, 

United States v. Naaman, No. 08-cr-246 (D.D.C. Aug. 7, 2008), ECF 

No. 3 [hereinafter United States v. Naaman] (same), available at http://

www.justice.gov/criminal/fraud/fcpa/cases/naamano/08-07-08naamanindict.pdf; Complaint, SEC v. Elkin, et al., No. 10-cv-661 (D.D.C. 

Apr. 28, 2010), ECF No. 1 [hereinafter SEC v. Elkin] (charging an 

employee of U.S. publicly traded company with violating FCPA for 

bribery of officials in Kyrgyzstan), available at http://www.sec.gov/

litigation/complaints/2010/comp21509.pdf; Criminal Information, 

United States v. Elkin, No. 10-cr-15 (W.D. Va. Aug. 3, 2010), ECF No. 

8 [hereinafter United States v. Elkin] (same), available at http://www.

justice.gov/criminal/fraud/fcpa/cases/elkin/08-03-10elkin-information.

pdf; Indictment, United States v. Tesler, et al., No. 09-cr-98 (S.D. Tex. 

Feb. 17, 2009), ECF No. 1 [hereinafter United States v. Tesler] (charging 

a British agent of U.S. publicly traded company with violating the 

FCPA for bribery of Nigerian officials), available at http://www.justice.

gov/criminal/fraud/fcpa/cases/tesler/tesler-indict.pdf; Superseding 

Indictment, United States v. Sapsizian, et al., supra note 8, ECF 32 

(charging a French employee of French company traded on a U.S. 

exchange with violating the FCPA).

51 15 U.S.C. § 78dd-2.

52 15 U.S.C. § 78dd-2(h)(1).

53 15 U.S.C. § 78dd-2(a). See, e.g., Superseding Indictment, United States 

v. Nexus Technologies, et al., No. 08-cr-522 (E.D. Pa. Oct. 28, 2009), 

ECF No. 106 [hereinafter United States v. Nexus Technologies] (private 

U.S. company and corporate executives charged with violating FCPA for 

bribes paid in Vietnam), available at http://www.justice.gov/criminal/

fraud/fcpa/cases/nguyenn/09-04-08nguyen-indict.pdf; Indictment, 

United States v. Esquenazi, supra note 44, (private U.S. company and 

corporate executives charged with FCPA violations for bribes paid in 

Haiti), available at http://www.justice.gov/criminal/fraud/fcpa/cases/

esquenazij/12-08-09esquenazi-indict.pdf.

54 15 U.S.C. § 78dd-3(a). As discussed above, foreign companies that 

have securities registered in the United States or that are required to file 

periodic reports with the SEC, including certain foreign companies with 

American Depository Receipts, are covered by the FCPA’s anti-bribery 

provisions governing “issuers” under 15 U.S.C. § 78dd-1.
107

55 See International Anti-Bribery and Fair Competition Act of 1998, Pub. 

L. 105-366, 112 Stat. 3302 (1998); 15 U.S.C. § 78dd-3(a); see also U.S. 

Dept. of Justice, Criminal Resource Manual § 9-1018 (Nov. 

2000) (the Department “interprets [Section 78dd-3(a)] as conferring 

jurisdiction whenever a foreign company or national causes an act to be 

done within the territory of the United States by any person acting as 

that company’s or national’s agent.”). This interpretation is consistent 

with U.S. treaty obligations. See S. Rep. No. 105-2177 (1998) (expressing 

Congress’ intention that the 1998 amendments to the FCPA “conform 

it to the requirements of and to implement the OECD Convention.”); 

Anti-Bribery Convention at art. 4.1, supra note 19 (“Each Party shall 

take such measures as may be necessary to establish its jurisdiction over 

the bribery of a foreign public official when the offence is committed in 

whole or in part in its territory.”).

56 15 U.S.C. § 78dd-3(a); see, e.g., Criminal Information, United States v. 

Alcatel-Lucent France, S.A., et al., No. 10-cr-20906 (S.D. Fla. Dec. 27, 

2010), ECF No. 1 [hereinafter United States v. Alcatel-Lucent France] 

(subsidiary of French publicly traded company convicted of conspiracy 

to violate FCPA), available at http://www.justice.gov/criminal/fraud/

fcpa/cases/alcatel-lucent-sa-etal/12-27-10alcatel-et-al-info.pdf; Criminal 

Information, United States v. DaimlerChrysler Automotive Russia 

SAO, No. 10-cr-64 (D.D.C. Mar. 22, 2010), ECF No. 1 (subsidiary of 

German publicly traded company convicted of violating FCPA), available 

at http://www.justice.gov/criminal/fraud/fcpa/cases/daimler/03-22-

10daimlerrussia-info.pdf; Criminal Information, United States v. Siemens 

S.A. (Argentina), No. 08-cr-368 (D.D.C. Dec. 12, 2008), ECF No. 1 

(subsidiary of German publicly traded company convicted of violating 

FCPA), available at http://www.justice.gov/criminal/fraud/fcpa/cases/

siemens/12-12-08siemensargen-info.pdf. 57 See 15 U.S.C. §§ 78dd-2(h)(5) (defining “interstate commerce”), 78dd3(f )(5) (same); see also 15 U.S.C. §78c(a)(17). 58 15 U.S.C. §§ 78dd-2(h)(5), 78dd-3(f )(5).

59 See 15 U.S.C. § 78dd-3. 60 Criminal Information, United States v. JGC Corp., No. 11-cr-260 

(S.D. Tex. Apr. 6, 2011), ECF No. 1 [hereinafter United States v. JGC 

Corp.], available at http://www.justice.gov/criminal/fraud/fcpa/cases/

jgc-corp/04-6-11jgc-corp-info.pdf; Criminal Information, United States 

v. Snamprogetti Netherlands B.V., No. 10-cr-460 (S.D. Tex. Jul. 7, 2010), 

ECF No. 1 [hereinafter United States v. Snamprogetti], available at

http://www.justice.gov/criminal/fraud/fcpa/cases/snamprogetti/07-07-

10snamprogetti-info.pdf. 61 See 15 U.S.C. §§ 78dd-1(g) (“irrespective of whether such issuer or such 

officer, director, employee, agent, or stockholder makes use of the mails 

or any means or instrumentality of interstate commerce in furtherance 

of such offer, gift, payment, promise, or authorization”), 78dd-2(i)

(1) (“irrespective of whether such United States person makes use of 

the mails or any means or instrumentality of interstate commerce in 

furtherance of such offer, gift, payment, promise, or authorization”).

62 S. Rep. No. 105-277 at 2 (“[T]he OECD Convention calls on parties 

to assert nationality jurisdiction when consistent with national legal 

and constitutional principles. Accordingly, the Act amends the FCPA 

to provide for jurisdiction over the acts of U.S. businesses and nationals 

in furtherance of unlawful payments that take place wholly outside 

the United States. This exercise of jurisdiction over U.S. businesses and 

nationals for unlawful conduct abroad is consistent with U.S. legal 

and constitutional principles and is essential to protect U.S. interests 

abroad.”).

63 Id. at 2-3. 64 15 U.S.C. §§ 78dd-1(a), 78dd-2(a), 78dd-3(a).

65 See H.R. Rep. No. 95-831, at 12 (referring to “business purpose” test). 66 See, e.g., Complaint, SEC v. Siemens AG, supra note 48; Criminal 

Information, United States v. Siemens AG, supra note 48. 67 In amending the FCPA in 1988, Congress made clear that the business 

purpose element, and specifically the “retaining business” prong, was 

meant to be interpreted broadly:

The Conferees wish to make clear that the reference 

to corrupt payments for “retaining business” in 

present law is not limited to the renewal of contracts 

or other business, but also includes a prohibition 

against corrupt payments related to the execution 

or performance of contracts or the carrying out of 

existing business, such as a payment to a foreign 

official for the purpose of obtaining more favorable 

tax treatment. The term should not, however, be 

construed so broadly as to include lobbying or other 

normal representations to government officials.

H.R. Rep. No. 100-576, at 1951-52 (internal citations omitted). 68 See, e.g., Complaint, SEC v. Panalpina, Inc., No. 10-cv-4334 (S.D. Tex. 

Nov. 4, 2010), ECF No. 1 [hereinafter SEC v. Panalpina, Inc.], available 

at http://www.sec.gov/litigation/complaints/2010/comp21727.pdf; 

Criminal Information, United States v. Panalpina, Inc., No. 10-cr765 (S.D. Tex. Nov. 4, 2010), ECF No. 1 [hereinafter United States v. 

Panalpina, Inc.], available at http://www.justice.gov/criminal/fraud/

fcpa/cases/panalpina-inc/11-04-10panalpina-info.pdf; Criminal 

Information, United States v. Panalpina World Transport (Holding) 

Ltd., No. 10-cr-769 (S.D. Tex. Nov. 4, 2010), ECF No. 1, available 

at http://www.justice.gov/criminal/fraud/fcpa/cases/panalpinaworld/11-04-10panalpina-world-info.pdf; see also Press Release, U.S. 

Sec. and Exchange Comm., SEC Charges Seven Oil Services and 

Freight Forwarding Companies for Widespread Bribery of Customs 

Officials (Nov. 4, 2010) (“The SEC alleges that the companies bribed 

customs officials in more than 10 countries in exchange for such perks 

as avoiding applicable customs duties on imported goods, expediting 

the importation of goods and equipment, extending drilling contracts, 

and lowering tax assessments.”), available at http://www.sec.gov/

news/press/2010/2010-214.htm; Press Release, U.S. Dept. of Justice, 

Oil Services Companies and a Freight Forwarding Company Agree 

to Resolve Foreign Bribery Investigations and to Pay More Than $156 

Million in Criminal Penalties (Nov. 4, 2010) (logistics provider and its 

subsidiary engaged in scheme to pay thousands of bribes totaling at least 

$27 million to numerous foreign officials on behalf of customers in oil 

and gas industry “to circumvent local rules and regulations relating to 

the import of goods and materials into numerous foreign jurisdictions”), 

available at http://www.justice.gov/opa/pr/2010/November/10-

crm-1251.html. 69 United States v. Kay, 359 F.3d 738, 755-56 (5th Cir. 2004).

70 Id. at 749. Indeed, the Kay court found that Congress’ explicit 

exclusion of facilitation payments from the scope of the FCPA was 

evidence that “Congress intended for the FCPA to prohibit all other

illicit payments that are intended to influence non-trivial official foreign 

action in an effort to aid in obtaining or retaining business for some 

person.” Id. at 749-50 (emphasis added). 71 Id. at 750. 72 Id. at 749-55. 73 Id. at 756 (“It still must be shown that the bribery was intended to 

produce an effect—here, through tax savings—that would ‘assist in 

obtaining or retaining business.’”).

74 The FCPA does not explicitly define “corruptly,” but in drafting the 

statute Congress adopted the meaning ascribed to the same term in the 

domestic bribery statute, 18 U.S.C. § 201(b). See H.R. Rep. No. 95-640, 

at 7.

75 The House Report states in full:

The word “corruptly” is used in order to make 

clear that the offer, payment, promise, or gift, must 

be intended to induce the recipient to misuse 

his official position; for example, wrongfully to 

direct business to the payor or his client, to obtain 

preferential legislation or regulations, or to induce a 

foreign official to fail to perform an official function. 

The word “corruptly” connotes an evil motive or 

purpose such as that required under 18 U.S.C. 

201(b) which prohibits domestic bribery. As in 

18 U.S.C. 201(b), the word “corruptly” indicates 

an intent or desire wrongfully to influence the 

recipient. It does not require that the act [be] fully 

consummated or succeed in producing the desired 

outcome.

Id. The Senate Report provides a nearly identical explanation of the 

meaning of the term:

The word “corruptly” is used in order to make 

clear that the offer, payment, promise, or gift, must 

be intended to induce the recipient to misuse 

his official position in order to wrongfully direct 

business to the payor or his client, or to obtain 
APPENDIX

Endnotes

108

preferential legislation or a favorable regulation. 

The word “corruptly” connotes an evil motive or 

purpose, an intent to wrongfully influence the 

recipient.

S.Rep. No. 95-114, at 10. 76 See 15 U.S.C. §§ 78dd-1(a), 78dd-2(a), 78dd-3(a). 77 See, e.g., Complaint, SEC v. Monsanto Co., No. 05-cv-14 (D.D.C. 

Jan. 6, 2005) (among other things, the company paid a $50,000 bribe 

to influence an Indonesian official to repeal an unfavorable law, which 

was not repealed despite the bribe), available at http://www.sec.gov/

litigation/complaints/comp19023.pdf; Criminal Information, United 

States v. Monsanto Co., No. 05-cr-8 (D.D.C. Jan. 6, 2005), available at

http://www.justice.gov/criminal/fraud/fcpa/cases/monsanto-co/01-06-

05monsanto-info.pdf. 78 Jury instructions in FCPA cases have defined “corruptly” consistent 

with the definition found in the legislative history. See, e.g., Jury 

Instructions at 22-23, United States v. Esquenazi, supra note 44; Jury 

Instructions at 10, United States v. Green, supra note 44; Jury Instructions 

at 35, United States v. Jefferson, supra note 44; Jury Instructions at 25, 

United States v. Bourke, supra note 44; Jury Instructions at 17, United 

States v. Kay, supra note 44; Jury Instructions at 5, United States v. Mead, 

supra note 44. 79 See Complaint, SEC v. Innospec, Inc., No. 10-cv-448 (D.D.C. Mar. 

18, 2010), ECF No. 1 [hereinafter SEC v. Innospec], available at http://

www.sec.gov/litigation/complaints/2010/comp21454.pdf; Criminal 

Information at 8, United States v. Innospec Inc., No. 10-cr-61 (D.D.C. 

Mar. 17, 2010), ECF No. 1 [hereinafter United States v. Innospec], 

available at http://www.justice.gov/criminal/fraud/fcpa/cases/innospecinc/03-17-10innospec-info.pdf. 80 See Complaint, SEC v. Innospec, supra note 79; Criminal Information, 

United States v. Innospec, supra note 79. 81 See 15 U.S.C. §§ 78dd-1(c)(2)(A), 78dd-2(g)(2)(A), and 78dd-3(3)(2)

(A).

82 Compare 15 U.S.C. § 78ff(c)(1)(A) (corporate criminal liability under 

issuer provision) with § 78ff(c)(2)(A) (individual criminal liability under 

issuer provision); compare 15 U.S.C. § 78dd-2(g)(1)(A) (corporate 

criminal liability under domestic concern provision) with § 78dd-2(g)

(2)(A) (individual criminal liability under issuer provision); compare 

15 U.S.C. § 78dd-3(e)(1)(A) (corporate criminal liability for territorial 

provision) with § 78dd-3(e)(2)(A) (individual criminal liability for 

territorial provision).  However, companies still must act corruptly.  

See Section 30A(a), 15 U.S.C. § 78dd-1(a); 15 U.S.C. §§ 78dd-2(a), 

78dd-3(a).

83 United States v. Kay, 513 F.3d 432, 448 (5th Cir. 2007); see also

Jury Instructions at 38, United States v. Esquenazi, supra note 44; Jury 

Instructions at 10, United States v. Green, supra note 44; Jury Instructions 

at 35, United States v. Jefferson, supra note 44; Jury Instructions at 25, 

United States v. Bourke, supra note 44; Jury Instructions at 5, United States 

v. Mead, supra note 44. 84 Bryan v. United States, 524 U.S. 184, 191-92 (1998) (construing 

“willfully” in the context of 18 U.S.C. § 924(a)(1)(A)) (quoting Ratzlaf v. 

United States, 510 U.S. 135, 137 (1994)); see also Kay, 513 F.3d at 446-

51 (discussing Bryan and term “willfully” under the FCPA). 85 Kay, 513 F.3d at 447-48; Stichting Ter Behartiging Van de Belangen 

Van Oudaandeelhouders In Het Kapitaal Van Saybolt Int’l B.V. v. 

Schreiber, 327 F.3d 173, 181 (2d Cir. 2003). 

86 The phrase “anything of value” is not defined in the FCPA, but the 

identical phrase under the domestic bribery statute has been broadly 

construed to include both tangible and intangible benefits. See, e.g., 

United States v. Moore, 525 F.3d 1033, 1048 (11th Cir. 2008) (rejecting 

defendant’s objection to instruction defining sex as a “thing of value,” 

which “unambiguously covers intangible considerations”); United 

States v. Gorman, 807 F.2d 1299, 1304-05 (6th Cir. 1986) (holding that 

loans and promises of future employment are “things of value”); United 

States v. Williams, 705 F.2d 603, 622-23 (2d Cir. 1983) (approving jury 

instruction that stock could be a “thing of value” if defendant believed it 

had value, even though the shares had no commercial value, and noting 

that “[t]he phrase ‘anything of value’ in bribery and related statutes has 

consistently been given a broad meaning”).

87 Section 30A(a), 15 U.S.C. § 78dd-1(a); 15 U.S.C. §§ 78dd-2(a), 78dd3(a) (emphasis added).

88 Like the FCPA, the domestic bribery statute, 18 U.S.C. § 201, prohibits 

giving, offering, or promising “anything of value.” Numerous domestic 

bribery cases under Section 201 have involved “small” dollar bribes. 

See, e.g., United States v. Franco, 632 F.3d 880, 882-84 (5th Cir. 2011) 

(affirming bribery convictions of inmate for paying correctional officer 

$325 to obtain cell phone, food, and marijuana, and noting that 18 

U.S.C. § 201 does not contain minimum monetary threshold); United 

States v. Williams, 216 F.3d 1099, 1103 (D.C. Cir. 2000) (affirming 

bribery conviction for $70 bribe to vehicle inspector); United States v. 

Traitz, 871 F.2d 368, 396 (3rd Cir. 1989) (affirming bribery conviction 

for $100 bribe paid to official of Occupational Health and Safety 

Administration); United States v. Hsieh Hui Mei Chen, 754 F.2d 817, 

822 (9th Cir. 1985) (affirming bribery convictions including $100 bribe 

to immigration official); United States v. Bishton, 463 F.2d 887, 889 

(D.C. Cir. 1972) (affirming bribery conviction for $100 bribe to division 

chief of District of Columbia Sewer Operations Division).

89 Complaint, SEC v. Daimler AG, supra note 48; Criminal Information, 

United States v. Daimler AG, supra note 48. 90 Complaint, SEC v. Halliburton Company and KBR, Inc., No. 09-cv399 (S.D. Tex. Feb. 11, 2009), ECF No 1 [hereinafter SEC v. Halliburton 

and KBR], available at http://www.sec.gov/litigation/complaints/2009/

comp20897.pdf; Criminal Information, United States v. Kellogg 

Brown & Root LLC, No. 09-cr-71, ECF No. 1 (S.D. Tex. Feb. 6, 2009) 

[hereinafter United States v. KBR], available at http://www.justice.gov/

criminal/fraud/fcpa/cases/kelloggb/02-06-09kbr-info.pdf. 91 Complaint, SEC v. Halliburton and KBR, supra note 90; Criminal 

Information, United States v. KBR, supra note 90. 92 See, e.g., Complaint, SEC v. RAE Sys. Inc., No. 10-cv-2093 (D.D.C. 

Dec. 10, 2010), ECF No. 1 [hereinafter SEC v. RAE Sys., Inc.] (fur 

coat, among other extravagant gifts), available at http://www.sec.gov/

litigation/complaints/2010/comp21770.pdf; Non-Pros. Agreement, 

In re RAE Sys. Inc. (Dec. 10, 2010) [hereinafter In re RAE Sys. Inc.]

(same), available at http://www.justice.gov/criminal/fraud/fcpa/cases/

rae-systems/12-10-10rae-systems.pdf; Complaint, SEC v. Daimler AG, 

supra note 48 (armored Mercedes Benz worth €300,000); Criminal 

Information, United States v. Daimler AG, supra note 48 (same). 93 See Complaint, SEC v. ABB Ltd, No. 04-cv-1141 (D.D.C. July 

6, 2004), ECF No. 1, available at http://www.sec.gov/litigation/

complaints/comp18775.pdf; Criminal Information, United States v. 

ABB Vetco Gray Inc., et al., No. 04-cr-279 (S.D. Tex. June 22, 2004), 

ECF No. 1 [hereinafter United States v. ABB Vetco Gray], available 

at http://www.justice.gov/criminal/fraud/fcpa/cases/abb/06-22-

04abbvetco-info.pdf. 94 Complaint, SEC v. UTStarcom, Inc., No. 09-cv-6094 (N.D. Cal. Dec. 

31, 2009), ECF No. 1 [hereinafter SEC v. UTStarcom], available at

http://www.sec.gov/litigation/complaints/2009/comp21357.pdf; NonPros. Agreement, In re UTStarcom Inc. (Dec. 31, 2009) [hereinafter In re 

UTStarcom], available at http://www.justice.gov/criminal/fraud/fcpa/

cases/utstarcom-inc/12-31-09utstarcom-agree.pdf. 95 Complaint, SEC v. UTStarcom, supra note 94; Non-Pros. Agreement, 

In re UTStarcom, supra note 94. 96 Complaint, SEC v. UTStarcom, supra note 94; Non-Pros. Agreement, 

In re UTStarcom, supra note 94. 97 Complaint, SEC v. Lucent Technologies Inc., No. 07-cv-2301 (D.D.C. 

Dec. 21, 2007), ECF No.1 [hereinafter SEC v. Lucent], available at

http://www.sec.gov/litigation/complaints/2007/comp20414.pdf; NonPros. Agreement, In re Lucent Technologies (Nov. 14, 2007) [hereinafter 

In re Lucent], available at http://www.justice.gov/criminal/fraud/fcpa/

cases/lucent-tech/11-14-07lucent-agree.pdf. 98 Complaint, SEC v. Lucent, supra note 97; Non-Pros. Agreement, In re 

Lucent, supra note 97. 99 The company consented to the entry of a final judgment permanently 
109

enjoining it from future violations of the books and records and internal 

controls provisions and paid a civil penalty of $1,500,000. Complaint, 

SEC v. Lucent, supra note 97. Additionally, the company entered into a 

non-prosecution agreement with DOJ and paid a $1,000,000 monetary 

penalty. Non-Pros. Agreement, In re Lucent, supra note 97. 100 United States v. Liebo, 923 F.2d 1308, 1311 (8th Cir. 1991). 101 Judgment, United States v. Liebo, No. 89-cr-76 (D. Minn. Jan. 31, 

1992), available at http://www.justice.gov/criminal/fraud/fcpa/cases/

liebor/1992-01-31-liebor-judgment.pdf. 102 Complaint, SEC v. Schering-Plough Corp., No. 04-cv-945 (D.D.C. 

June 9, 2004), ECF No. 1, available at http://www.sec.gov/litigation/

complaints/comp18740.pdf; Admin. Proceeding Order, In the Matter 

of Schering-Plough Corp., Exchange Act Release No. 49838 ( June 9, 

2004) (finding that company violated FCPA accounting provisions and 

imposing $500,000 civil monetary penalty), available at http://www.sec.

gov/litigation/admin/34-49838.htm. 103 FCPA opinion procedure releases can be found at http://www.

justice.gov/criminal/fraud/fcpa/. In the case of the company seeking to 

contribute the $1.42 million grant to a local MFI, DOJ noted that it had 

undertaken each of these due diligence steps and controls, in addition to 

others, that would minimize the likelihood that anything of value would 

be given to any officials of the Eurasian country. U.S. Dept. of Justice, 

FCPA Op. Release 10-02 ( July 16, 2010), available at http://www.

justice.gov/criminal/fraud/fcpa/opinion/2010/1002.pdf. 104 U.S. Dept. of Justice, FCPA Op. Release 95-01 ( Jan. 11, 

1995), available at http://www.justice.gov/criminal/fraud/fcpa/

opinion/1995/9501.pdf. 105 Id. 106 Id. 107 U.S. Dept. of Justice, FCPA Op. Release 97-02 (Nov. 5, 

1997), available at http://www.justice.gov/criminal/fraud/fcpa/

opinion/1997/9702.pdf; U.S. Dept. of Justice, FCPA Op. Release

06-01 (Oct. 16, 2006), available at http://www.justice.gov/criminal/

fraud/fcpa/opinion/2006/0601.pdf. 108 U.S. Dept. of Justice, FCPA Op. Release 06-01 (Oct. 16, 2006). 109 Id. 110 Id. 111 See Section 30A(a)(1)-(3) of the Exchange Act, 15 U.S.C. § 78dd-1(a)

(1)-(3); 15 U.S.C. §§ 78dd-2(a)(1)-(3), 78dd-3(a)(1)-(3).

112 Section 30A(f )(1)(A) of the Exchange Act, 15 U.S.C. § 78dd-1(f )(1)

(A); 15 U.S.C. §§ 78dd-2(h)(2)(A), 78dd-3(f )(2)(A).

113 Under the FCPA, any person “acting in an official capacity for 

or on behalf of ” a foreign government, a department, agency, or 

instrumentality thereof, or a public international organization, is a 

foreign official. Section 30A(f )(1)(A), 15 U.S.C. § 78dd-1(f )(1)(A); 15 

U.S.C. §§ 78dd-2(h)(2)(A), 78dd-2(f )(2)(A). See also U.S. Dept. of 

Justice, FCPA Op. Release No. 10-03, at 2 (Sept. 1, 2010), available 

at http://www.justice.gov/criminal/fraud/fcpa/opinion/2010/1003.pdf

(listing safeguards to ensure that consultant was not acting on behalf of 

foreign government).

114 But see Sections 30A(b) and f(3)(A) of the Exchange Act, 15 U.S.C. § 

78dd-1(b) & (f )(3); 15 U.S.C. §§ 78dd-2(b) & (h)(4), 78dd-3(b) & (f )

(4) (facilitating payments exception).

115 Even though payments to a foreign government may not violate the 

anti-bribery provisions of the FCPA, such payments may violate other 

U.S. laws, including wire fraud, money laundering, and the FCPA’s 

accounting provisions. This was the case in a series of matters brought by 

DOJ and SEC involving kickbacks to the Iraqi government through the 

United Nations Oil-for-Food Programme. See, e.g., Complaint, SEC v. 

Innospec, supra note 79; Criminal Information, United States v. Innospec, 

supra note 79; Complaint, SEC v. Novo Nordisk A/S, No. 09-cv-862 

(D.D.C. May 11, 2009), ECF No. 1, available at http://www.sec.gov/

litigation/complaints/2009/comp21033.pdf; Criminal Information, 

United States v. Novo Nordisk A/S, No. 09-cr-126 (D.D.C. May 11, 

2009), ECF No. 1, available at http://www.justice.gov/criminal/

fraud/fcpa/cases/nordiskn/05-11-09novo-info.pdf; Complaint, 

SEC v. Ingersoll-Rand Company Ltd., No. 07-cv-1955 (D.D.C. Oct. 

31, 2007), ECF No. 1, available at http://www.sec.gov/litigation/

complaints/2007/comp20353.pdf; Criminal Information, United States 

v. Ingersoll-Rand Italiana SpA, No. 07-cr-294 (D.D.C. Oct. 31, 2007), 

ECF No. 1, available at http://www.justice.gov/criminal/fraud/fcpa/

cases/ingerand-italiana/10-31-07ingersollrand-info.pdf; Complaint, 

SEC v. York Int’l Corp., No. 07-cv-1750 (D.D.C. Oct. 1, 2007), ECF 

No. 1 [hereinafter SEC v. York Int’l Corp.], available at http://www.sec.

gov/litigation/complaints/2007/comp20319.pdf; Criminal Information, 

United States v. York Int’l Corp., No. 07-cr-253 (D.D.C. Oct. 1, 2007), 

ECF No. 1 [hereinafter United States v. York Int’l Corp.], available at

http://www.justice.gov/criminal/fraud/fcpa/cases/york/10-01-07yorkinfo.pdf; Complaint, SEC v. Textron Inc., No. 07-cv-1505 (D.D.C. Aug. 

23, 2007), ECF No. 1 [hereinafter SEC v. Textron], available at http://

www.sec.gov/litigation/complaints/2007/comp20251.pdf; Non-Pros. 

Agreement, In re Textron Inc. (Aug. 23, 2007), available at http://www.

justice.gov/criminal/fraud/fcpa/cases/textron-inc/08-21-07textronagree.pdf. DOJ has issued opinion procedure releases concerning 

payments (that were, in essence, donations) to government agencies or 

departments. See U.S. Dept. of Justice, FCPA Op. Release 09-01 

(Aug. 3, 2009) (involving donation of 100 medical devices to foreign 

government), available at http://www.justice.gov/criminal/fraud/

fcpa/opinion/2009/0901.pdf; U.S. Dept. of Justice, FCPA Op. 

Release 06-01 (Oct. 16, 2006) (involving contribution of $25,000 to 

regional customs department to pay incentive rewards to improve local 

enforcement of anti-counterfeiting laws), available at http://www.justice.

gov/criminal/fraud/fcpa/opinion/2006/0601.pdf. 116 The United States has some state-owned entities, like the Tennessee 

Valley Authority, that are instrumentalities of the government. McCarthy 

v. Middle Tenn. Elec. Membership Corp., 466 F.3d 399, 411 n.18 

(6th Cir. 2006) (“[T]here is no question that TVA is an agency and 

instrumentality of the United States.”) (internal quotes omitted).

117 During the period surrounding the FCPA’s adoption, state-owned 

entities held virtual monopolies and operated under state-controlled 

price-setting in many national industries around the world. See generally 

World Bank, Bureaucrats in Business: The Economics 

and Politics of Government Ownership, World Bank 

Policy Research Report at 78 (1995); Sunita Kikeri and 

Aishetu Kolo, State Enterprises, The World Bank Group

(Feb. 2006), available at http://rru.worldbank.org/documents/

publicpolicyjournal/304Kikeri_Kolo.pdf. 118 Id. at 1 (“[A]fter more than two decades of privatization, government 

ownership and control remains widespread in many regions—and in 

many parts of the world still dominates certain sectors.”).

119 To date, consistent with the approach taken by DOJ and SEC, all 

district courts that have considered this issue have concluded that this is 

an issue of fact for a jury to decide. See Order, United States v. Carson, 

2011 WL 5101701, No. 09-cr-77 (C.D. Cal. May 18, 2011), ECF No. 

373 [hereinafter United States v. Carson]; United States v. Aguilar, 783 

F. Supp. 2d 1108 (C.D. Cal. 2011); Order, United States v. Esquenazi, 

supra note 44, ECF No. 309; see also Order, United States v. O’Shea, No. 

09-cr-629 (S.D. Tex. Jan. 3, 2012), ECF No. 142; Order, United States 

v. Nguyen, No. 08-cr-522 (E.D. Pa. Dec. 30, 2009), ECF No. 144. These 

district court decisions are consistent with the acceptance by district 

courts around the country of over 35 guilty pleas by individuals who 

admitted to violating the FCPA by bribing officials of state-owned or 

state-controlled entities. See Government’s Opposition to Defendants’ 

Amended Motion to Dismiss Counts One Through Ten of the 

Indictment at 18, United States v. Carson, supra note 119, ECF No. 332; 

Exhibit I, United States v. Carson, supra note 119, ECF No. 335 (list of 

examples of enforcement actions based on foreign officials of state-owned 

entities). 

120 Jury Instructions, United States v. Esquenazi, supra note 44, ECF No. 

520; Order at 5 and Jury Instructions, United States v. Carson, supra note 

119, ECF No. 373 and ECF No. 549; Aguilar, 783 F. Supp. 2d at 1115. 121 Criminal Information, United States v. C.E. Millier Corp., et al., 

No. 82-cr-788 (C.D. Cal. Sept. 17, 1982), available at http://www.

justice.gov/criminal/fraud/fcpa/cases/ce-miller/1982-09-17-ce-millerinformation.pdf. 122 See Complaint, SEC v. Sam P. Wallace Co., Inc., et al., No. 81-cv1915 (D.D.C. Aug. 31, 1982); Criminal Information, United States v. 

Sam P. Wallace Co., Inc., No. 83-cr-34 (D.P.R. Feb. 23, 1983), available 

at http://www.justice.gov/criminal/fraud/fcpa/cases/sam-wallacecompany/1983-02-23-sam-wallace-company-information.pdf; see also

Criminal Information, United States v. Goodyear Int’l Corp., No. 89-

cr-156 (D.D.C. May 11, 1989) (Iraqi Trading Company identified as 

“instrumentality of the Government of the Republic of Iraq”), available 

at http://www.justice.gov/criminal/fraud/fcpa/cases/goodyear/1989-
APPENDIX

Endnotes

110

05-11-goodyear-information.pdf. 123 See Complaint, SEC v. ABB, supra note 48; Criminal Information at 

3, United States v. ABB Inc., No. 10-cr-664 (S.D. Tex. Sept. 29, 2010), 

ECF No. 1 [hereinafter United States v. ABB], available at http://

www.justice.gov/criminal/fraud/fcpa/cases/abb/09-20-10abbinc-info.

pdf; Constitución Política de los Estados Unidos Mexicanos [C.P.], as 

amended, art. 27, Diario Oficial de la Federación [DO], 5 de Febrero de 

1917 (Mex.); Ley Del Servicio Publico de Energia Electrica, as amended, 

art. 1-3, 10, Diario Oficial de la Federación [DO], 22 de Diciembre de 

1975 (Mex.).

124 See Indictment at 2, United States v. Esquenazi, supra note 44, ECF No. 

3; Affidavit of Mr. Louis Gary Lissade at 1-9, id., ECF No. 417-2. 125 Criminal Information at 30-31, United States v. Alcatel-Lucent France, 

supra note 56, ECF No. 10. 126 Id. 127 See International Anti-Bribery and Fair Competition Act of 1998, 

Pub. L. 105-366 § 2, 112 Stat. 3302, 3303, 3305, 3308 (1998).

128 Section 30A(F)(1)(B) of the Exchange Act, 15 U.S.C. § 78dd-1(f )(1)

(B); 15 U.S.C. §§ 78dd-2(h)(2)(B), 78dd-3(f )(2)(B).

129 Third parties and intermediaries themselves are also liable for FCPA 

violations. Section 30A(a) of the Exchange Act, 15 U.S.C. § 78dd-1(a); 

15 U.S.C. §§ 78dd-2(a), and 78dd-3(a). 

130 Section 30A(a)(3) of the Exchange Act, 15 U.S.C. § 78dd-1(a)(3); 15 

U.S.C. §§ 78dd-2(a)(3), 78dd-3(a)(3).

131 See, e.g., Complaint, SEC v. Johnson & Johnson, No. 11-cv-686 

(D.D.C. Apr. 8, 2011) [hereinafter SEC v. Johnson & Johnson] (bribes 

paid through Greek and Romanian agents)), available at http://www.sec.

gov/litigation/complaints/2011/comp21922.pdf; Criminal Information, 

United States v. DePuy, Inc., No. 11-cr-99 (D.D.C. Apr. 8, 2011), ECF 

No. 1 [hereinafter United States v. DePuy] (bribes paid through Greek 

agents), available at http://www.justice.gov/criminal/fraud/fcpa/cases/

depuy-inc/04-08-11depuy-info.pdf; Complaint, SEC v. ABB, supra note 

48 (bribes paid through Mexican agents); Criminal Information, United 

States v. ABB, supra note 123 (same); Criminal Information, United 

States v. Int’l Harvester Co., No. 82-cr-244 (S.D. Tex. Nov. 17, 1982) 

(bribes paid through Mexican agent), available at http://www.justice.

gov/criminal/fraud/fcpa/cases/international-harvester/1982-11-17-

international-harvester-information.pdf. 132 See Criminal Information, United States v. Marubeni Corp., No. 12-

cr-22 (S.D. Tex. Jan. 17, 2012), ECF No. 1 [hereinafter United States v. 

Marubeni], available at http://www.justice.gov/criminal/fraud/fcpa/

cases/marubeni/2012-01-17-marubeni-information.pdf; Criminal 

Information, United States v. JGC Corp., supra note 60, ECF No. 1; 

Criminal Information, United States v. Snamprogetti, supra note 60, ECF 

No. 1; Complaint, SEC v. ENI, S.p.A. and Snamprogetti Netherlands 

B.V., No. 10-cv-2414 (S.D. Tex. July 7, 2010), ECF No. 1, available at

http://www.sec.gov/litigation/complaints/2010/comp-pr2010-119.pdf; 

Criminal Information, United States v. Technip S.A., No. 10-cr-439 (S.D. 

Tex. June 28, 2010), ECF No. 1 [hereinafter United States v. Technip], 

available at http://www.justice.gov/criminal/fraud/fcpa/cases/technipsa/06-28-10-technip-%20information.pdf; Complaint, SEC v. Technip, 

No. 10-cv-2289 (S.D. Tex. June 28, 2010), ECF No. 1 [hereinafter SEC v. 

Technip], available at http://www.sec.gov/litigation/complaints/2010/

comp-pr2010-110.pdf; Indictment, United States v. Tesler, supra note 

50; Complaint, SEC v. Halliburton and KBR, supra note 90; Criminal 

Information, United States v. KBR, supra note 90; Criminal Information, 

United States v. Stanley, No. 08-cr-597 (S.D. Tex. Sept. 3, 2008), ECF No. 

1, available at http://justice.gov/criminal/fraud/fcpa/cases/stanleya/08-

29-08stanley-info.pdf. 133 See Criminal Information, United States v. AGA Medical Corp., No. 

08-cr-172, ECF No. 1 (D. Minn. June 3, 2008), available at http://www.

justice.gov/criminal/fraud/fcpa/cases/agamedcorp/06-03-08aga-info.

pdf. 134 Complaint, SEC v. Innospec, supra note 79; Criminal Information, 

United States v. Innospec, supra note 79; Superseding Criminal 

Information, United States v. Naaman, supra note 50, ECF No. 15, 

available at http://www.justice.gov/criminal/fraud/fcpa/cases/

naamano/06-24-10naaman-supsersed-info.pdf; Complaint, SEC v.

Turner, supra note 50. 135 See sources cited supra note 68. 136 See sources cited supra note 68. 137 Section 30A(a)(3) of the Exchange Act, 15 U.S.C. § 78dd-1(a)(3); 15 

U.S.C. §§ 78dd-2(a)(3), 78dd-3(a)(3).

138 See Section 30A(f )(2)(A) of the Exchange Act, 15 U.S.C. § 78dd-1(f )

(2)(A); 15 U.S.C. §§ 78dd-2(h)(3)(A), 78dd-3(f )(3)(A).

139 See Section 30A(f )(2)(B) of the Exchange Act, 15 U.S.C. § 78dd-1(f )

(2)(B); 15 U.S.C. §§ 78dd-2(h)(3)(B), 78dd-3(f )(3)(B). The “knowing” 

standard was intended to cover “both prohibited actions that are taken 

with ‘actual knowledge’ of intended results as well as other actions 

that, while falling short of what the law terms ‘positive knowledge,’ 

nevertheless evidence a conscious disregard or deliberate ignorance 

of known circumstances that should reasonably alert one to the high 

probability of violations of the Act.” H.R. Rep. No. 100-576, at 920; see 

also Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-

418, § 5003, 102 Stat. 1107, 1423-24 (1988).

140 H.R. Rep. No. 100-576, at 920 (1988). 141 Section 30A(c)(1) of the Exchange Act, 15 U.S.C. § 78dd-1(c)(1); 15 

U.S.C. §§ 78dd-2(c)(1), 78dd-3(c)(1).

142 H.R. Rep. No. 100-576, at 922. The conferees also noted that “[i]n 

interpreting what is ‘lawful under the written laws and regulations’ . . . the 

normal rules of legal construction would apply.” Id. 143 See United States v. Kozeny, 582 F. Supp. 2d 535, 537-40 (S.D.N.Y. 

2008). Likewise, the court found that a provision under Azeri law that 

relieved bribe payors of criminal liability if they were extorted did 

not make the bribe payments legal. Azeri extortion law precludes the 

prosecution of the payor of the bribes for the illegal payments, but it does 

not make the payments legal. Id. at 540-41. 144 Section 30A(c)(2)(A), (B) of the Exchange Act, 15 U.S.C. § 78dd-1(c)

(2); 15 U.S.C. §§ 78dd-2(c)(2), 78dd-3(c)(2).

145 For example, the Eighth Circuit Court of Appeals found that 

providing airline tickets to a government official in order to corruptly 

influence that official may form the basis for a violation of the FCPA’s 

anti-bribery provisions. See Liebo, 923 F. 2d at 1311-12. 146 See generally U.S. Dept. of Justice, FCPA Op. Release 11-01 

( June 30, 2011) (travel, lodging, and meal expenses of two foreign 

officials for two-day trip to United States to learn about services of U.S. 

adoption service provider), available at http://www.justice.gov/criminal/

fraud/fcpa/opinion/2011/11-01.pdf; U.S. Dept. of Justice, FCPA 

Op. Release 08-03 ( July 11, 2008) (stipends to reimburse minimal 

travel expenses of local, government-affiliated journalists attending press 

conference in foreign country), available at http://www.justice.gov/

criminal/fraud/fcpa/opinion/2008/0803.pdf; U.S. Dept. of Justice, 

FCPA Op. Release 07-02 (Sept. 11, 2007) (domestic travel, lodging, 

and meal expenses of six foreign officials for six-week educational 

program), available at http://www.justice.gov/criminal/fraud/fcpa/

opinion/2007/0702.pdf; U.S. Dept. of Justice, FCPA Op. Release

07-01 ( July 24, 2007) (domestic travel, lodging, and meal expenses 

of six foreign officials for four-day educational and promotional tour 

of U.S. company’s operations sites), available at http://www.justice.

gov/criminal/fraud/fcpa/opinion/2007/0701.pdf; U.S. Dept. of 

Justice, FCPA Op. Release 04-04 (Sept. 3, 2004) (travel, lodging, 

and modest per diem expenses of five foreign officials to participate 

in nine-day study tour of mutual insurance companies), available at 

http://www.justice.gov/criminal/fraud/fcpa/opinion/2004/0404.

pdf; U.S. Dept. of Justice, FCPA Op. Release 04-03 ( June 14, 

2004) (travel, lodging, meal, and insurance expenses for twelve foreign 

officials and one translator on ten-day trip to three U.S. cities to meet 

with U.S. public sector officials), available at http://www.justice.gov/

criminal/fraud/fcpa/opinion/2004/0403.pdf; U.S. Dept. of Justice, 

FCPA Op. Release 04-01 ( Jan. 6, 2004) (seminar expenses, including 

receptions, meals, transportation and lodging costs, for one-and-a-half 

day comparative law seminar on labor and employment law in foreign 

country), available at http://www.justice.gov/criminal/fraud/fcpa/
111

opinion/2004/0401.pdf; U.S. Dept. of Justice, FCPA Op. Release

96-01 (Nov. 25, 1996) (travel, lodging, and meal expenses of regional 

government representatives to attend training courses in United 

States), available at http://www.justice.gov/criminal/fraud/fcpa/

opinion/1996/9601.pdf; U.S. Dept. of Justice, FCPA Op. Release

92-01 (Feb. 1992) (training expenses so that foreign officials could 

effectively perform duties related to execution and performance of jointventure agreement, including seminar fees, airfare, lodging, meals, and 

ground transportation), available at http://www.justice.gov/criminal/

fraud/fcpa/review/1992/r9201.pdf. 147 U.S. Dept. of Justice, FCPA Op. Release 11-01 ( June 30, 2011); 

U.S. Dept. of Justice, FCPA Op. Release 07-02 (Sept. 11, 2007); 

U.S. Dept. of Justice, FCPA Op. Release 07-01 ( July 24, 2007); 

U.S. Dept. of Justice, FCPA Op. Release 04-04 (Sept. 3, 2004); U.S. 

Dept. of Justice, FCPA Op. Release 04-03 ( June 14, 2004); U.S. 

Dept. of Justice, FCPA Op. Release 04-01 ( Jan. 6, 2004). 148 U.S. Dept. of Justice, FCPA Op. Release 96-01 (Nov. 25, 1996). 149 U.S. Dept. of Justice, FCPA Op. Release 11-01 ( June 30, 2011); 

U.S. Dept. of Justice, FCPA Op. Release 07-02 (Sept. 11, 2007); 

U.S. Dept. of Justice, FCPA Op. Release 07-01 ( July 24, 2007); 

U.S. Dept. of Justice, FCPA Op. Release 04-04 (Sept. 3, 2004); U.S. 

Dept. of Justice, FCPA Op. Release 04-01 ( Jan. 6, 2004) . 150 U.S. Dept. of Justice, FCPA Op. Release 04-01 ( Jan. 6, 2004). 151 U.S. Dept. of Justice, FCPA Op. Release 08-03 ( July 11, 2008). 152 U.S. Dept. of Justice, FCPA Op. Release 11-01 ( June 30, 2011); 

U.S. Dept. of Justice, FCPA Op. Release 92-01 (Feb. 1992). 153 U.S. Dept. of Justice, FCPA Op. Release 08-03 ( July 11, 2008). 154 Id. 155 Id.; U.S. Dept. of Justice, FCPA Op. Release 04-03 ( June 14, 

2004); U.S. Dept. of Justice, FCPA Op. Release 04-01 ( Jan. 6, 

2004); U.S. Dept. of Justice, FCPA Op. Release 07-01 ( July 24, 

2007). 

156 U.S. Dept. of Justice, FCPA Op. Release 11-01 ( June 30, 2011); 

U.S. Dept. of Justice, FCPA Op. Release 07-02 (Sept. 11, 2007); 

U.S. Dept. of Justice, FCPA Op. Release 07-01 ( July 24, 2007); 

U.S. Dept. of Justice, FCPA Op. Release 04-04 (Sept. 3, 2004); U.S. 

Dept. of Justice, FCPA Op. Release 04-03 ( June 14, 2004); U.S. 

Dept. of Justice, FCPA Op. Release 04-01 ( Jan. 6, 2004). 157 U.S. Dept. of Justice, FCPA Op. Release 07-01 ( July 24, 2007); 

U.S. Dept. of Justice, FCPA Op. Release 08-03 ( July 11, 2008). 158 For example, DOJ has previously approved expenditures on behalf of 

family members or for entertainment purposes under certain, limited 

circumstances. See, e.g., U.S. Dept. of Justice, FCPA Rev. P. Release

83-02 ( July 26, 1983) (declining to take enforcement action against 

company seeking to provide promotional tour for foreign official and 

wife, where both had already planned a trip to the United States at their 

own expense and company proposed to pay only for all reasonable and 

necessary actual domestic expenses for the extension of their travel to 

allow the promotional tour, which would not exceed $5,000), available at 

http://www.justice.gov/criminal/fraud/fcpa/review/1983/r8302.pdf. 159 Unlike the local law and bona fide expenditures defenses, the 

facilitating payments exception is not an affirmative defense to the 

FCPA. Rather, payments of this kind fall outside the scope of the 

FCPA’s bribery prohibition. Prior to 1988, the “facilitating payments” 

exception was incorporated into the definition of “foreign official,” which 

excluded from the statute’s purview officials whose duties were primarily 

ministerial or clerical. See Foreign Corrupt Practices Act of 1977, Pub. 

L. No. 95-213, § 104(d)(2), 91 Stat. 1494, 1498 (1977) (providing that 

the term foreign official “does not include any employee of a foreign 

government or any department, agency, or instrumentality thereof whose 

duties are essentially ministerial or clerical”). The original exception thus 

focused on the duties of the recipient, rather than the purpose of the 

payment. In practice, however, it proved difficult to determine whether 

a foreign official’s duties were “ministerial or clerical.” S. Rep. No. 100-

85, at 53. Responding to criticism that the statutory language “does not 

clearly reflect Congressional intent and the boundaries of the prohibited 

conduct,” Congress revised the FCPA to define the exception in terms of 

the purpose of the payment. H. Rep. No. 100-40, pt. 2, at 77. In doing so, 

Congress reiterated that while its policy to exclude facilitating payments 

reflected practical considerations of enforcement, “such payments should 

not be condoned.” Id. The enacted language reflects this narrow purpose. 160 In exempting facilitating payments, Congress sought to distinguish 

them as “payments which merely move a particular matter toward an 

eventual act or decision or which do not involve any discretionary action,” 

giving the examples of “a gratuity paid to a customs official to speed the 

processing of a customs document” or “payments made to secure permits, 

licenses, or the expeditious performance of similar duties of an essentially 

ministerial or clerical nature which must of necessity be performed in any 

event.” H.R. Rep. No. 95-640, at 8. 161 Section 30A(f )(3)(B) of the Exchange Act, 15 U.S.C. § 78dd-1(f )(3)

(B); 15 U.S.C. §§ 78dd-2(h)(4)(B), 78dd-3(f )(4)(B).

162 In a 2004 decision, the Fifth Circuit emphasized this precise point, 

commenting on the limited nature of the facilitating payments exception:

A brief review of the types of routine governmental 

actions enumerated by Congress shows how limited 

Congress wanted to make the grease exceptions. 

Routine governmental action, for instance, includes 

“obtaining permits, licenses, or other official 

documents to qualify a person to do business in 

a foreign country,” and “scheduling inspections 

associated with contract performance or inspections 

related to transit of goods across country.” 

Therefore, routine governmental action does not 

include the issuance of every official document or 

every inspection, but only (1) documentation that 

qualifies a party to do business and (2) scheduling an 

inspection—very narrow categories of largely nondiscretionary, ministerial activities performed by 

mid- or low-level foreign functionaries.

UnitedStates v. Kay; 359 F.3d 738, 750-51 (5th Cir. 2004) (internal 

footnote omitted) (emphasis in original).

163 Non-Pros. Agreement, In re Helmerich & Payne, Inc. ( July 29, 2009) 

[hereinafter In re Helmerich & Payne], available at http://www.justice.

gov/criminal/fraud/fcpa/cases/helmerich-payne/06-29-09helmerichagree.pdf; Admin. Proceeding Order, In the Matter of Helmerich & 

Payne, Inc., Exchange Act Release No. 60400 ( July 30, 2009) [hereinafter 

In the Matter of Helmerich & Payne], available at http://www.sec.gov/

litigation/admin/2009/34-60400.pdf. 164 Criminal Information, Vetco Gray Controls Inc., et al., No. 07-

cr-4 No. (S.D. Tex. Jan. 5, 2007), ECF Nos. 1-2, available at http://

www.justice.gov/criminal/fraud/fcpa/cases/vetco-controls/02-06-

07vetcogray-info.pdf. 165 Complaint, SEC v. Noble Corp., No. 10-cv-4336 (S.D. Tex. Nov. 

4, 2010), ECF No. 1, available at http://www.sec.gov/litigation/

complaints/2010/comp21728.pdf; Non-Pros. Agreement, In re Noble 

Corp. (Nov. 4, 2010), available at http://www.justice.gov/criminal/

fraud/fcpa/cases/noble-corp/11-04-10noble-corp-npa.pdf; see also 

sources cited supra note 68. 166 Working Group on Bribery, 2009 Recommendation of the Council for 

Further Combating Bribery of Foreign Public Officials in International 

Business Transactions, at § VI (recommending countries should 

periodically review their policies and approach to facilitation payments 

and should encourage companies to prohibit or discourage facilitation 

payments “in view of the corrosive effect of small facilitation payments, 

particularly on sustainable economic development and the rule of law”); 

Working Group on Bribery, United States: Phase 3, at 24 (Oct. 15, 

2010), available at http://www.oecd.org/dataoecd/10/49/46213841.

pdf (commending United States for steps taken in line with 2009 

recommendation to encourage companies to prohibit or discourage 

facilitation payments).

167 Facilitating payments are illegal under the U.K. Bribery Act 2010, 

which came into force on July 1, 2011, and were also illegal under 

prior U.K. legislation. See Bribery Act 2010, c.23 (Eng.), available 

at http://www.legislation.gov.uk/ukpga/2010/23/contents; see also 

U.K. Ministry of Justice, The Bribery Act 2010: Guidance About 

Procedures Which Relevant Commercial Organisations Can Put into Place 

to Prevent Persons Associated with Them from Bribing (Section 9 of the 

Bribery Act 2010), at 18 (2011), available at http://www.justice.gov.uk/

guidance/docs/bribery-act-2010-guidance.pdf. 168 See, e.g., Non-Pros. Agreement, In re Helmerich & Payne, supra note 

163; Admin. Proceeding Order, In the Matter of Helmerich & Payne, 

supra note 163. 169 In order to establish duress or coercion, a defendant must demonstrate 

that the defendant was under unlawful, present, immediate, and 
APPENDIX

Endnotes

112

impending threat of death or serious bodily injury; that the defendant did 

not negligently or recklessly create a situation where he would be forced 

to engage in criminal conduct (e.g., had been making payments as part 

of an ongoing bribery scheme); that the defendant had no reasonable 

legal alternative to violating the law; and that there was a direct causal 

relationship between the criminal action and the avoidance of the 

threatened harm. See Eleventh Circuit Pattern Jury Instr., Special Instr. 

No. 16 (2003); see also Fifth Circuit Pattern Jury Instr. No. 1.36 (2001); 

Sixth Circuit Pattern Jury Instr. No. 6.05 (2010); Seventh Circuit Pattern 

Jury Instr. No. 6.08 (1998); Ninth Circuit Pattern Jury Instr. No. 6.5 

(2010); 1A Kevin F. O’Malley, Jay E. Grenig, Hon. William C. Lee, 

Federal Jury Practice and Instructions § 19.02 (6th ed. 2008 & Supp. 

2012).

170 S. Rep. No. 95-114, at 11. 171 Id. at 10. 172 Id. at 11. 173 United States v. Kozeny, 582 F. Supp. 2d 535, 540 n.31 (S.D.N.Y. 

2008).

174 Kozeny, 582 F. Supp. 2d at 540 (citing S. Rep. No. 95-114, at 10-11). 175 Id. 176 These payments, however, must be accurately reflected in the 

company’s books and records so that the company and its management 

are aware of the payments and can assure that the payments were properly 

made under the circumstances. For example, in one instance, a Kazakh 

immigration prosecutor threatened to fine, jail, or deport employees 

of a U.S. company’s subsidiary. Believing the threats to be genuine, the 

employees in Kazakhstan sought guidance from senior management 

of the U.S. subsidiary and were authorized to make the payments. The 

employees then paid the government official a total of $45,000 using 

personal funds. The subsidiary reimbursed the employees, but it falsely 

recorded the reimbursements as “salary advances” or “visa fines.” The 

parent company, which eventually discovered these payments, as well 

as other improperly booked cash payments made to a Kazakhstani 

consultant to obtain visas, was charged with civil violations of the 

accounting provisions. Admin. Proceeding Order, In the Matter of 

NATCO Group Inc., Exchange Act Release No. 61325 ( Jan. 11, 2010), 

available at http://www.sec.gov/litigation/admin/2010/34-61325.pdf

(imposing cease-and-desist order and $65,000 civil monetary penalty).

177 See Jury Instructions at 21, United States v. Aguilar, No. 10-cr-1031 

(C.D. Cal. May 16, 2011), ECF No. 511.

178 See, e.g., Pacific Can Co. v. Hewes, 95 F.2d 42, 46 (9th Cir. 1938) 

(“Where one corporation is controlled by another, the former acts 

not for itself but as directed by the latter, the same as an agent, and the 

principal is liable for the acts of its agent within the scope of the agent’s 

authority.”); United States v. NYNEX Corp., 788 F. Supp. 16, 18 n.3 

(D.D.C. 1992) (holding that “[a] corporation can of course be held 

criminally liable for the acts of its agents,” including “the conduct of its 

subsidiaries.”).

179 Pacific Can Co., 95 F.2d at 46; NYNEX Corp., 788 F. Supp. at 18 n.3. 180 See, e.g., Standard Oil Co. v. United States, 307 F.2d 120, 127 (5th Cir. 

1962).

181 Admin. Proceeding Order, In the Matter of United Industrial Corp., 

Exchange Act Release No. 60005 (May 29, 2009), available at http://

www.sec.gov/litigation/admin/2009/34-60005.pdf; see also Lit. Release 

No. 21063, SEC v. Worzel (May 29, 2009), available at http://www.sec.

gov/litigation/litreleases/2009/lr21063.htm. 182 See, e.g., Philip Urofksy, What You Don’t Know Can Hurt You: Successor 

Liability Resulting From Inadequate FCPA Due Diligence in M&A 

Transactions, 1763 PLI/Corp. 631, 637 (2009) (“As a legal matter, when 

one corporation acquires another, it assumes any existing liabilities of 

that corporation, including liability for unlawful payments, regardless of 

whether it knows of them.”). Whether or not successor liability applies to 

a particular corporate transaction depends on the facts involved and state, 

federal, and, potentially, foreign law. 

183 See, e.g., Carolyn Lindsey, More Than You Bargained for: Successor 

Liability Under the U.S. Foreign Corrupt Practices Act, 35 Ohio N.U. 

L. Rev. 959, 966 (2009) (“Allowing a company to escape its debts and 

liabilities by merging with another entity is considered to lead to an 

unjust result.”).

184 See, e.g., Melrose Distillers, Inc. v. United States, 359 U.S. 271, 274 

(1959) (affirming criminal successor liability for antitrust violations); 

United States v. Alamo Bank of Texas, 880 F.2d 828, 830 (5th Cir. 1989) 

(affirming criminal successor liability for Bank Secrecy Act violations); 

United States v. Polizzi, 500 F.2d 856, 907 (9th Cir. 1974) (affirming 

criminal successor liability for conspiracy and Travel Act violations); 

United States v. Shields Rubber Corp., 732 F. Supp. 569, 571-72 (W.D. 

Pa. 1989) (permitting criminal successor liability for customs violations); 

see also United States v. Mobile Materials, Inc., 776 F.2d 1476, 1477 (10th 

Cir. 1985) (allowing criminal post-dissolution liability for antitrust, mail 

fraud, and false statement violations);.

185 Complaint, SEC v. The Titan Corp., No. 05-cv-411 (D.D.C. Mar. 1, 

2005) (discovery of FCPA violations during pre-acquisition due diligence 

protected potential acquiring company and led to termination of merger 

agreement), available at http://www.sec.gov/litigation/complaints/

comp19107.pdf; Criminal Information, United States v. Titan Corp., 

No. 05-cr-314 (S.D. Cal. Mar. 1, 2005) (same) [hereinafter United States 

v. Titan Corp.], available at http://www.justice.gov/criminal/fraud/fcpa/

cases/titan-corp/03-01-05titan-info.pdf. 186 For a discussion of declinations, see Chapter 7. 187 See Complaint, SEC v. El Paso Corp., No. 07-cv-899 (S.D.N.Y. Feb. 7, 

2007), ECF No. 1 [hereinafter SEC v. El Paso Corp.] (charging company 

with books and records and internal controls charges for improper 

payments to Iraq under U.N. Oil-for-Food Programme), available at

http://www.sec.gov/litigation/complaints/2007/comp19991.pdf. 188 Complaint, SEC v. Alliance One Int’l, Inc., No. 10-cv-1319 (D.D.C. 

Aug. 6, 2010), ECF No. 1, available at http://www.sec.gov/litigation/

complaints/2010/comp21618-alliance-one.pdf; Non-Pros. Agreement, 

In re Alliance One Int’l, Inc. (Aug. 6, 2010), available at http://www.

justice.gov/criminal/fraud/fcpa/cases/alliance-one/08-06-10allianceone-npa.pdf; Criminal Information, United States v. Alliance One Int’l 

AG, No. 10-cr-17 (W.D. Va. Aug. 6, 2010), ECF No. 3, available at

http://www.justice.gov/criminal/fraud/fcpa/cases/alliance-one/08-06-

10alliance-one-info.pdf; Criminal Information, United States v. Alliance 

One Tobacco Osh, LLC, No. 10-cr-16 (W.D. Va. Aug. 6, 2010), ECF 

No. 3, available at http://www.justice.gov/criminal/fraud/fcpa/cases/

alliance-one/08-06-10alliance-one-tobaccoinfo.pdf. 189 See Criminal Information, United States v. Syncor Taiwan, Inc., No. 

02-cr-1244 (C.D. Cal. Dec. 5, 2002), ECF No. 1, available at http://

www.justice.gov/criminal/fraud/fcpa/cases/syncor-taiwan/12-05-

02syncor-taiwan-info.pdf; Plea Agreement, United States v. Syncor 

Taiwan, Inc., No. 02-cr-1244 (C.D. Cal. Dec. 9, 2002), ECF No. 14, 

available at http://www.justice.gov/criminal/fraud/fcpa/cases/syncortaiwan/12-03-02syncor-taiwan-plea-agree.pdf. 190 See Complaint, SEC v. Syncor Int’l Corp., No. 02-cv-2421 (D.D.C. 

Dec. 10, 2002), ECF No. 1, available at http://www.sec.gov/litigation/

complaints/comp17887.htm; SEC v. Syncor International Corp., SEC 

Lit. Rel. 17997, (Dec. 10, 2002), available at http://www.sec.gov/

litigation/litreleases/lr17887.htm. 191 See Complaint, SEC v. York Int’l Corp., supra note 115; Criminal 

Information, United States v. York Int’l Corp., supra note 115. 192 See Criminal Information, United States v. Latin Node, Inc., No. 

09-cr-20239 (S.D. Fla. Mar. 23, 2009), ECF No. 1, available at http://

www.justice.gov/criminal/fraud/fcpa/cases/litton-applied/03-23-

09latinnode-info.pdf; eLandia Int’l Inc., Annual Report (Form 10-K), 

at 20 (Apr. 2, 2009), available at http://www.sec.gov/Archives/edgar/

data/1352819/000119312509070961/d10k.htm. 193 See Criminal Information, United States v. Salvoch, No. 10-cr-20893 

(S.D. Fla. Dec. 17, 2010), ECF No. 3, available at http://www.justice.

gov/criminal/fraud/fcpa/cases/salvoch/12-17-10salvoch-info.pdf; 

Criminal Information, United States v. Vasquez, No. 10-cr-20894 (S.D. 

Fla. Dec. 17, 2010), ECF No. 3, available at http://www.justice.gov/

criminal/fraud/fcpa/cases/vasquezjp/12-17-10vasquez-juan-info.pdf; 

Indictment, United States v. Granados, et al., No. 10-cr-20881, (S.D. 
113

Fla. Dec. 14, 2010), ECF No. 3, available at http://www.justice.gov/

criminal/fraud/fcpa/cases/granados-jorge/12-21-10granados-indict.pdf. 194 See Deferred Pros. Agreement, United States v. Snamprogetti, supra

note 60, ECF No. 3, available at http://www.justice.gov/criminal/fraud/

fcpa/cases/snamprogetti/07-07-10snamprogetti-dpa.pdf. 195 Compare Criminal Information, United States v. Snamprogetti, supra

note 60, with Deferred Pros. Agreement, United States v. Snamprogetti, 

supra note 60, ECF No. 3. 196 See Press Release, General Electric Co., General Electric Agrees to 

Acquire InVision (Mar. 15, 2004), available at http://www.ge.com/files/

usa/company/investor/downloads/sharpeye_press_release.pdf; Press 

Release, U.S. Dept. of Justice, InVision Tech. Inc. Enters into Agreement 

with the United States (Dec. 6, 2004), available at http://www.justice.

gov/opa/pr/2004/December/04_crm_780.htm; Company News; G.E. 

Gets InVision, a Maker of Bomb Detectors, N.Y. Times, Dec. 7, 2004, at 

C4.

197 Non-Pros. Agreement, In re InVision (Dec. 3, 2004), available at

http://www.justice.gov/criminal/fraud/fcpa/cases/invision-tech/12-03-

04invisiontech-agree.pdf; Non-Pros. Agreement, In re General Elec. Co., 

(Dec. 3, 2004), available at http://www.justice.gov/criminal/fraud/fcpa/

cases/invision-tech/12-03-04invisiontech-agree-ge.pdf; Complaint, SEC 

v. GE InVision, Inc., f/k/a InVision Technologies, Inc., No. 05-cv-660, 

(N.D. Cal. Feb. 14, 2005), ECF No. 1, available at http://www.sec.gov/

litigation/complaints/comp19078.pdf. 198 See U.S. Dept. of Justice, FCPA Op. Release 08-02 ( June 13, 

2008), available at http://www.justice.gov/criminal/fraud/fcpa/

opinion/2008/0802.pdf; see also Press Release, U.S. Dept. of Justice, 

Pfizer H.C.P. Corp. Agrees to Pay $15 Million Penalty to Resolve Foreign 

Bribery Investigation (Aug. 7, 2012) (“In the 18 months following its 

acquisition of Wyeth, Pfizer Inc., in consultation with the department, 

conducted a due diligence and investigative review of the Wyeth business 

operations and integrated Pfizer Inc.’s internal controls system into 

the former Wyeth business entities. The department considered these 

extensive efforts and the SEC resolution in its determination not to 

pursue a criminal resolution for the pre-acquisition improper conduct of 

Wyeth subsidiaries.”), available at http://www.justice.gov/opa/pr/2012/

August/12-crm-980.html. 199 18 U.S.C. § 2. 200 In enacting the FCPA in 1977, Congress explicitly noted that “[t]he 

concepts of aiding and abetting and joint participation would apply to a 

violation under this bill in the same manner in which those concepts have 

always applied in both SEC civil actions and in implied private actions 

brought under the securities laws generally.” H.R. Rep. No. 95-640, at 8. 201 Pinkerton held that a conspirator may be found guilty of a substantive 

offense committed by a co-conspirator in furtherance of the conspiracy 

if the co-conspirator’s acts were reasonably foreseeable. See Pinkerton v. 

United States, 328 U.S. 640, 647-48 (1946).

202 See United States v. MacAllister, 160 F.3d 1304, 1307 (11th Cir. 

1998); United States v. Winter, 509 F.2d 975, 982 (5th Cir. 1975). 

203 See Criminal Information, United States v. Marubeni, supra note 

132; Criminal Information, United States v. JGC Corp., supra note 60; 

Criminal Information, United States v. Snamprogetti, supra note 60; see 

also Criminal Information, United States v. Technip, supra note 132. 204 Section 20(e) of the Exchange Act, “Prosecution of Persons Who 

Aid and Abet Violations,” explicitly provides that, for purposes of a 

civil action seeking injunctive relief or a civil penalty, “any person that 

knowingly or recklessly provides substantial assistance to another person 

in violation of a provision of this chapter, or of any rule or regulation 

issued under this chapter, shall be deemed to be in violation of such 

provision to the same extent as the person to whom such assistance is 

provided.” Section 20(e) of the Exchange Act, 15 U.S.C. § 78t(e). 

205 Under Section 21C(a) of the Exchange Act, the SEC may impose a 

cease-and-desist order through the SEC’s administrative proceedings 

upon any person who is violating, has violated, or is about to violate any 

provision of the Exchange Act or any rule or regulation thereunder, and 

upon any other person that is, was, or would be a cause of the violation, 

due to an act or omission the person knew or should have known would 

contribute to such violation. Section 21C(a) of the Exchange Act,15 

U.S.C. § 78u-3(a).

206 See Complaint, SEC v. Panalpina, Inc., supra note 68. 207 18 U.S.C. § 3282(a) provides: “Except as otherwise expressly provided 

by law, no person shall be prosecuted, tried, or punished for any offense, 

not capital, unless the indictment is found or the information is instituted 

within five years next after such offense shall have been committed.”

208 See Grunewald v. United States, 353 U.S. 391, 396-97 (1957) 

(holding government must prove conspiracy still existed and at least 

one overt act was committed within the statute of limitations); Fiswick 

v. United States, 329 U.S. 211, 216 (1946) (“The statute of limitations, 

unless suspended, runs from the last overt act during the existence of 

the conspiracy. The overt acts averred and proved may thus mark the 

duration, as well as the scope, of the conspiracy.”) (citation omitted); see 

generally Julie N. Sarnoff, Federal Criminal Conspiracy, 48 Am. Crim. L. 

Rev. 663, 676 (Spring 2011). 209 18 U.S.C. § 3292. 210 28 U.S.C. § 2462. 211 S. Rep. No. 95-114, at 3 (noting that, in the past, “corporate bribery 

has been concealed by the falsification of corporate books and records,” 

that the accounting provisions “remove [] this avenue of coverup,” and 

that “[t]aken together, the accounting requirements and criminal [antibribery] prohibitions . . . should effectively deter corporate bribery of 

foreign government officials”).

212 S. Rep. No. 95-114, at 7. 213 Section 13(b)(2)(A) of the Exchange Act, 15 U.S.C. § 78m(b)(2)(A). 214 Section 13(b)(2)(B) of the Exchange Act, 15 U.S.C. § 78m(b)(2)(B). 215 The accounting provisions contain a narrow exemption related to 

national security and the protection of classified information. Under 

this “national security” provision, “no duty or liability [under Section 

13(b)(2) of the Exchange Act] shall be imposed upon any person acting 

in cooperation with the head of any federal department or agency 

responsible for such matters if such act in cooperation with such head of 

a department or agency was done upon the specific, written directive of 

the head of such department or agency pursuant to Presidential authority 

to issue such directives.” Section 13(b)(3) of the Exchange Act, 15 U.S.C. 

§ 78m(b)(3). As Congress made clear, however, the exception is narrowly 

tailored and intended to prevent the disclosure of classified information. 

H.R. Rep. 94-831, at 11, available at http://www.justice.gov/criminal/

fraud/fcpa/history/1977/corruptrpt-94-831.pdf. 216 Section 13(b)(2)(A) of the Exchange Act, 15 U.S.C. § 78m(b)(2)(A). 217 H.R. Rep. No. 94-831, at 10. 218 Id. 219 Section 13(b)(7) of the Exchange Act, 15 U.S.C. § 78m(b)(7). 220 H.R. Rep. No. 100-576, at 917 (1988), available athttp://www.justice.

gov/criminal/fraud/fcpa/history/1988/tradeact-100-418.pdf. Congress 

rejected the addition of proposed cost-benefit language to the definition 

“in response to concerns that such a statutory provision might be abused 

and weaken the accounting provisions at a time of increasing concern 

about audit failures and financial fraud and resultant recommendations 

by experts for stronger accounting practices and audit standards.” Id. 221 See, e.g., Complaint, SEC v. Biomet, Inc., No. 12-cv-454 (D.D.C. Mar. 

26, 2012), ECF No. 1 [hereinafter SEC v. Biomet], available at http://

www.sec.gov/litigation/complaints/2012/comp22306.pdf; Criminal 

Information, United States v. Biomet, Inc., No. 12-cr-80 (D.D.C. Mar. 

26, 2012) [hereinafter United States v. Biomet], available at http://www.

justice.gov/criminal/fraud/fcpa/cases/biomet/2012-03-26-biometinformation.pdf; Complaint, SEC v. Smith & Nephew Inc., No. 12-cv187 (D.D.C. Feb. 6, 2012), ECF No. 1, available at http://www.sec.gov/

litigation/complaints/2012/comp22252.pdf; Criminal Information, 

United States v. Smith & Nephew plc., No. 12-cr-30 (D.D.C. Feb. 6, 

2012), ECF No. 1, available at http://www.justice.gov/criminal/fraud/

fcpa/cases/smith-nephew/2012-02-06-s-n-information.pdf; Complaint, 

SEC v. Johnson & Johnson, supra note 131; Criminal Information, 

United States v. DePuy, supra note 131; Complaint, SEC v. Maxwell 

Technologies Inc., No. 11-cv-258 (D.D.C. Jan. 31, 2011), ECF No. 1 

[hereinafter SEC v. Maxwell Technologies], available at http://www.sec.

gov/litigation/complaints/2011/comp21832.pdf; Criminal Information, 

United States v. Maxwell Technologies Inc., No. 11-cr-329 (S.D. Cal. 

Jan. 31, 2011), ECF No. 1, available at http://www.justice.gov/criminal/

fraud/fcpa/cases/maxwell/01-31-11maxwell-tech-info.pdf; Complaint, 

SEC v. Transocean, Inc., No. 10-cv-1891 (D.D.C. Nov. 4, 2010), ECF 

No. 1, available at http://www.sec.gov/litigation/complaints/2010/

comp21725.pdf; Criminal Information, United States v. Transocean, 

Inc., No. 10-cr-768 (S.D. Tex. Nov. 4, 2010), ECF No. 1, available at

http://www.justice.gov/criminal/fraud/fcpa/cases/transocean-inc/11-

04-10transocean-info.pdf.
APPENDIX

Endnotes

114

222 S. Rep. No. 95-114, at 7. 223 Section 13(b)(2)(B) of the Exchange Act, 15 U.S.C. § 78m(b)(2)(B). 224 Section 13(b)(7) of the Exchange Act, 15 U.S.C. § 78m(b)(7). 225 See Complaint, SEC v. Siemens AG, supra note 48; Criminal 

Information, United States v. Siemens AG, supra note 48. 226 Complaint, SEC v. Siemens AG, supra note 48; Criminal Information, 

United States v. Siemens AG, supra note 48; Press Release, U.S. Dept. 

of Justice, Siemens AG and Three Subsidiaries Plead Guilty to Foreign 

Corrupt Practices Act Violations and Agree to Pay $450 Million in 

Combined Criminal Fines (Dec. 15, 2008), available at http://www.

justice.gov/opa/pr/2008/December/08-crm-1105.html. 227 See, e.g., Complaint, SEC v. Biomet, supra note 221 (bribes paid to 

government healthcare providers in which phony invoices were used 

to justify payments and bribes were falsely recorded as “consulting 

fees” or “commissions” in company’s books and records); Criminal 

Information, United States v. Biomet, supra note 221 (same); SEC v. 

Alcatel-Lucent, supra note 48 (bribes paid to foreign officials to secure 

telecommunications contracts where company lacked proper internal 

controls and permitted books and records to falsified); United States v. 

Alcatel-Lucent, S.A., supra note 48 (same). 228 Complaint, SEC v. Daimler AG, supra note 48; Criminal Information, 

United States v. Daimler AG, supra note 48. 229 Id. 230 Id. 231 Id. 232 Id. 233 Id. 234 See, e.g., Complaint, SEC v. Tyco Int’l, supra note 9; Complaint, SEC v. 

Willbros, No. 08-cv-1494 (S.D. Tex. May 14, 2008), ECF No. 1, available 

at http://www.sec.gov/litigation/complaints/2008/comp20571.pdf. 235 See, e.g., Complaint, SEC v. Siemens AG, supra note 48; Complaint, 

SEC v. York Int’l Corp., supra note 115; Complaint, SEC v. Textron, supra

note 115; Criminal Information, United States v. Control Components, 

Inc., No. 09-cr-162 (C.D. Cal. July 22, 2009), ECF No. 1 [hereinafter 

United States v. Control Components], available at http://www.justice.

gov/criminal/fraud/fcpa/cases/control-inc/07-22-09cci-info.pdf; 

Criminal Information, United States v. SSI Int’l Far East, Ltd., No. 06-cr398, ECF No. 1 (D. Or. Oct. 10, 2006) [hereinafter United States v. SSI 

Int’l], available at http://www.justice.gov/criminal/fraud/fcpa/cases/

ssi-intl/10-10-06ssi-information.pdf. 236 See, e.g., Complaint, SEC v. El Paso Corp., supra note 187; Complaint, 

SEC v. Innospec, supra note 79; Complaint, SEC v. Chevron Corp., 07-

cv-10299 (S.D.N.Y. Nov. 14, 2007), ECF No. 1, available at http://www.

sec.gov/litigation/complaints/2007/comp20363.pdf. 237 Plea Agreement, United States v. Stanley, supra note 8; Plea Agreement, 

United States v. Sapsizian, supra note 8. 238 See Complaint, SEC v. Maxwell Technologies, supra note 221. 239 See Complaint, SEC v. Willbros Group, supra note 9. 240 15 U.S.C. § 7201, et seq. 241 Exchange Act Rule 13a-15, 17 C.F.R. § 240.13a-15; Exchange Act 

Rule 15d-15, 17 C.F.R. § 240.15d-15; Item 308 of Regulation S-K, 17 

C.F.R. § 229.308; Item 15, Form 20-F, available at http://www.sec.gov/

about/forms/form20-f.pdf; General Instruction (B), Form 40-F (for 

foreign private issuers), available at http://www.sec.gov/about/forms/

form40-f.pdf. 242 See U.S. Sec. and Exchange Comm., Commission Guidance 

Regarding Management’s Report on Internal Control 

over Financial Reporting Under Section 13(a) or 15(d) of 

the Securities Exchange Act of 1934, Release No. 33-8810 ( June 

27, 2007), available at http://www.sec.gov/rules/interp/2007/33-8810.

pdf. 243 Id. 244 Foreign Corrupt Practices Act of 1977, Pub. L. No. 95-213, § 102, 91 

Stat. 1494 (1977).

245 See supra note 48; SEC v. Technip, supra note 132, (French company); 

United States v. Technip, supra note 132, (same); see also Admin. 

Proceeding Order, In re Diageo plc, Exchange Act Release No. 64978 

(SEC July 27, 2011) (UK company), available at http://www.sec.gov/

litigation/admin/2011/34-64978.pdf; Admin. Proceeding Order, In 

re Statoil, ASA, Exchange Act Release No. 54599 (SEC May 29, 2009) 

(Norwegian company), available at http://www.sec.gov/litigation/

admin/2006/34-54599.pdf; Criminal Information, United States v. 

Statoil, ASA, No. 06-cr-960 (S.D.N.Y. Oct. 13, 2006) (same), available at

http://www.justice.gov/criminal/fraud/fcpa/cases/statoil-asa-inc/10-13-

09statoil-information.pdf. 246 Although private companies are not covered by the books and records 

and internal controls provisions of the FCPA and do not fall within 

SEC’s jurisdiction, such companies generally are required by federal and 

state tax laws and state corporation laws to maintain accurate books and 

records sufficient to properly calculate taxes owed. Further, most large 

private companies maintain their books and records to facilitate the 

preparation of financial statements in conformity with GAAP to comply 

with financial institutions’ lending requirements.

247 See SEC v. RAE Sys. Inc., supra note 92; In re RAE Sys. Inc., supra note 

92. 

248 See Section 13(b)(6) of the Exchange Act, 15 U.S.C. § 78m(b) (6), 

which provides that where an issuer “holds 50 per centum or less of the 

voting power with respect to a domestic or foreign firm,” the issuer must 

“proceed in good faith to use its influence, to the extent reasonable under 

the issuer’s circumstances, to cause such domestic or foreign firm to devise 

and maintain a system of internal accounting controls consistent with 

[Section 13(b)(2)].”

249 See 15 U.S.C. § 78m(b)(6). Congress added the language in subsection 78m(b)(6) to the FCPA in 1988, recognizing that “it is 

unrealistic to expect a minority owner to exert a disproportionate degree 

of influence over the accounting practices of a subsidiary.” H.R. Rep. 

No. 100-576, at 917. The Conference Report noted that, with respect 

to minority owners, “the amount of influence which an issuer may 

exercise necessarily varies from case to case. While the relative degree of 

ownership is obviously one factor, other factors may also be important in 

determining whether an issuer has demonstrated good-faith efforts to use 

its influence.” Id.; see also S. Rep. No. 100-85, at 50. 250 Section 20(e) of the Exchange Act, titled “Prosecution of Persons 

Who Aid and Abet Violations,” explicitly provides that for purposes of 

a civil action seeking injunctive relief or a civil penalty, “any person that 

knowingly or recklessly provides substantial assistance to another person 

in violation of a provision of this title, or of any rule or regulation issued 

under this title, shall be deemed to be in violation of such provision to 

the same extent as the person to whom such assistance is provided.” See 

Section 20(e) of the Exchange Act, 15 U.S.C. § 78t(e). 

251 See Complaint at 11-12, SEC v. Elkin, supra note 50, ECF 1. 252 SEC v. Elkin, supra note 50, ECF 6-9 (final judgments). 253 See, e.g., Complaint, SEC v. Nature’s Sunshine Products, Inc., et al., No. 

09-cv-672 (D. Utah, July 31, 2009), ECF No. 2, available at http://www.

sec.gov/litigation/litreleases/2009/lr21162.htm. 254 See Admin. Proceeding Order, In re Watts Water Technologies, 

Inc. and Leesen Chang, Exchange Act Release No. 65555 (SEC 

Oct. 13, 2011), available at http://www.sec.gov/litigation/

admin/2011/34-65555.pdf. 255 Id. at 2, 4, 6-7. 256 Exchange Act Rule 13b2-1, 17 C.F.R. § 240.13b2-1. 257 15 U.S.C. § 78m(b)(5). 258 Section 3(a)(9) of the Exchange Act, 15 U.S.C. § 78c(a)(9). 259 Exchange Act Rule 13b2-2, 17 C.F.R. § 240.13b2-2 260 Complaint, SEC v. Jennings, No. 11-cv-1444 (D.D.C. Jan. 24, 

2011), ECF No. 1, available at http://www.sec.gov/litigation/

complaints/2011/comp21822.pdf. 261 Complaint, id., ECF No. 1; Final Judgment, id., ECF No. 3. 262 Serious Fraud Office, Innospec Ltd: Former CEO admits bribery to 

falsify product tests ( July 30, 2012), available at http://www.sfo.gov.

uk/press-room/latest-press-releases/press-releases-2012/innospec-ltd--

former-ceo-admits-bribery-to-falsify-product-tests.aspx. 263 15 U.S.C. § 78m(b)(4)-(5). Congress adopted this language in 1988 in 
115

order to make clear that, consistent with enforcement policy at the time, 

criminal penalties would not be imposed “for inadvertent or insignificant 

errors in books and records, or inadvertent violations of accounting 

controls.” See S. Rep. No. 100-85, at 49; H.R. Rep. No. 100-576, at 

916 (“The Conferees intend to codify current Securities and Exchange 

Commission (SEC) enforcement policy that penalties not be imposed for 

insignificant or technical infractions or inadvertent conduct.”). 

264 15 U.S.C. § 78ff(a). 265 See United States v. Alcatel-Lucent, S.A., supra note 48; see also United 

States v. Alcatel-Lucent France, supra note 56. 266 See Deferred Prosecution Agreement, United States v. Alcatel-Lucent, 

S.A., supra note 48, ECF No. 10, available at http://www.justice.gov/

criminal/fraud/fcpa/cases/alcatel-etal/02-22-11alcatel-dpa.pdf. 267 See Plea Agreement, United States v. Siemens AG, supra note 48, ECF 

No. 14, available at http://www.justice.gov/criminal/fraud/fcpa/cases/

siemens/12-15-08siemensakt-plea.pdf. 268 See Minute Entry of Guilty Plea, United States v. Peterson, supra note 

8, ECF 13; see also Press Release, U.S. Dept. of Justice, Former Morgan 

Stanley Managing Director Pleads Guilty for Role in Evading Internal 

Controls Required by FCPA (Apr. 23, 2012), available at http://www.

justice.gov/opa/pr/2012/April/12-crm-534.html. 269 See Criminal Information, United States v. Baker Hughes Svcs. 

Int’l, No. 07-cr-129 (S.D. Tex. Apr. 11, 2007), ECF No. 1, available at

http://www.justice.gov/criminal/fraud/fcpa/cases/baker-hughs/04-11-

07bakerhughesintl-info.pdf. 270 See United States v. Panalpina, Inc., supra note 68. 271 Id. 272 See FASB Statement of Financial Accounting Concepts No. 2, ¶¶ 

63-80.

273 PCAOB Auditing Standard No. 12 and PCAOB AU Section 325. 274 See Section 10A of the Exchange Act, 15U.S.C. § 78j-1. 275 18 U.S.C. § 1952. 276 See, e.g., United States v. Nexus Technologies, supra note 53; Criminal 

Information, United States v. Robert Richard King, et al., No. 01-cr-190 

(W.D. Mo. June 27, 2001), available at http://www.justice.gov/criminal/

fraud/fcpa/cases/kingr-etal/05-03-02king-robert-indict.pdf; Superseding 

Indictment, United States v. Mead, supra note 44; Criminal Information, 

United States v. Saybolt North America Inc., et al., No. 98-cr-10266 (D. 

Mass. Aug. 18, 1998), available at http://www.justice.gov/criminal/

fraud/fcpa/cases/saybolt/08-10-98saybolt-info.pdf. 277 See Second Superseding Indictment, United States v. Kozeny, No. 05-

cr-518 (S.D.N.Y. May 26, 2009), ECF No. 203, available at http://www.

justice.gov/criminal/fraud/fcpa/cases/kozenyv/05-26-09bourke2ndsupersed-indict.pdf; Judgment, United States v. Bourke, No. 05-cr-518 

(S.D.N.Y. Nov. 12, 2009), ECF No. 253, available at http://www.justice.

gov/criminal/fraud/fcpa/cases/kozenyv/11-12-09bourke-judgment.pdf. 278 Plea Agreement, United States v. Control Components, supra note 

235, ECF No. 7; see also Order, United States v. Carson, supra note 119, 

ECF No. 440 (denying motion to dismiss counts alleging Travel Act 

violations), available at http://www.justice.gov/criminal/fraud/fcpa/

cases/carsons/2011-09-20-carson-minutes-denying-motion-to-dismiss.

pdf. 279 See, e.g., Criminal Information, United States v. Esquenazi, supra note 

44; Criminal Information, United States v. Green, supra note 44; Criminal 

Information, United States v. General Elec. Co., No. 92-cr-87 (S.D. Ohio 

July 22, 1992), available at http://www.justice.gov/criminal/fraud/fcpa/

cases/general-electric/1992-07-22-general-electric-information.pdf. 280 Foreign officials may “not be charged with violating the FCPA itself, 

since the [FCPA] does not criminalize the receipt of a bribe by a foreign 

official.” United States v. Blondek, 741 F.Supp. 116, 117 (N.D. Tex. 

1990), aff ’d United States v. Castle, 925 F.2d 831 (5th Cir. 1991) (“We 

hold that foreign officials may not be prosecuted under 18 U.S.C. § 

371 for conspiring to violate the FCPA.”). Foreign officials, however, 

can be charged with violating the FCPA when the foreign official acts 

as an intermediary of a bribe payment. See, e.g., Information, United 

States v. Basu, No. 02-cr-475 (D.D.C. Nov. 26, 2002) (World Bank 

employee charged with wire fraud and FCPA violations for facilitating 

bribe payments to another World Bank official and Kenyan government 

official), available at http://www.justice.gov/criminal/fraud/fcpa/cases/

basu/11-26-02basu-info.pdf; Information, United States v. Sengupta, No. 

02-cr-40 (D.D.C. Jan. 30, 2002), available at http://www.justice.gov/

criminal/fraud/fcpa/cases/sengupta/01-30-02sengupta-info.pdf. 

281 See, e.g., Judgments, United States v. Esquenazi, supra note 44, ECF 

Nos. 182, 816, 824 (judgments against foreign official defendants).

282 Criminal Information, United States v. SSI Int’l, supra note 235 

(alleging violations of 18 U.S.C. §§ 1343, 1346); Plea Agreement, United 

States v. SSI Int’l, supra note 235, (Oct. 10, 2006), available at http://

www.justice.gov/criminal/fraud/fcpa/cases/control-inc/07-24-09cciplea-agree.pdf. 283 See Ex-Im Bank, Form of Exporter’s Certificate, EBD-M-56 ( Jan. 

2007), available at http://www.exim.gov/pub/ins/pdf/ebd-m-56.pdf. 284 See 18 U.S.C. § 1001. 285 22 C.F.R. §§ 130.2, 130.9. 286 For example, in United States v. BAE Systems plc, BAE pleaded guilty 

to conspiring to defraud the United States by impairing and impeding its 

lawful functions, to making false statements about its FCPA compliance 

program, and to violating the AECA and ITAR.  BAE paid a $400 

million fine and agreed to an independent corporate monitor to ensure 

compliance with applicable anti-corruption and export control laws. 

Criminal Information and Plea Agreement, United States v. BAE Sys. 

plc, No. 10-cr-35 (D.D.C. Mar. 1, 2010), ECF Nos.1, 8, available at

http://www.justice.gov/criminal/fraud/fcpa/cases/bae-system/02-01-

10baesystems-info.pdf and http://www.justice.gov/criminal/fraud/fcpa/

cases/bae-system/03-01-10baesystems-plea-agree.pdf. In an action based 

on the same underlying facts as the criminal guilty plea, BAE entered 

a civil settlement with the Directorate of Defense Trade Controls for 

violations of AECA and ITAR, including over 2500 ITAR violations 

that included a failure to report the payment of fees or commissions 

associated with defense transactions and failure to maintain records 

involving ITAR-controlled transactions.  BAE paid $79 million in 

penalties, and the State Department imposed a “policy of denial” for 

export licenses on three BAE subsidiaries involved in the wrongful 

conduct. Consent Agreement between BAE Sys. plc and Defense Trade 

Controls at 17-20, Bureau of Political-Military Affairs, U.S. Dept. of State 

(May 16, 2011), available at http://www.pmddtc.state.gov/compliance/

consent_agreements/pdf/BAES_CA.pdf; Proposed Charging Letter, In 

re Investigation of BAE Systems plc Regarding Violations of the Arms 

Export Control Act and the International Traffic in Arms Regulations, 

U.S. Dept. of State (May 2011), available at http://www.pmddtc.state.

gov/compliance/consent_agreements/pdf/BAES_PCL.pdf. 287 26 U.S.C. § 162(c)(1); see also Plea Agreement, United States v. Smith, 

No. 07-cr-69 (C.D. Cal. Sept. 3, 2009), ECF No. 89, available at http://

www.justice.gov/criminal/fraud/fcpa/cases/smithl/09-03-09smithl-pleaagree.pdf; Criminal Information, United States v. Titan Corp., supra note 

185.

288 See USAM § 9-27.000. 289 See USAM § 9-27.420 (setting forth considerations to be weighed 

when determining whether it would be appropriate to enter into plea 

agreement).

290 See USAM § 9-28.000 et seq. 291 See USAM § 9-28.710 (discussing attorney-client and work product 

protections). 

292 See http://www.sec.gov/divisions/enforce/enforcementmanual.pdf. 293 See USAM§ 9-28.300.A; see also USAM § 9-28.700.B (explaining 

benefits of cooperation for both government and corporation).

294 See USAM § 9-28.900 (discussing restitution and remediation). The 

commentary further provides that prosecutors should consider and weigh 

whether the corporation appropriately disciplined wrongdoers and a 

corporation’s efforts to reform, including its quick recognition of the 

flaws in the program and its efforts to improve the program. Id. 295 See USAM §§ 9-27.230, 9-27.420. 296 U.S. Sentencing Guidelines § 8B2.1(b)(7) (2011). 297 Id. § 8C2.5(f )(2) (2011). 298 U.S. Sec. and Exchange Comm., Report of Investigation 

Pursuant to Section 21(a) of the Securities Exchange Act 

of 1934 and Commission Statement on the Relationship 

of Cooperation to Agency Enforcement Decisions, SEC 

Rel. Nos. 34-44969 and AAER-1470 (Oct. 23, 2001) [hereinafter 

Seaboard Report] available at http://www.sec.gov/litigation/

investreport/34-44969.htm.

299 U.S. Sec. and Exchange Comm., Policy Statement 

Concerning Cooperation by Individuals in its 

Investigations and Related Enforcements Actions, 17 

C.F.R. § 202.12 ( Jan. 10, 2010), available at http://www.sec.gov/rules/
APPENDIX

Endnotes

116

policy/2010/34-61340.pdf. 300 See U.S. Sentencing Guidelines at § 8B2.1(a)(2). 301 U.S. Sentencing Guidelines § 8B2.1(b). 302 See generally Debbie Troklus, et al., Compliance 101: How 

to build and maintain an effective compliance and ethics 

program, Society of Corp. Compliance and Ethics (2008) 

3-9 [hereinafter Compliance 101] (listing reasons to implement 

compliance program, including protecting company’s reputation, 

creating trust between management and employees, preventing false 

statements to customers, creating efficiencies and streamlining processes, 

detecting employee and contractor fraud and abuse, ensuring highquality products and services, and providing “early warning” system of 

inappropriate actions); Transparency Int’l, Business Principles 

for Countering Bribery: Small and Medium Enterprise 

(SME) Edition 5 (2008) (citing benefits of anti-bribery program 

like protecting reputation, creating record of integrity enhances 

opportunities to acquire government business, protecting company 

assets otherwise squandered on bribes); Mark Pieth, Harmonising 

Anti-Corruption Compliance: The OECD Good Practice 

Guidance 45-46 (2011) [hereinafter Harmonising AntiCorruption Compliance] (citing need for compliance program 

to prevent and detect in-house risks, such as workplace security or 

conflicts of interest, and external risks, like anti-trust violations, embargo 

circumvention, environmental hazards, and money laundering).

303 Debarment authorities, such as the Department of Defense or 

the General Services Administration, may also consider a company’s 

compliance program when deciding whether to debar or suspend 

a contractor. Specifically, the relevant regulations provide that the 

debarment authority should consider “[w]hether the contractor had 

effective standards of conduct and internal control systems in place at 

the time of the activity which constitutes cause for debarment or had 

adopted such procedures prior to any Government investigation of the 

activity cited as a cause for debarment,” and “[w]hether the contractor 

has instituted or agreed to institute new or revised review and control 

procedures and ethics training programs.” 48 C.F.R. § 9.406-1(a).

304 Seaboard Report, supra note 298; U.S. Sec. and Exchange 

Comm., Report of Investigation Pursuant to Section 21(a) 

of the Securities Exchange Act of 1934 and Commission 

Statement on the Relationship of Cooperation to Agency 

Enforcement Decisions, SEC Rel. No. 44969 (Oct. 23, 2001), 

available at http://www.sec.gov/litigation/investreport/34-44969.htm. 305 USAM § 9-28.300. When evaluating the pervasiveness of wrongdoing 

within the corporation, prosecutors are advised that while it may be 

appropriate to charge a corporation for minor misconduct where the 

wrongdoing was pervasive, “it may not be appropriate to impose liability 

upon a corporation, particularly one with a robust compliance program in 

place, under a strict respondeat superior theory for the single isolated act 

of a rogue employee.” Id. § 9-28.500.A (emphasis added). Prosecutors 

should also consider a company’s compliance program when examining 

any remedial actions taken, including efforts to implement an effective 

compliance program or to improve an existing one. As the commentary 

explains, “although the inadequacy of a corporate compliance program is 

a factor to consider when deciding whether to charge a corporation, that 

corporation’s quick recognition of the flaws in the program and its efforts 

to improve the program are also factors to consider as to appropriate 

disposition of a case.” Id. § 9-28.900.B. Finally, the Principles of Federal 

Prosecution of Business Organizations provides that prosecutors should 

consider the existence and effectiveness of the corporation’s pre-existing 

compliance program in determining how to treat a corporate target. Id.

§ 9-28.800.

306 See USAM § 9-28.800.B; see also U.S. Sentencing Guidelines § 

8B2.1(a) (2011) (“The failure to prevent or detect the instant offense 

does not necessarily mean that the program is not generally effective in 

preventing and detecting criminal conduct.”).

307 See Press Release, U.S. Dept. of Justice, Former Morgan Stanley 

Managing Director Pleads Guilty for Role in Evading Internal Controls 

Required by FCPA (Apr. 25, 2012) (declining to bring criminal case 

against corporate employer that “had constructed and maintained a 

system of internal controls, which provided reasonable assurances that its 

employees were not bribing government officials”), available at http://

www.justice.gov/opa/pr/2012/April/12-crm-534.html; Press Release, 

U.S. Sec. and Exchange Comm., SEC Charges Former Morgan Stanley 

Executive with FCPA Violations and Investment Adviser Fraud, No. 

2012-78 (Apr. 25, 2012) (indicating corporate employer was not charged 

in the matter and had “cooperated with the SEC’s inquiry and conducted 

a thorough internal investigation to determine the scope of the improper 

payments and other misconduct involved”), available at http://www.sec.

gov/news/press/2012/2012-78.htm. 308 See USAM § 9-28.800.B. 309 See, e.g., Int’l Chamber of Commerce, ICC Rules on 

Combating Corruption (2011) [hereinafter ICC Rules on 

Combating Corruption], available at http://www.iccwbo.

org/uploadedFiles/ICC/policy/business_in_society/Statements/

ICC_Rules_on_Combating_Corruption_2011edition.pdf; 

Transparency Int’l, Business Principles for Countering 

Bribery (2d ed. 2009) [hereinafter Business Principles for 

Countering Bribery], available at http://www.transparency.

org/global_priorities/private_sector/business_principles/; United 

Kingdom Ministry of Justice, The Bribery Act of 2010, 

Guidance about procedures which relevant commercial 

organisations can put into place to prevent persons 

associated with them from bribing (2010), available at http://

www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.

pdf; World Bank Group, Integrity Compliance Guidelines

(2011) [hereinafter Integrity Compliance Guidelines], 

available at http://siteresources.worldbank.org/INTDOII/Resources/

Integrity_Compliance_Guidelines.pdf; Asia-Pacific Economic 

Cooperation, APEC Anti-corruption Code of Conduct 

for Business (2007) [hereinafter APEC Anti-corruption Code], 

available at http://www.apec.org/Groups/SOM-Steering-Committeeon-Economic-and-Technical-Cooperation/Task-Groups/~/media/

Files/Groups/ACT/07_act_codebrochure.ashx; Int’l Chamber of 

Commerce, Transparency Int’l, United Nations Global 

Compact, and World Economic Forum, Resisting Extortion 

and Solicitation in International Transactions: A 

Company Tool for Employee Training (2011), available at

http://www3.weforum.org/docs/WEF_PACI_RESIST_Report_2011.

pdf; Int’l Chamber of Commerce, et al., Clean Business 

Is Good Business, available at http://www3.weforum.org/docs/

WEF_PACI_BusinessCaseFightingCorruption_2011.pdf; World 

Economic Forum, Partnering Against Corruption – 

Principles for Countering Bribery (2009) [hereinafter 

Partnering Against Corruption], available at http://www3.

weforum.org/docs/WEF_PACI_Principles_2009.pdf; Working 

Group on Bribery, OECD, Good Practice Guidance on 

Internal Controls, Ethics, and Compliance 2010, [hereinafter 

OECD Good Practice Guidance] available at http://www.oecd.

org/dataoecd/5/51/44884389.pdf; U.N. Global Compact, The Ten 

Principles [hereinafter The Ten Principles] available at http://

www.unglobalcompact.org/aboutTheGC/TheTenPrinciples/index.html. 310 This is also reflected in the Sentencing Guidelines, which recognizes 

that no single, formulaic set of requirements should be imposed, but 

instead focuses on a number of factors like applicable industry practice 

or the standards called for by any applicable governmental regulation, 

the size of the organization, and whether the organization has engaged 

in similar misconduct in the past. See U.S. Sentencing Guidelines § 

8B2.1 & app. note 2 (2011).

311 This was underscored by then-SEC Commissioner Cynthia Glassman 

in 2003 in a speech on the SEC’s implementation of the Sarbanes-Oxley 

Act: “[T]he ultimate effectiveness of the new corporate governance rules 

will be determined by the ‘tone at the top.’ Adopting a code of ethics 

means little if the company’s chief executive officer or its directors make 

clear, by conduct or otherwise, that the code’s provisions do not apply 
117

to them. . . . Corporate officers and directors hold the ultimate power 

and responsibility for restoring public trust by conducting themselves 

in a manner that is worthy of the trust that is placed in them.” Cynthia 

Glassman, SEC Implementation of Sarbanes-Oxley: The New Corporate 

Governance, Remarks at National Economists Club (April 7, 2003), 

available at http://www.sec.gov/news/speech/spch040703cag.htm . 312 Indeed, research has found that “[e]thical culture is the single biggest 

factor determining the amount of misconduct that will take place in a 

business.”  Ethics Resource Center, 2009 National Business 

Ethics Survey: Ethics in the Recession (2009), at 41.  Metrics 

of ethical culture include ethical leadership (tone at the top), supervisor 

reinforcement of ethical behavior (middle management reinforcement), 

and peer commitment (supporting one another in doing the right 

thing).  Ethics Resource Center, 2011 National Business 

Ethics Survey: Workplace Ethics in Transition (2012) at 19.  

Strong ethical cultures and strong ethics and compliance programs are 

related, as data show that a well-implemented program helps lead to a 

strong ethical culture.  Id. at 34.  “Understanding the nature of any gap 

between the desired culture and the actual culture is a critical first step in 

determining the nature of any ethics-based risks inside the organization.”  

David Gebler, The Role of Culture at 1.7, in Society of Corporate 

Compliance and Ethics, The Complete Compliance and 

Ethics Manual (2011).  To create an ethical culture, attention must be 

paid to norms at all levels of an organization, including the “tone at the 

top,” “mood in the middle,” and “buzz at the bottom.”  Id. 1.9-1.10. 313 See, e.g., U.S. Sentencing Guidelines § 8B2.1(2)(B)-(C) (2011). 314 Id. 315 Id. 316 Id. 317 See, e.g., Ethics and Compliance Officer Association 

Foundation, The Ethics and Compliance Handbook: A 

Practical Guide From Leading Organizations (2008) at 13-26 

[hereinafter The Ethics and Compliance Handbook]. 318 See U.S. Sentencing Guidelines § 8B2.1(b)(4) (2011). 319 See U.S. Sentencing Guidelines § 8B2.1(b)(6) (2011) (“The 

organization’s compliance and ethics program shall be promoted 

and enforced consistently throughout the organization through (A) 

appropriate incentives to perform in accordance with the compliance and 

ethics program; and (B) appropriate disciplinary measures for engaging 

in criminal conduct and for failing to take reasonable steps to prevent or 

detect criminal conduct.”).

320 See, e.g., Joseph E. Murphy, Society of Corp. Compliance and 

Ethics, Using Incentives in Your Compliance and Ethics 

Program (2011) at 1; The Ethics and Compliance Handbook, 

supra note 317, at 111-23. 321 Stephen M. Cutler, Director, Division of Enforcement, SEC, Tone at 

the Top: Getting It Right, Second Annual General Counsel Roundtable 

(Dec. 3, 2004), available at http://www.sec.gov/news/speech/

spch120304smc.htm. 322 See, e.g., ICC Rules on Combating Corruption, supra note 309, 

at 8.

323 See, e.g. U.S. Sentencing Guidelines § 8B2.1(b)(5)(C); 

Compliance 101, supra note 302, at 30-33. 324 Corporate Board Member/FTI Consulting 2009 Legal Study, Buckle 

Up. Boards and General Counsel May Face a Bumpy Ride in 2009, at 5 

(“Interestingly, while 67% of general counsel say their company is subject 

to compliance under the FCPA, 64% of those say there is room for 

improvement in their FCPA training and compliance programs.”).

325 See U.S. Sentencing Guidelines § 8B2.1(b)(5)(B) (“The 

organization shall take reasonable steps . . . to evaluate periodically the 

effectiveness of the organization’s compliance and ethics program.”).

326 See, e.g., Compliance 101, supra note 302, at 60-61; The Ethics 

and Compliance Handbook, supra note 317, at 155-60; Business 

Principles for Countering Bribery, supra note 309, at 14. 327 See, e.g., Michael M. Mannix and David S. Black., Compliance Issues 

in M&A: Performing Diligence on the Target’s Ethics and Compliance 

Program at 5.71-5.81, in Society of Corporate Compliance 

and Ethics, The Complete Compliance and Ethics Manual 

(2011).

328 Complaint, SEC v. Syncor International Corp., supra note 190; 

Criminal Information, United States v. Syncor Taiwan, Inc., supra note 

189. 

329 U.S. Dept. of Justice, FCPA Op. Release 08-02 ( June 13, 2008), 

available at http://justice.gov/criminal/fraud/fcpa/opinion/2008/0802.

pdf. 330 Complaint, SEC v. Rae Sys., Inc., supra note 92; Non-Pros. Agreement, 

In re Rae Sys. Inc., supra note 92. 331 U.S. Dept. of Commerce, Business Ethics: A Manual for 

Managing a Responsible Business Enterprise in Emerging 

Market Economies (2004), available at http://www.ita.doc.gov/

goodgovernance/adobe/bem_manual.pdf. 332 U.S. Dept. of State, Fighting Global Corruption: Business 

Risk Management (2d ed. 2001), available at http://www.ogc.doc.

gov/pdfs/Fighting_Global_Corruption.pdf. 333 See Harmonising Anti-Corruption Compliance, supra note 

302, at 46 (“Anti-corruption compliance is becoming more and more 

harmonised worldwide.”).

334 OECD Good Practice Guidance, supra note 309. 335 APEC Anti-corruption Code, supra note 309. 336 ICC Rules on Combating Corruption, supra note 309. 337 Business Principles for Countering Bribery, supra note 309. 338 The Ten Principles, supra note 309. 339 Integrity Compliance Guidelines, supra note 309. 340 Partnering Against Corruption, supra note 309. 341 15 U.S.C. §§ 78dd-2(g)(1)(A), 78dd-3(e)(1)(A), 78ff(c)(1)(A). 342 15 U.S.C. §§ 78dd-2(g)(2)(A), 78dd-3(e)(2)(A), 78ff(c)(2)(A). 343 15 U.S.C. § 78ff(a). 344 15 U.S.C. § 78ff(a). 345 18 U.S.C. § 3571(d); see Southern Union v. United States, 132 S. Ct. 

2344, 2350-51 & n.4 (2012).

346 15 U.S.C. §§ 78dd-2(g)(3), 78dd-3(e)(3), 78ff(c)(3). 347 The U.S. Sentencing Guidelines are promulgated by the U.S. 

Sentencing Commission:

The United States Sentencing Commission 

(“Commission”) is an independent agency in the 

judicial branch composed of seven voting and two 

non-voting ex-officio members. Its principal purpose 

is to establish sentencing policies and practices for 

the federal criminal justice system that will assure the 

ends of justice by promulgating detailed guidelines 

prescribing the appropriate sentences for offenders 

convicted of federal crimes. The Guidelines and 

policy statements promulgated by the Commission 

are issued pursuant to Section 994(a) of Title 28, 

United States Code.

U.S. Sentencing Guidelines § 1A1.1 (2011). 348 Id. at ch. 3-5. 349 Id. § 2C1.1. 350 Id. § 2C1.1(b). 351 Id. § 3B1.1. 352 Id. at ch. 4, § 5A. 353 Id. § 2B1.1(b)(10)(B), 2B1.1(b)(18)(A). 354 Id. § 8C2.4 (a). 355 Id. § 8C2.5. 356 Id. § 8C2.5(f ), 8C2.5(g). 357 DOJ has exercised this civil authority in limited circumstances in 

the last thirty years. See, e.g., United States & SEC v. KPMG Siddharta 

Siddharta & Harsono, et al., No. 01-cv-3105 (S.D. Tex. 2001) (entry 

of injunction barring company from future FCPA violations based on 

allegations that company paid bribes to Indonesian tax official in order 

to reduce the company’s tax assessment); United States v. Metcalf & 

Eddy, Inc., No. 99-cv-12566 (D. Mass. 1999) (entry of injunction barring 

company from future FCPA violations and requiring maintenance of 

compliance program based on allegations that it paid excessive marketing 

and promotional expenses such as airfare, travel expenses, and per 

diem to an Egyptian official and his family); United States v. American 

Totalisator Co. Inc., No. 93-cv-161 (D. Md. 1993) (entry of injunction 

barring company from future FCPA violations based on allegations that 

it paid money to its Greek agent with knowledge that all or some of 

the money paid would be offered, given, or promised to Greek foreign 

officials in connection with sale of company’s system and spare parts); 

United States v. Eagle Bus Manufacturing, Inc., No. 91-cv-171 (S.D. Tex. 

1991) (entry of injunction barring company from future FCPA violations 

based on allegations that employees of the company participated in 
APPENDIX

Endnotes

118

bribery scheme to pay foreign officials of Saskatchewan’s state-owned 

transportation company $50,000 CAD in connection with sale of buses); 

United States v. Carver, et al., No. 79-cv-1768 (S.D. Fla. 1979) (entry 

of injunction barring company from future FCPA violations based on 

allegations that Carver and Holley, officers and shareholders of Holcar 

Oil Corp., paid $1.5 million to Qatar foreign official to secure an oil 

drilling concession agreement); United States v. Kenny, et al., No. 79-cv2038 (D.D.C. 1979) (in conjunction with criminal proceeding, entry of 

injunction barring company from future FCPA violations for providing 

illegal financial assistance to political party to secure renewal of stamp 

distribution agreement).

358 15 U.S.C. §§ 78dd-2(g)(1)(B), 78dd-3(e)(1)(B), 78ff(c)(1)(B); see also

17 C.F.R. § 201.1004 (providing adjustments for inflation).

359 15 U.S.C. §§ 78dd-2(g)(2)(B), 78dd-3(e)(2)(B), 78ff(c)(2)(B); see also

17 C.F.R. § 201.1004 (providing adjustments for inflation).

360 15 U.S.C. §§ 78dd-2(g)(3), 78dd-3(e)(3), 78ff(c)(3); see also 17 C.F.R. 

§ 201.1004 (providing adjustments for inflation).

361 Section 21(B)(b) of the Exchange Act, 15 U.S.C. § 78u(d)(3); see also

17 C.F.R. § 201.1004 (providing adjustments for inflation).

362 See Securities Enforcement Remedies and Penny Stock Reform Act 

of 1990, Pub. L. No. 101-429, 104 Stat. 931 §§ 202, 301, 401, and 402 

(codified in scattered sections of Title 15 of the United States Code).

363 48 C.F.R. §§ 9.406-2, 9.407-2. 364 48 C.F.R. § 9.402(b). 365 See 48 C.F.R. §§ 9.406-1, 9.407-1(b)(2). Section 9.406-1 sets forth the 

following non-exhaustive list of factors:

(1) Whether the contractor had effective standards 

of conduct and internal control systems in place at 

the time of the activity which constitutes cause for 

debarment or had adopted such procedures prior to 

any Government investigation of the activity cited as 

a cause for debarment.

(2) Whether the contractor brought the activity 

cited as a cause for debarment to the attention of the 

appropriate Government agency in a timely manner.

(3) Whether the contractor has fully investigated 

the circumstances surrounding the cause for 

debarment and, if so, made the result of the 

investigation available to the debarring official.

(4) Whether the contractor cooperated fully with 

Government agencies during the investigation and 

any court or administrative action.

(5) Whether the contractor has paid or has agreed 

to pay all criminal, civil, and administrative liability 

for the improper activity, including any investigative 

or administrative costs incurred by the Government, 

and has made or agreed to make full restitution.

(6) Whether the contractor has taken appropriate 

disciplinary action against the individuals 

responsible for the activity which constitutes cause 

for debarment.

(7) Whether the contractor has implemented or 

agreed to implement remedial measures, including 

any identified by the Government.

(8) Whether the contractor has instituted or agreed 

to institute new or revised review and control 

procedures and ethics training programs.

(9) Whether the contractor has had adequate 

time to eliminate the circumstances within the 

contractor’s organization that led to the cause for 

debarment.

(10) Whether the contractor’s management 

recognizes and understands the seriousness of the 

misconduct giving rise to the cause for debarment 

and has implemented programs to prevent 

recurrence. 366 48 C.F.R. § 9.406-1(a). 367 Exec. Order No. 12,549, 51 Fed. Reg. 6,370 (Feb. 18, 1986); Exec. 

Order No. 12,689, 54 Fed. Reg. 34131 (Aug. 18, 1989). 

368 48 C.F.R. § 9.407-2(b). 369 USAM § 9-28.1300 (2008). 370 See, e.g., African Development Bank Group, Integrity 

and Anti-Corruption Progress Report 2009-2010 7, 14 

(“As the premier financial development institution in Africa, the 

AfDB is determined to root out misconduct, fraud and corruption 

within its own ranks as well as in the implementation of the projects 

it finances. In order to do so, the Bank created an anti-corruption and 

fraud investigation division in November 2005 as its sole investigative 

body. The unit became operational in June 2006 and commenced 

investigations in January 2007. . . . Investigations conducted by the 

IACD [Integrity and Anti-Corruption Department] are not criminal 

proceedings; they are administrative in nature. Sanctions range from 

personnel disciplinary actions, such as separation, to loan cancellation 

and debarment for contractors, which can be temporary or permanent.”), 

available at http://www.afdb.org/fileadmin/uploads/afdb/Documents/

Publications/Integrity%20and%20Anti-Corruption.pdf; The World 

Bank Group, Procurement: Sanctions Committee (“The World Bank’s 

debarment process was first formulated in July, 1996, and the Sanctions 

Committee was established in November 1998 to review allegations and 

recommend sanctions to the President. Written procedures were issued 

in August 2001 and are posted on the Bank’s website, along with the 

sanction actions.”), available at http://web.worldbank.org/WBSITE/

EXTERNAL/PROJECTS/PROCUREMENT/0,,contentMDK:5000

2288~pagePK:84271~piPK:84287~theSitePK:84266,00.html. 371 See African Development Bank Group, Asian Development Bank, 

European Bank for Reconstruction and Development, Inter-American 

Development Bank Group and World Bank Group, Agreement 

for Mutual Enforcement of Debarment Decisions (Apr. 9, 2010), 

available at http://siteresources.worldbank.org/NEWS/Resources/

AgreementForMutualEnforcementofDebarmentDecisions.pdf. 372 Id.; see also The World Bank Group, Cross-Debarment Accord Steps Up 

Fight Against Corruption (Apr. 9, 2010) (“‘With today’s cross-debarment 

agreement among development banks, a clear message on anticorruption 

is being delivered: Steal and cheat from one, get punished by all,’ said 

World Bank Group President Robert B. Zoellick.”), available at http://

web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:2

2535805~pagePK:64257043~piPK:437376~theSitePK:4607,00.html. 373 22 C.F.R. §§ 126.7(a)(3)-(4), 120.27(a)(6). 374 Authority under the AECA is delegated to the DDTC. See 22 C.F.R. 

§ 120.1(a). 

375 22 U.S.C. § 2778(g)(1)(A)(vi), (g)(3)(B). 376 22 C.F.R. § 127.7(c). 377 See supra note 286. 378 See Gary G. Grindler, Acting Dep. Att’y Gen., U.S. Dept. of 

Justice, Mem. to the Heads of Department Components and United 

States Attorneys on Additional Guidance on the Use of Monitors in 

Deferred Prosecution Agreements and Non-Prosecution (May 25, 

2010), available at http://www.justice.gov/dag/dag-memo-guidancemonitors.pdf; Lanny A. Breuer, Assist. Att’y Gen., Dep’t of Justice, 

Mem. to All Criminal Division Personnel on Selection of Monitors in 

Criminal Division Matters ( June 24, 2009), available at http://www.

justice.gov/criminal/fraud/fcpa/docs/response3-supp-appx-3.pdf; see 

also Craig S. Morford, Acting Dep. Att’y Gen., U.S. Dept. of Justice, 

Mem. to the Heads of Department Components and United States 

Attorneys on Selection and Use of Monitors in Deferred Prosecution 

Agreements and Non-Prosecution Agreements with Corporations 

(Mar. 7, 2008), available at http://www.justice.gov/dag/morforduseofmonitorsmemo-03072008.pdf. 379 Historically, DOJ had, on occasion, agreed to DPAs with companies 

that were not filed with the court. That is no longer the practice of DOJ. 

380 USAM § 9-27.230. 381 USAM § 9-27.230.B. 382 DOJ has recently declined matters where some or all of the following 
119

circumstances were present: (1) a corporation voluntarily and fully 

disclosed the potential misconduct; (2) corporate principles voluntarily 

engaged in interviews with DOJ and provided truthful and complete 

information about their conduct; (3) a parent company conducted 

extensive pre-acquisition due diligence of potentially liable subsidiaries 

and engaged in significant remediation efforts post-acquisition; (4) a 

company provided information about its extensive compliance policies, 

procedures, and internal controls; (5) a company agreed to a civil 

resolution with the Securities and Exchange Commission while also 

demonstrating that criminal declination was appropriate; (6) only a single 

employee was involved in the improper payments; and (7) the improper 

payments involved minimal funds compared to overall business revenues. 

383 See Criminal Information, United States v. Peterson, supra note 8, 

Press Release, U.S. Dept. of Justice, Former Morgan Stanley Managing 

Director Pleads Guilty for Role in Evading Internal Controls Required 

by FCPA (Apr. 25, 2012), available at http://www.justice.gov/opa/

pr/2012/April/12-crm-534.html (“After considering all the available 

facts and circumstances, including that Morgan Stanley constructed and 

maintained a system of internal controls, which provided reasonable 

assurances that its employees were not bribing government officials, the 

Department of Justice declined to bring any enforcement action against 

Morgan Stanley related to Peterson’s conduct. The company voluntarily 

disclosed this matter and has cooperated throughout the department’s 

investigation.”); see also Press Release, U.S. Sec. and Exchange Comm., 

SEC Charges Former Morgan Stanley Executive with FCPA Violations 

and Investment Adviser Fraud (Apr. 25, 2012), available at http://www.

sec.gov/news/press/2012/2012-78.htm (“Morgan Stanley, which is not 

charged in the matter, cooperated with the SEC’s inquiry and conducted 

a thorough internal investigation to determine the scope of the improper 

payments and other misconduct involved.”). 

384 SEC Rules of Practice, 17 C.F.R. § 201.102(e). 385 Deferred Pros. Agreement, In the Matter of Tenaris, S.A. (May 17, 

2011), available at http://www.sec.gov/news/press/2011/2011-112-dpa.

pdf; see also Press Release, U.S. Sec. and Exchange Comm., Tenaris to Pay 

$5.4 Million in SEC’s First-Ever Deferred Prosecution Agreement (May 

17, 2011), available at http://www.sec.gov/news/press/2011/2011-112.

htm. 386 See Non-Pros. Agreement, In re Tenaris, S.A. (May 17, 2011), available 

at http://www.justice.gov/criminal/fraud/fcpa/cases/tenaris-sa/2011-

03-14-tenaris.pdf. 387 See U.S. Sec. and Exchange Comm., Enforcement Manual

§ 6.2.3. (March 9, 2012), available at http://www.sec-gov/divisions/

enforce/enforcementmanual.pdf.

388 See id. § 6.2.4. 389 See id. § 2.6. 390 18 U.S.C. § 1514A(c). 391 18 U.S.C. § 1513(e). 392 15 U.S.C. § 78u-6(a)(3). The new provision defines “original 

information” to mean information that:

(A) is derived from the independent knowledge 

or analysis of a whistleblower; (B) is not known 

to the Commission from any other source, unless 

the whistleblower is the original source of the 

information; and (C) is not exclusively derived from 

an allegation made in a judicial or administrative 

hearing, in a governmental report, hearing, audit, 

or investigation, or from the news media, unless the 

whistleblower is a source of the information. 393 15 U.S.C. § 78u-6; see also Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Pub. L. No. 111-203, § 922, 124 Stat. 1376, 

1841-49 (2010).

394 For detailed information about the program, including eligibility 

requirements and certain limitations that apply, see Section 922 of the 

Dodd-Frank Wall Street Reform and Consumer Protection Act, available 

at http://www.sec.gov/about/offices/owb/dodd-frank-sec-922.pdf, 

and the final rules on eligibility, Exchange Act Rule 21F-8, 17 C.F.R. § 

240.21F-8. 

395 For example, the rules: (1) make a whistleblower eligible for an award 

if the whistleblower reports original information internally, and the 

company informs the SEC about the violations; (2) give whistleblowers 

120 days to report information to the SEC after first reporting 

internally and still be treated as if he or she had reported to the SEC 

at the earlier reporting date , thus preserving their “place in line” for 

a possible whistleblower award from the SEC; and (3) provide that a 

whistleblower’s voluntary participation in an entity’s internal compliance 

and reporting systems is a factor that can increase the amount of an 

award, and that a whistleblower’s interference with internal compliance 

and reporting system is a factor that can decrease the amount of an award. 

See Exchange Act Rule 21F, 17 C.F.R. § 240.21F. 396 See Exchange Act Rule 21F-7(b), 17 C.F.R. § 240.21F-7(b). 397 For example, SEC staff will not disclose a whistleblower’s identity in 

response to requests under the Freedom of Information Act. However, 

there are limits on SEC’s ability to shield a whistleblower’s identity, 

and in certain circumstances SEC must disclose it to outside entities. 

For example, in an administrative or court proceeding, SEC may be 

required to produce documents or other information that would 

reveal the whistleblower’s identity. In addition, as part of ongoing 

SEC investigatory responsibilities, SEC staff may use information 

provided by a whistleblower during the course of the investigation. In 

appropriate circumstances, SEC may also provide information, subject 

to confidentiality requirements, to other governmental or regulatory 

entities. Exchange Act Rule 21F-7(a), 17 C.F.R. 240.21F-7(a).

398 Although SEC does not have an opinion procedure release process, 

it has declared its decision to follow the guidance announced through 

DOJ’s FCPA Opinion Release Procedure. U.S. Sec. and Exchange 

Comm., SEC Release No. 34-17099 (Aug. 29, 1980), available at http://

www.sec.gov/news/digest/1980/dig082980.pdf. SEC Release No. 34-

17099 stated that, to encourage issuers to take advantage of the DOJ’s 

FCPA Review Procedure, as a matter of prosecutorial discretion, SEC 

would “not take enforcement action alleging violations of Section 30A 

in any case where an issuer has sought and obtained an FCPA Review 

letter from the Department, prior to May 31, 1981, stating that the 

Department will not take enforcement action under Section 30A with 

respect to the transaction involved.” Id. The release further noted that it 

would revisit this policy once the DOJ had evaluated the results of the 

FCPA Review Procedure after its first year of operation. A second release 

stated that the SEC would continue to adhere to the policy announced 

in Release No. 34-17099. U.S. Sec. and Exchange Comm., SEC Release 

No. 34-18255 (Nov. 13, 1981), available at http://www.sec.gov/news/

digest/1981/dig111381.pdf. 399 Both DOJ’s opinion procedure releases (from 1993 to present) and 

review procedure releases (from 1980-1992) are available at http://www.

justice.gov/criminal/fraud/fcpa/opinion. 400 The full regulations relating to DOJ’s opinion procedure are available 

at http://www.justice.gov/criminal/fraud/fcpa/docs/frgncrpt.pdf. 401 28 C.F.R. § 80.1. 402 28 C.F.R. § 80.3. 403 28 C.F.R. § 80.12 (“Neither the submission of a request for an 

FCPA Opinion, its pendency, nor the issuance of an FCPA Opinion, 

shall in any way alter the responsibility of an issuer to comply with the 

accounting requirements of 15 U.S.C. 78m(b)(2) and (3).”). 

404 28 C.F.R. § 80.4. 405 28 C.F.R. § 80.5. 406 28 C.F.R. § 80.6. 407 28 C.F.R. § 80.14(a). This non-disclosure policy applies regardless of 

whether DOJ responds to the request or the party withdraws the request 

before receiving a response. Id. 408 28 C.F.R. § 80.6. 409 28 C.F.R. § 80.2. 410 In connection with any request for an FCPA opinion, DOJ may 

conduct whatever independent investigation it believes appropriate. 28 

C.F.R. § 80.7. 

411 28 C.F.R. § 80.15. Once a request is withdrawn, it has no effect. 

However, DOJ reserves the right to retain a copy of any FCPA 

opinion request, documents, and information submitted during the 

opinion release procedure for any governmental purpose, subject to the 

restrictions on disclosures in 28 C.F.R. § 80.14.

412 28 C.F.R. § 80.8. 413 28 C.F.R. § 80.7. “Such additional information, if furnished orally, 

must be confirmed in writing promptly. The same person who signed 

the initial request must sign the written, supplemental information and 

must again certify it to be a true, correct and complete disclosure of the 

requested information.” Id. 414 28 C.F.R. § 80.9 (“No oral clearance, release or other statement 
APPENDIX

Endnotes

120

purporting to limit the enforcement discretion of the Department of 

Justice may be given. The requesting issuer or domestic concern may rely 

only upon a written FCPA opinion letter signed by the Attorney General 

or his designee.”). 

415 28 C.F.R. § 80.8. FCPA opinions do not bind or obligate any agency 

other than DOJ. They also do not affect the requesting party’s obligations 

to any other agency or under any statutory or regulatory provision other 

than those specifically cited in the particular FCPA opinion. 28 C.F.R. § 

80.11. If the conduct for which an FCPA opinion is requested is subject 

to approval by any other agency, such FCPA opinion may not be taken 

to indicate DOJ’s views on any legal or factual issues before that other 

agency. 28 C.F.R. § 80.13.

416 28 C.F.R. § 80.10. DOJ can rebut this presumption by a 

preponderance of the evidence. A court determining whether the 

presumption has been rebutted weighs all relevant factors, including 

whether the submitted information was accurate and complete and the 

activity was within the scope of conduct specified in the request. Id. As of 

September 2012, DOJ has never pursued an enforcement action against a 

party for conduct that formed the basis of an FCPA opinion stating that 

the prospective conduct would violate DOJ’s present enforcement policy. 

417 As a general matter, DOJ normally anonymizes much of the 

information in its publicly released opinions and includes the general 

nature and circumstances of the proposed conduct. DOJ does not release 

the identity of any foreign sales agents or other types of identifying 

information. 28 C.F.R. § 80.14(b). However, DOJ may release the 

identity of the requesting party, the foreign country in which the 

proposed conduct is to take place, and any actions DOJ took in response 

to the FCPA opinion request. Id. If a party believes that an opinion 

contains proprietary information, it may request that DOJ remove or 

anonymize those portions of the opinion before it is publicly released. 28 

C.F.R. § 80.14(c).

418 28 C.F.R. § 80.16. 
FCPA Unit

Fraud Section, Criminal Division

U.S. Department of Justice

1400 New York Avenue, N.W.

Washington, DC 20005

http://www.justice.gov/criminal/fraud/fcpa/

FCPA Unit

Enforcement Division

U.S. Securities & Exchange Commission

100 F Street, NE

Washington, DC 20549

http://www.sec.gov/spotlight/fcpa.shtml