While not a new piece of legislation, the United States Foreign Corrupt Practices Act (“FCPA”) is experiencing closer scrutiny than in prior years. Enacted in 1977 under 15 U.S.C. § 78dd-1, the FCPA contains two sets of provisions that cover two different but related goals. In broad terms, the first prohibits the payment of bribes to foreign officials in return for influence by that official in order to obtain business. The second attempts to ensure that proper record keeping and internal controls for business accounting methods are instituted so that slush funds and off-the-books transactions do not occur.
The FCPA has seen some enforcement since enacted, but recently has received much more attention, both domestically and abroad. In 1997, the international Organization for Economic Co-operation and Development (“OECD”) formed a convention on combatting bribery of foreign public officials and adopted much of the FCPA’s anti-bribery restrictions. As of today, forty nations have ratified the principles of the OECD.
Two U.S. government agencies enforce the provisions of the FCPA. The U.S. Securities and Exchange Commission (“SEC”) typically enforces civil judgments through a special enforcement unit established in 2010. The U.S. Department of Justice (“DOJ”) prosecutes the enforcement actions for criminal liability and also may issue or enforce civil judgments.
Working together, the SEC and DOJ issued its “Resource Guide” on November 14, 2012, to “provide practical advice about, and useful in-sights into” the enforcement considerations of the SEC and DOJ. This guide came too late for many, however, since the last six years have seen an intense ramp-up in enforcement actions.
The increase in enforcement has included a greater number of SEC and DOJ actions filed, particularly since 2007. The number of actions filed have doubled or tripled since those filed prior to 2007. In addition, the amount in fines and settlement dollars also has burgeoned. From 2000 to 2006, the SEC reported roughly $129.6 million in settlements. Amounts have increased each year since then, with settlements exceeding $500 million mark in four of the past six years.
The increase in action may be attributable to the greater volume of work sought overseas in our ever-increasing global marketplace, now more reachable with modern technologies. Or perhaps the SEC and DOJ have just been tasked to focus on what politicians view as an important an emerging problem, particularly with U.S. businesses reaching into emerging markets such as China, India and Brazil. Whatever the cause, recent political backlash has occurred, which may be inevitable with enforcement actions that make headlines and dollar amounts that exceed hundreds of millions of dollars.
The U.S. House of Representatives Committee on the Judiciary formed an Over-Criminalization Task Force this past summer (on June 14, 2013). The purposes of the committee are to address both the “scope of over-criminalization and over-federalization, and what steps this Task Force and the Judiciary Committee can take to address the issue.” As hearings continue on Capitol Hill, those in and related to the construction industry should be vigilant regarding the importance of proper compliance programs and prepared to analyze any potential new legislation in this area.
The ABA Construction Forum SPEC Distance Learning Committee presented the Foreign Corrupt Practices Act and Anti-Corruption Laws in Construction Contracting Webinar on November 5, 2013. Presenting were Lori Ann Lange of Peckar & Abramson, P.C.; Junaid A. Zubairi of Vedder Price, P.C.; and the author of this article, J. Kimon Yiasemides of Warner Construction Consultants, Inc. During the webinar, they discussed this and other anti-corrupt practices laws, how to be proactive about these laws, and what to do in the event of a reportable incident.