Enforcement Actions Under the Foreign Corrupt Practices Act

Corruption and bribery pose a significant risk to companies with global operations, particularly those conducting business in developing countries. The Foreign Corrupt Practices Act (FCPA), enacted in 1977, imposes harsh penalties for paying bribes to foreign officials and other corrupt business practices.

As a result of the FCPA, multinational companies must be vigilant in their compliance efforts. FCPA enforcement actions have increased in recent years, making it all the more pertinent that companies have compliance measures in place to recognize red flags internally.

The FCPA is made up of two key parts: anti-bribery provisions and accounting requirements. The anti-bribery provisions prohibit companies from paying money or offering gifts to foreign government officials in order to benefit their business interests. The accounting provisions require companies to maintain accurate books and records and maintain a system of adequate internal controls. Such measures are intended to prevent corrupt payments from being hidden from accounting records.

If the government can prove the existence of certain elements, an individual may be found guilty of violating the FCPA. These elements include:

• A payment or promise to provide money, gifts, or anything of value
• The involvement of a foreign government official
• A corrupt motive
• The intent to influence the actions or decisions of the intended recipient of the payment

While the FCPA enforcement actions are often targeted at US publicly traded companies, enforcement actions have increased against individuals and foreign companies.

In 2023, Roger Ng, a former managing director at Goldman Sachs, was charged with violating the FCPA and sentenced to 10 years in prison for his involvement in a global money laundering scheme. The scheme involved 1MDB, a Malaysian state investment fund. Mr. Ng and his co-conspirators were found guilty of paying more than $1 billion in bribes to multiple government officials in Malaysia and the United Arab Emirates in order to obtain lucrative business opportunities.

As another example of an individual being charged with FCPA violations, in 2018 a former oil company CEO was sentenced to 36 months in prison for his involvement in an international bribery scheme. The former CEO was found to have bribed foreign government officials in Brazil, Angola, and Equatorial Guinea in order to win offshore oil projects. The former CEO had third authorized-party sales agent to pay the bribes to foreign officials.

Foreign companies have also more frequently become the subjects of investigations, settlements and prosecutions for violations of the FCPA. For example, the German multinational software company SAP was forced to pay the Departure of Justice (DOJ) and the Securities and Exchange Commission (SEC) over $220 million to resolve violations of the FCPA for foreign bribery activities. SAP was found to have paid bribes to government officials in South Africa and Indonesia to secure lucrative business opportunities. The DOJ and SEC investigations were initially instigated as a result of whistleblower information.

When a company learns of a potential FCPA violation by an employee, it has the option to self-report the FCPA violation to the DOJ. The DOJ’s FCPA Corporate Enforcement Policy provides incentives for voluntary self-reporting of potential FCPA violations. The DOJ may decide not to prosecute companies that fully cooperate with DOJ investigations or disclose alleged misconduct within their organization.