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      Proskauer on International Litigation and Arbitration:
       Managing, Resolving, and Avoiding Cross-Border Business or Regulatory Disputes
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  1. Multiple Agencies.
    1. U.S. Authorities.
      1. The Department of Justice (“DOJ”) has primary responsibility for criminal and civil enforcement of the anti-bribery provisions of the FCPA.
        1. DOJ Advisory Opinion. 15 U.S.C. §§ 78dd-1(d) to -1(e), 78dd-2(e) to -1(f); 28 C.F.R. §§ 80.1-80.16.
          1. Pursuant to the 1988 Amendments to the FCPA, the Attorney General is required to provide guidance regarding the DOJ’s enforcement of the FCPA to “potential exporters and small businesses that are unable to obtain specialized counsel on issues related to the FCPA.” 15 U.S.C. § 78dd-2(f)(4).
          2. The FCPA authorizes the Attorney General to issue guidelines and advisory opinions in response to specific business inquiries. An issuer or domestic concern may seek an official government opinion as to the DOJ’s present enforcement intentions under the FCPA’s anti-bribery provisions regarding any proposed payment or business activity.
          3. If the government determines that a party’s specified activities conform to the DOJ’s enforcement policy, the party is entitled to a rebuttal presumption of compliance with the FCPA in any subsequent action brought under the anti-bribery provisions.
          4. The DOJ will not issue guidelines or opinions regarding the FCPA’s accounting provisions. Businesses can look to the SEC’s releases and policy statements for guidance on record-keeping activities and internal controls.
        2. United States Attorney’s Offices (“USAOs”) may also initiate criminal actions for FCPA violations, but only in coordination with Main Justice’s Fraud Section.
      2. The SEC is responsible for civil enforcement and may refer a case to the DOJ for criminal prosecution.
      3. The DOJ and the SEC often work together in “parallel investigations.”
    2. Private Parties.
      1. The FCPA does not provide a private right of action. However, conduct that violates the anti-bribery provisions of the FCPA may give rise to a private cause of action for treble damages under the Racketeer Influenced and Corrupt Organizations Act (RICO). See Nat’l Group for Comm. and Computers, Ltd. v. Lucent Tech. Inc., RICO Bus. Disp. Guide 10,798 (S.D.N.Y. 2004); United States v. Young & Rubicam, Inc., 741 F. Supp. 334, 339 (D. Conn. 1990).
    3. Foreign Authorities.
      1. The international community is increasingly concerned about combating corruption in international business transactions.
      2. The U.S. Government cooperates with foreign authorities by sharing evidence and assisting in their prosecutions.
      3. Organization for Economic Co-operation and Development (“OECD”).
        1. The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (“Anti-Bribery Convention”) went into effect in February 1999. Currently, there are thirty seven (37) signatories to the Anti-Bribery Convention, including the United States.
        2. All signatory countries commit to ensuring that their national governments pass legislation necessary for the ratification of the Anti-Bribery Convention and its implementation into national law.
        3. The Convention requires all participating countries to criminalize the bribery of foreign officials, impose sanctions for violations, provide mutual legal assistance, and agree to extradite those charged with a bribery offense.
      4. The United Nations adopted the Convention Against Corruption in October 2003, to assist in preventing corruption in the international arena. The UN Convention requires its one hundred forty (140) signatories to adopt legislation similar to the OECD Anti-Bribery Convention criminalizing bribery of government officials. See U.N. Convention Against Corruption, G.A. Res 4, U.N. GAOR, 58th Sess., Agenda Item 108, U.N. Doc. A/RES/58/4 (Dec. 11, 2003).
      5. Several regional organizations have also adopted anti-bribery conventions, including:
        1. The European Union (“EU”)
          1. The EU adopted a Convention in May 1997, proscribing the bribery of public officials in the EU. However, there is no prohibition in this Convention against the bribery of foreign nationals within the EU or foreign officials from non-EU countries. See European Union Convention on the Fight Against Corruption Involving Officials of the European Communities or Officials of Member States of the European Union, 1997 O.J. (C 195) 1.
          2. The Council of Europe adopted the Criminal Law Convention Against Corruption, designed to criminalize corruption in the public and private sectors. Council of Europe, Criminal Law Convention on Corruption, Jan. 27, 1999, ETS No. 173.
        2. Organization of American States (“OAS”)
          1. The OAS adopted the Inter-American Convention Against Corruption in March 1997, which requires member states to enact domestic legislation to criminalize the bribery of public officials. Organization of American States, Inter-American Convention Against Corruption, Mar. 29, 1996, 35 I.L.M. 724.
    4. Several other non-governmental organizations (“NGOs”) also have implemented policies to combat corruption.
      1. The International Monetary Fund may suspend or delay funding if the countries failed to discourage bribery acts sufficiently.
      2. The World Bank has implemented programs that prevent corruption in World Bank-funded projects and assist in reducing internal corruption. The World Bank also promotes global anti-corruption programs.
      3. The World Trade Organization has initiated enforcement procedures targeted at government officials abusing discretion in the government-awarded contract procurement process.
    5. Thus, as countries and NGOs have implemented legislation and regulations similar to the FCPA to eradicate bribery globally, companies doing business in the international arena not only deal with U.S. authorities, but may face the possibility of enforcement actions in other jurisdictions by:
      1. the authorities in the country where bribes occurred;
      2. the authorities in the country where the violators, i.e., employees, subsidiary, or agents, are located; and
      3. NGOs, pursuant to their internal regulations.
  2. Criminal and Civil Penalties under the FCPA.
    1. Corporations.
      1. Criminal Penalties.
        1. A corporation can be fined up to $2 million for each criminal violation of the FCPA, and up to $25 million for “willful” violations. 15 U.S.C. § 78ff(a).
        2. Under the Alternative Fines Act, the government may impose a fine equal to twice the benefit the defendant sought from making the corrupt payment. 18 U.S.C. § 3571(D).
        3. The sentencing of corporations for FCPA violations is determined under Chapter Eight of the U.S. Sentencing Guidelines. See U.S. Sentencing Guidelines, ch. 8.
      2. Civil Penalties.
        1. The FCPA also provides for civil penalties for up to $10,000 for each violation.
        2. In addition, in an SEC enforcement action, the court may impose an additional fine not to exceed the greater of (i) the gross amount of the pecuniary gain to the defendant as a result of the violation, or (ii) a specified dollar limitation, based on the egregiousness of the violation, ranging from $50,000 to $500,000.
      3. The U.S. Government may also suspend or revoke the company’s privileges of conducting business with government agencies.
    2. Individuals.
      1. Criminal Penalties.
        1. An individual faces a maximum term of imprisonment of five years for each FCPA violation, and 20 years for “willful” violations of the FCPA. 15 U.S.C. §§ 78ff(a).
        2. An individual can be subject to a criminal fine of up to $100,000 for each violation of the FCPA, and up to $5 million for “willful” violations. 15 U.S.C. §§ 78ff(a), 78-ff(c)(2).
        3. Under the Alternative Fines Act, the government may impose a fine equal to twice the benefit the defendant sought by from making the corrupt payment. 18 U.S.C. § 3571(D).
      2. Civil Penalties.
        1. As with corporations, the government may bring a civil action seeking a fine of up to $10,000 for each violation of the FCPA.
        2. In an SEC enforcement action, the court may impose an additional fine not to exceed the greater of (i) the gross amount of the pecuniary gain to the defendant as a result of the violation, or (ii) a specified dollar limitation, based on the egregiousness of the violation, ranging from $5,000 to $100,000.
        3. The SEC may also seek to prohibit an individual defendant from serving as an officer or director of a public company.
      3. A company cannot indemnify an officer, director, stockholder, employee, or agent for fines imposed for violations of the FCPA. 15 U.S.C. § 78dd-2(g)(3).
    3. Both the DOJ and the SEC also have the power to seek injunctions to prevent FCPA violations.
  3. Civil Liability.
    1. Officers and directors of issuers may be exposed to civil liability for losses incurred by the company for FCPA violations.
    2. Given the magnitude of sanctions and intangible repercussions of FCPA violations, directors are well-advised to take their responsibilities seriously. See In re Caremark Int’l Inc. Derivative Litig., 698 A.2d 959 (Del. Ch. 1996) (finding that directors may be held liable for failing to ensure that an adequate compliance program existed).

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