2020.01.17 / International Commerce / Formosan Brothers Attorneys-at-Law

By Terry Tu  Senior Consultant of Formosan Brothers Attorneys-at-Law, Admitted to the New York Bar, CAMS

The United States’ Foreign Corrupt Practices Act (the “FCPA”) prohibits individuals and businesses from bribing foreign governments or officials to affect their actions or policy in order to obtain or retain business. Taiwanese businesses should pay attention to the risk control regarding legal compliance to avoid violating the FCPA.  

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The FCPA’s anti-bribery provisions apply broadly to three categories of persons and entities:

1. issuers: any company with a class of securities listed on a national securities exchange in the U.S. or any company with a class of securities quoted in the over-the-counter market in the U.S. and required to file periodic reports with SEC (not limited to U.S. companies, but also foreign companies with American Depository Receipts that are listed on a U.S. exchange);

2. domestic concerns: any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship that is organized under the laws of the U.S. or its states, territories, possessions, or commonwealths or that has its principal place of business in the U.S.;

3. territorial jurisdiction: any foreign persons or foreign non-issuer entities that, either directly or through an agent, engage in any act in furtherance of a corrupt payment while in the territory of the U.S. (such as placing a phone call or sending an email, text message, or fax from, to, or through the U.S., or sending a wire transfer from or to a U.S. bank or otherwise using a correspondent bank located in the U.S.). In addition, the officers, directors, employees, agents, and shareholders of the aforesaid three categories are also covered by the FCPA.

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The FCPA aims to prohibit bribes intended to obtain or retain business. Examples of actions taken to obtain or retain business are: winning a government procurement contract, gaining access to non-public bid tender information, evading taxes or penalties, obtaining government action to prevent competitors from entering a market, circumventing a licensing or permit requirement, influencing the adjudication of lawsuits or enforcement actions, obtaining exceptions to regulations, etc. All of such actions help the business secure an improper advantage in order to obtain or retain business.

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Actions of illegal bribes include: offering to pay, paying, promising to pay, or authorizing the payment of money, or providing, gifting, promising to give, or authorizing the giving of anything of value. An improper benefit can take many forms. While cases often involve payments of cash (sometimes in the guise of “consulting fees” or “commissions”), others involve travel expenses, tour expenses, entertainment expenses, club membership fees, expensive gifts, etc.  The FCPA does not expressly provide the minimum threshold amount that constitutes improper benefit and does not intend to prohibit appropriate and reasonable ways of business promotion. However, if small payments or gifts are part of a systemic or long-standing course of conduct that evidences bribery, the conduct is at risk of breaking the law.  

The FCPA’s anti-bribery provisions apply to corrupt payments made to:

1. any foreign official: meaning any officer or employee of a foreign government or any department, agency, or instrumentality thereof, such as government-operated enterprises, government-funded foundations, institutions in which the government is not a majority shareholder but has veto power over the operation or personnel thereof, or of a public international organization, such as the IMF, WIPO, WTO, OECD, etc., 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;

2. any foreign political party or official thereof or any candidate for foreign political office;

3. any intermediaries. Many businesses, while expanding in a foreign country, often hire local persons or businesses or relatives of government or political party officials as intermediaries to take short cuts. Even though the business may not directly commit bribery but indirectly doing so through a third party, if the business is fully knowing that all or a portion of the money or payment given to an intermediary will be directly or indirectly offered, given, or promised to a foreign government or political party official, such business may be subject to FCPA penalties.

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(This article is abridged from the “Expert Commentaries” column of the electronic version of Commercial Times on January 17, 2020. For more information related to the content of this article, please do not hesitate to contact Formosan Brothers Attorneys-at-Law.)

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