Under an American law known as the Foreign Corrupt Practices Act (“FCPA”), any individual or company with minimal connection to the United States could be fined or criminally prosecuted for “bribery.” What does that mean? Without getting into the weeds, bribery here means to pay for or provide material of value to a “foreign official” in a corrupt manner to “obtain or retain business.” Even where your company’s foreign subsidiary hires an agent, engages a distributor, or forms a joint venture, the individuals who own, manage or lead the parent company could be liable for the actions of those third-parties.
Talk of bribery often evokes a dramatic scene in a reader’s mind. Enforcement agents in suits with earpieces stalk the lobby of a Swiss hotel to arrest the well-dressed character carrying duffle bags of gold bars destined for the Minister of Defense. In practice, bribery occurs in a much less sinister fashion. It’s understandable that to compete, an entrepreneur would adopt seemly accepted local business practices.
Undisciplined actions by local partners are not just the cost of doing business when the DOJ (Department of Justice) and the SEC (Securities and Exchange Commission) could construe those actions as a bribes. There are three crucial things to consider:
Monitor Local Reps. The people you hire to act on your behalf in foreign countries are ostensibly doing your bidding, and in turn, you are responsible for their actions.
Be Proactive. Ensure your agreements reflect your company’s position that bribery will not be permitted, and will in fact, be punished.
Plan Ahead. With counsel, design a program or some sort of training to minimize the likelihood of violations. It also helps your case when you can demonstrate that you made an effort to comply with the FCPA and other anti-bribery provisions.
It doesn’t matter the size of the company. Whether large or small, you could get caught in these crosshairs. And the smaller you are, the less you can afford to make that mistake. Some healthcare companies have been prosecuted for giving gifts to hospital officials and doctors.
According to a FCPA professor, approximately 25 corporate FCPA enforcement actions have been based on the theory that individuals (such as physicians) employed by foreign healthcare systems are “foreign officials.”
It’s particularly important to work with attorneys familiar with both the culture and the law of your target countries.