Is your employer paying bribes to overseas officials?
Do you have inside information about cooked books or phony accounting entries?
If you answered “Yes” to either question, MahanyLaw FCPA whistleblower lawyers can help you earn a whistleblower cash reward.
The Foreign Corrupt Practices Act: an Introduction
Bribes. Cash payoffs. Corrupt foreign officials. Cooked books. This all sounds like something from a Tom Cruise or Matt Damon movie, but the bribery of foreign officials happens every day.
And, when a company with ties to the United States is behind those bribes, its actions violate the Foreign Corrupt Practices Act (FCPA).
Under the SEC Whistleblower Program, people with inside information about those bribes are eligible to receive large cash awards. Ditto for whistleblowers who report public companies with false books and accounting entries.
History and Overview of the Foreign Corrupt Practices Act – FCPA
The Foreign Corrupt Practices Act (15 U.S.C. §78dd-1) was passed by Congress in 1977. Although its title suggests the law is directed at offshore fraud, the law actually has two major components:
- Foreign bribery; and
- False books and records.
We address foreign bribery and false books & records separately below.
The FCPA was originally introduced to address the bribery of foreign government officials. The Congressional committee considering the Act found that:
“More than 400 corporations have admitted making questionable or illegal payments. The companies, most of them voluntarily, have reported paying out well in excess of $300 million in corporate funds to foreign government officials, politicians, and political parties… The abuses disclosed run the gamut from bribery of high foreign officials in order to secure some type of favorable action by a foreign government to so-called facilitating payments that allegedly were made to ensure that government functionaries discharge certain ministrial [sic] or clerical duties. Sectors of industry typically involved are: drugs and health care; oil and gas production and services; food products; aerospace, airlines and air services; and chemicals.
The payment of bribes to influence the acts or decisions of foreign officials, foreign political parties or candidates for foreign political office is unethical. It is counter to the moral expectations and values of the American public. But not only is it unethical, it is bad business as well. It erodes public confidence in the integrity of the free market system. It short-circuits the marketplace by directing business to those companies too inefficient to compete in terms of price, quality or service, or too lazy to engage in honest salesmanship, or too intent upon unloading marginal products. In short, it rewards corruption instead of efficiency and puts pressure on ethical enterprises to lower their standards or risk losing business.”
By passing the Foreign Corrupt Practices Act, Congress hoped to create a level playing field for legitimate businesses and restore confidence in the free market system.
The law extends to any U.S. corporations and their employees and agents. Although Congress cannot regulate purely foreign companies, it can and did extend the law to any foreign company listed on a national U.S. stock exchange and companies that file reports with the SEC. In some situations, it can also reach foreign companies that aren’t listed with the SEC if some of the illegal conduct occurs within the United States.
The FCPA’s Anti-Bribery Provisions
In simple terms, the Foreign Corrupt Practices Act prohibits any payment to a foreign official made with the intent to influence that official to assist the company to obtain or retain any sort of business advantage. To better understand the law, some examples are helpful.
- Bribes / payments made to obtain favorable tax treatment or avoid taxes legally due.
- Bribes / payments made to avoid or reduce custom duties and tariffs.
- Bribes or payments made to speed up licenses and permits.
- Bribes or payments made to secure government contracts.
- Bribes or payments made to keep other competitors out of the market.
- Bribes or payments made to influence court cases or regulatory agency actions.
It’s not just the payment of the bribes that are illegal. Receiving unlawful payments, promising to make these payments or facilitating another with these bribes are all prohibited by the FCPA.
What is a Bribe?
A bribe doesn’t just have to be a wad of small bills! As the SEC and Justice Department continue to crack down on FCPA violations, some companies are getting increasingly creative in how they try to disguise their illegal bribery schemes.
Gift cards, prepaid credit cards, “commissions”, bogus “speaking fees” and honoraria and “consulting fees” have all been unsuccessfully tried. Ditto for lavish travel for conferences.
Today, some companies attempt to use third party agents and consultants to launder the bribes. It is still illegal and all parties can be charged.
The FCPA’s Accurate Books and Records Provisions (Accounting)
In addition to the anti-bribery provisions of the law, the Foreign Corrupt Practices Act also contains robust accounting provisions that require public companies to maintain accurate books and records and have adequate accounting controls. Businesses and individuals that falsify records can be civilly and criminally prosecuted under the Act. (Remember Enron?)
Whistleblower Awards and the FCPA
Both the Securities and Exchange Commission (SEC) and the U.S. Department of Justice enforce the Foreign Corrupt Practices Act. In 2010, the Dodd Frank Wall Street Reform and Consumer Protection Act (“Dodd Frank) created the ability to pay awards to whistleblowers with inside information about FCPA violations. The awards are administered through the SEC’s Whistleblower Program.
Section 922 of the Dodd Frank Act entitles whistleblowers to 10% to 30% of any monetary penalties collected by the SEC for violations of the FCPA. Penalties in the 8 and 9 figures are not uncommon meaning the potential for million dollar awards is high.
Foreign Whistleblowers Eligible
We often hear from foreign citizens working for U.S companies wanting to know if they are eligible to receive an award. The answer is yes and in fact, the SEC has already awarded millions to non U.S. residents and citizens.
Unless you authorized or received the bribes or ordered the illegal accounting entries, you are probably eligible for an award even if you don’t live, work or vote in the United States.
Whistleblower Anti Retaliation Laws
Are you suffering from retaliation because you told your employer about illegal conduct within the company?
Although the FCPA does not directly have an anti-retaliation provision, the SEC Whistleblower Program does protect whistleblowers from termination, other adverse employment action and other forms of retaliation. Thankfully, the SEC vigorously enforces those provisions.
The federal Sarbanes Oxley Act and Dodd Frank Act contain provisions that protect whistleblowers who report FCPA violations internally or to the SEC and suffer retaliation as a result.
Even if you lose your job, there is often help available. As SEC and FCPA whistleblower lawyers, we take retaliation very seriously.
If you have information about foreign bribes, false books or records or have suffered retaliation, contact the nationally recognized whistleblower lawyers at MahanyLaw right away.
FCPA Deadlines and Statute of Limitations
The anti-bribery provisions of the Foreign Corrupt Practices Act have a five-year statute of limitations. Don’t think that you can wait that long to submit a whistleblower claim, however. Although the government has five years to prosecute, the SEC has reduced awards because whistleblowers have delayed in reporting. The earlier you report, the better the potential of earning a large award.
If you suffer retaliation, the reporting periods can be very short. Under the Sarbanes Oxley Act, some FCPA whistleblower retaliation claims must be filed in as little as 180 days!
The safest way to assure a maximum award is by giving us a call right away. Remember, the SEC generally pays awards on a first to file basis, i.e. the first person to blow the whistle gets the award. That is yet another good reason to call us immediately.
Our FCPA Whistleblower Attorneys are standing by! Contact us for a no obligation, no fee consultation.
If you know of foreign bribery, phony books and records or other violations of U.S. securities law, give us a call. Working together, we can determine how best to stop the illegal practices, protect you from retaliation and get you the maximum award possible.
In the last several years we have helped our whistleblower clients recover over $100 million in awards. You could be next.
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