New attention on FCPA investigations: as the administration takes a more aggressive stance to police corporate America, financial executives doing business abroad need to know what steps to take to limit liability and ensure their firm is on the right side of the law.

• Author: Wysong, Wendy
• Position: Foreign Corrupt Practices Act

Caught between the pincers of economic turmoil and ramped-up government enforcement of anti-corruption laws, companies must ensure that their due diligence and compliance programs are cost effective, realistic and not inhibitive of the international business opportunities necessary for survival. Consolidations, acquisitions and other international transactions pose heightened risks of improper payments and suspect business relationships, particularly when driven by economic pressures.

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In a financial downturn, compliance budgets may be cut at the same time that riskier transactions seem most tempting. For companies subject to the U.S. Foreign Corrupt Practices Act (FCPA), economic pressures must not override the risks of noncompliance.

A compliance program that does not protect against risky business practices could subject a company to multi-million dollar fines and its executives to significant jail time. A risk-based program, tailored to a company's business, size, markets, supply and distribution chain, is a sensible approach to avoiding violations.

Recommendations for a cost-effective program that can be adapted to fit most companies involved in global transactions follow a brief explanation of FCPA.

The Foreign Corrupt Practices Act

The anti-bribery provisions of FCPA make it illegal to offer or provide money or anything of value directly or indirectly, tangible or not, to officials of foreign governments, foreign political parties, candidates for public office or international organization officials for the purpose of influencing those officials to assist in obtaining or retaining business or otherwise influencing official actions.

Actual payment of a bribe is not required, as the offer is sufficient to constitute a violation of law. Nor can a third party, such as a consultant, contractor, joint venture partner or other business associate, engage in the prohibited conduct on behalf of the company.

The FCPA's coverage is broad; not just United States individuals and business entities (anywhere in the world), but also "issues" of certain types of securities regulated by the U.S. Securities and Exchange Commission anywhere in the world and "any person" who performs an act in furtherance of a prohibited act in U.S. territory.

FCPA also contains accounting provisions that require issuers, defined as companies whose stock (including American Depository Receipts) is listed on U.S. exchanges, to keep accurate books, records and accounts that reflect any transaction and disposition of assets in reasonable detail and to maintain an adequate system of internal accounting controls.

However, FCPA only prohibits offers made with intent to influence official action, not all payments. Furthermore, it provides an exception for "facilitating payments" to low-level employees who perform "routine governmental action."

This exception does not apply to...