Foreign Corrupt Practices Act

Question 1

Which of the following actions of Sales, Inc., a U.S. based corporation, appears to be illegal with NO affirmative defense available under the FCPA?

a. Sales, Inc. pays a fee to the government of a foreign country to obtain a sales and distribution license in the country
b. Sales, Inc. pays a commission to the chief customs officer of the foreign country based on the amount of gross sales each month
c. Sales, Inc. pays a fee that is authorized under the laws of the country, to the chief customs official of the foreign country for consulting with the company on compliance with the customs laws
d. Sales, Inc. pays a transportation tax to a foreign government official for the purpose of transporting its product throughout the country

Answer 1

b. Sales, Inc. pays a commission to the chief customs officer of the foreign country based on the amount of gross sales each month

There is no law authorizing this fee. A law authorizing the fee is an affirmative defense.

Question 2

Which of the following actions is illegal under the Foreign Corrupt Practices Act?

a. Paying a license fee to a government to conduct business in the country
b. Paying a documentation fee to a government agency for filing corporate documentation
c. Paying an expedited fee to a customs agent to insure that goods will move quickly through the customs process
d. Paying a fee to a governmental agency designated for police and fire protection within a city limit

Answer 2

c. Paying an expedited fee to a customs agent to insure that goods will move quickly through the customs process

Question 3

Which of the following is not subject to the FCPA?

a. A U.S. corporation
b. An Asian corporation with offices throughout the world, including in the U.S.
c. A European corporation with offices only in Europe
a. An employee of a U.S. corporation

Answer 3

c. A European corporation with offices only in Europe

Question 4

What is the purpose of the FCPA?

Answer 4

Makes it unlawful to make payments to foreign government official to assist in obtaining or retaining business.

*applies to payments to any official, regardless of rank or position. Focuses on the purpose of the payment, not the position of the person.

Question 5

Is the purpose of the funds or payment important under FCPA?

Answer 5

Yes. The person making or authorizing the payment must have corrupt intent, and the payment must be intended to induce the recipient to misuse official position to direct business wrongfully.

*Does not necessarily need to succeed (intent is key)

Question 6

Does FCPA prohibit corrupt payments through intermediaries?

Answer 6

yes. It’s unlawful to make a payment to a 3rd party, knowing that all or a portion of the payment will go directly or indirectly to a foreign official.

Question 7

What payments are acceptable under FCPA?

Answer 7

Payments for routine government actions are acceptable (e.g., permits, licenses, etc.)

Question 8

What is a person’s defense under FCPA?

Answer 8

Payment was lawful under the written laws of the foreign country or that the money was spent as a party of demonstrating a product or performing a contractual obligation.