Foreign Corrupt Practices Act (FCPA) - application and liability
Doing business in Ukraine requires compliance with Ukrainian law. At the same time, the international regulatory field is being supplemented by acts that encourage and often oblige companies from other jurisdictions to comply with specific rules. Such acts in anti-corruption include, for example:
- the US Foreign Corrupt Practices Act (FCPA);
- the UK Bribery Act;
- French Anti-Corruption Law (Sapin II).
For example, we can consider the entities covered by the FCPA and the liability for non-compliance.
The FCPA must comply with the following:
- Issuers of a public stock exchange in the United States (their officers, directors, agents, and employees - applies to both headquarters and affiliates worldwide);
- U.S. "domestic enterprises" (companies incorporated under the laws of the United States or whose principal place of business is in the United States, as well as persons who are citizens/residents of the United States);
- Individuals located in the United States;
- Persons, regardless of nationality, acting on behalf of issuers, "domestic enterprises" (for example, a Ukrainian company acting as an intermediary, agent, commission agent, distributor, or joint venture partner of a person subject to the FCPA).
Violation of the FCPA entails the imposition of quite severe criminal, civil, and other sanctions for both individuals (company founders, company officers, persons acting on behalf of companies) and legal entities (issuers, affiliates, subsidiaries, distributors).
2020 was a record year in terms of monetary sanctions: FCPA violators paid $5.8 billion over the year. In particular, in 2020, two of the largest fines in the 44-year history of the FCPA were imposed - $3.3 billion and $2.1 billion - on the financial conglomerate Goldman Sachs Group Inc. and the aircraft manufacturer Airbus SE, respectively.
The record prison terms for company officials for violating the FCPA were 15 years, 13 years, and 7 years. Violators may also be subject to measures such as termination of the company's operations, suspension from entering into agreements with the government, suspension from cooperation with international development banks, suspension or revocation of certain export privileges, and appointment of a person to carry out independent corporate monitoring (which entails significant financial costs for the business).
Detailed guidelines for business "Compliance Basic Principles of Risk Identification and Mitigation" are available at the link: http://bit.ly/3lu1w0D
