The government issued clarifications as a recent surge in
enforcement has unnerved big businesses that are worried about
breaking the rules and paying big fines.
With billions of dollars in potential fines and foreign
investment in the balance, the U.S. Justice Department and the
Securities and Exchange Commission on Wednesday released long-
awaited guidance for how prosecutors may interpret and enforce an
anti-corruption law that bans American businesses from bribing
The 120-page "resource guide" to the Foreign Corrupt Practices
Act lays out the government's understanding of and standard
practices for the 1977 law. The statute sat largely dormant for
decades, but a recent surge in enforcement has unnerved corporate
boardrooms, leading to large fees for compliance lawyers and
enormous fines and settlements paid to the government.
The detailed guidance, including numerous case studies
illustrating what would and would not be considered a violation of
the law, is particularly important because foreign corrupt practices
cases rarely get adjudicated. Companies are generally inclined to
settle cases because even being indicted can cripple their
Judges rarely weigh in on whether prosecutors' interpretation of
the statute in ambiguous situations is accurate, as when an employee
of a state-owned enterprise, like a utility, counts as a "foreign
official" and is covered by the law.
The guide, signed by Lanny A. Breuer, the assistant attorney
general for the Justice Department's criminal division, and Robert
S. Khuzami, the director of enforcement for the S.E.C., lays out a
series of factors in considering who counts as a foreign official,
including whether a foreign government controls an entity like a
utility or has only a minority stake in it.
It also discusses gift-giving at length, including when gifts to
an overseas charity or gifts, travel and entertainment provided to
foreign officials who may be considering issuing a contract to a
business amount to a bribe, and when it is acceptable.
For example, the guidance says that it would not violate the
statute if a company provided foreign officials -- like employees of
a state-owned electricity commission -- promotional T-shirts at a
trade show, picked up a bar tab, bought "a moderately priced crystal
vase" as a wedding gift, or paid for their travel to a city in the
United States where the company has facilities, including taking
them to a baseball game or the theater.
It says that it would violate the law to pay for foreign
officials and their spouses to travel to a city like Las Vegas or
Paris if the company has no significant facilities there. That would
display a "corrupt intent" to curry favor with the officials because
"the trip does not appear to be designed for any legitimate business
purpose" and "is extravagant. …