The government issued clarifications, as a recent surge in
enforcement has unnerved big businesses 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 have released long-awaited
guidelines on how prosecutors interpret and enforce an anti-
corruption law that bans American businesses from bribing officials
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 rush of enforcement has brought anxiety to
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 violation of the
law -- is particularly important because cases of foreign corrupt
practices rarely get adjudicated. Corporations are generally
inclined to settle potential cases without trial, because being
indicted can cripple a business.
As a result, judges rarely weigh in on whether prosecutors'
interpretations of the statute in ambiguous situations -- for
instance, when an employee of a state-owned enterprise, like a
utility, should be considered a "foreign official," and therefore
covered by the law -- is accurate.
The guidance -- signed by Lanny A. Breuer, the assistant attorney
general for the Justice Department's criminal division, and Robert
S. Khuzami, the S.E.C.'s director of enforcement -- lays out a
series of factors in considering who counts as a foreign official.
Among them, for example, is whether a foreign government controls an
entity, like a utility, or has only a minority stake.
It also discusses gift-giving at length, and addresses the
question of when gifts to an overseas charity -- or travel and
entertainment provided to foreign officials who may be considering
issuing a contract to a business -- amount to bribes.
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 bill or bought "a moderately priced crystal
vase" as a wedding gift. There would also be no violation if the
company paid for the foreign visitors' travel to a city in the
United States where it has facilities, including taking them to a
baseball game or the theater.
However, the guide says, paying for foreign officials and their
spouses to travel to a city like Las Vegas or Paris, if the company
has no significant facilities there, would violate the law. That
would display a "corrupt intent" to curry favor with the officials
because "the trip does not appear to be designed for any legitimate
"The fight against corruption is a law enforcement priority of
the United States," Mr. Breuer said in a statement. Enforcement of
the statute "is critical to protecting the integrity of markets for
American companies doing business abroad, and we will continue to
make clear that bribing foreign officials is not an acceptable