By Davy Karkason
Founding Attorney

In today’s interconnected global economy, businesses operate on an international scale, seeking growth and opportunities across borders. However, this expansion also exposes them to various risks, including those related to corruption and bribery. The Foreign Corrupt Practices Act (FCPA) was enacted to address such concerns and promote ethical business practices. This blog delves into high-profile FCPA violations, examining the legal ramifications and business lessons they provide. By studying these cases, businesses can gain insights into the importance of FCPA compliance and take proactive measures to mitigate potential risks.

Understanding the FCPA

The FCPA, enacted in 1977, prohibits both U.S. individuals and companies from engaging in corrupt practices to obtain or retain business overseas. This includes bribery of foreign officials and accounting irregularities. FCPA enforcement is taken seriously, with both civil and criminal penalties imposed for violations. As such, businesses engaging in international operations must be well-versed in the requirements of the FCPA to avoid legal entanglements.

Notable FCPA Violations

  • Siemens AG: In 2008, Siemens AG, a German conglomerate, settled with the U.S. government for a record-breaking $800 million due to allegations of widespread bribery across multiple countries. The case highlighted the significance of robust internal controls and due diligence in preventing corruption.
  • Alstom: The French multinational power and transportation company, Alstom, faced a $772 million penalty in 2014 for engaging in a scheme to bribe foreign officials to secure contracts. This case underscored the extraterritorial reach of the FCPA, holding foreign companies accountable for corrupt practices that impact U.S. interests.
  • Telia Company AB: The Swedish telecommunications firm, Telia, reached a $965 million settlement in 2017 over allegations of bribery in Uzbekistan. This case emphasized the need for businesses to thoroughly investigate and address red flags, even in challenging jurisdictions.
  • Keppel Offshore & Marine: The Singaporean company agreed to pay over $422 million in 2017 to resolve FCPA charges related to a massive bribery scheme involving officials in Brazil and other countries. This case highlighted the importance of monitoring third-party intermediaries and contractors.

Lessons for Businesses

  1. It’s extremely important to establish comprehensive compliance programs tailored to the business’s operations. Additionally, regular training, due diligence, and risk assessments help prevent corrupt activities.
  2. Businesses must thoroughly vet and monitor third-party agents and contractors. Ignorance of who the third party was or what they did is not enough to negate liability. 
  3. Businesses are top-down with most things. This includes ethics. Ethical leadership and a culture of integrity are key. When leaders prioritize compliance, employees are more likely to follow suit.
  4. Businesses should promptly address any signs of corruption by launching internal investigations. When any corruption is found, it should be remediated however reasonably possible.  
  5. The FCPA has global jurisdiction, which means that companies from any country that engage in corrupt practices that impact U.S. interests can face consequences.

FCPA violations have far-reaching legal and financial implications that can tarnish a business’s reputation and profitability. Studying high-profile cases provides valuable lessons that businesses can apply to enhance FCPA compliance, protect their interests, and uphold ethical standards. 

By establishing comprehensive compliance programs, diligently overseeing third-party relationships, fostering ethical cultures, quickly responding to red flags, and understanding the extraterritorial reach of the FCPA, businesses can navigate the complexities of international operations while avoiding corruption and bribery.

U.S. Counsel Services for Foreign Businesses 

If your business is located outside of the United States but you engage in U.S.-based operations, it’s critical that you seek legal counsel from an attorney who understands the complex issues involved. Whether you have ongoing legal issues related to a business expansion or are simply engaged in a singular transaction, the lawyers at Transnational Matters can assist with all of your American endeavors.

When it comes to foreign and domestic businesses, we can assist with your transactions and general corporate needs. We would love to discuss your needs with you. Contact our experienced transnational litigation and arbitration attorneys today!

About the Author
As a lawyer and the founder of Transnational Matters, Davy Aaron Karkason represents numerous international companies and a wide variety of industries in Florida, the U.S., and abroad. He is dedicated to fighting against unjust expropriation and unfair treatment of any individual or entity involved in an international matter. Mr. Karason received his B.A. in Political Science & International Relations with a Minor in Criminal Justice from Nova Southeastern University. If you have any questions about this article you can contact Davy Karkason through our contact page.