Under the fcpa who is a foreign official anyway

It happens during the onboarding of a third party, when you conduct retrospective reviews and screening of existing third parties and as part of your ongoing third-party monitoring. Strong processes and policies around identifying and engaging with public officials are essential. Typically, developing these protocols is multi-stage—as you progress with your due diligence, you identify additional information or additional risks in parallel.

If the relationship is with an individual e. Screening against structured datasets can help you identify if the individual is a high-level official, PEP or a close associate of one and other immediate risks.

More often, however, the relationship will be with a corporate entity. This, too, can be screened. As you identify additional names, they need to be screened further and subjected to additional due diligence.

In many cases, the additional due diligence calls for looking beyond the superficial facts—who is actually behind the entity and involved in the relationship? For example, in the cases of both Telia and VimpelCom, the U.

The company was controlled by a public official. The language used when asking questions about public officials is critical. Be aware that local definitions often will differ from the legal jurisdiction in which a company's headquarters are located. If you use the wrong phrase, it is possible that the respondent may not provide the appropriate answer. Bribery Act.

Defined by the FATF as an individual who is, or has been, entrusted with a prominent public function. FATF recognizes that the definition of this is challenging—as it depends, to some extent, on the social-economic and cultural structure of the country of the PEP. It also recognizes that identifying such persons is challenging, since the number of persons who qualify as family members and close associates is fluid and may change significantly over time.

Conducting business with public officials can be mutually beneficial for your company and the local economy in which the public official serves. Your organization just needs to ask crucial questions, document the answers and ensure relevant approvals. Should relationships with public officials be expected? There are several scenarios where the role of a public official or state-owned company in your value chain is entirely expected and necessary.

No oil and gas organization operating in Malaysia would be surprised to come across a state-owned oil and gas group in their third-party business relationships.

What is their function with respect to the relationship? Is the involvement of the public official transparent or opaque? An agent who has no experience in the relevant industry raises the question of how such agent can be helpful to the company absent using government connections improperly.

Likewise, solar energy companies should be wary of agents who have family members in a foreign government or are overly friendly with officials at an agency perhaps through prior employment. Further, solar energy companies should conduct due diligence to determine whether the agent including a potential joint venture partner has been cited for FCPA or similar violations in the past or has otherwise shown disregard for regulatory compliance and contracts should be drafted in a manner to promote compliance.

In addition to making FCPA-related representations and covenanting compliance with the FCPA, agents and joint venture partners should complete a questionnaire as to their experience with and relations to foreign governments and should be required to provide receipts for all expenses paid by the company. Agency and joint venture agreements should provide for immediate termination if the company determines that the agent is violating the FCPA or has made false representations to the company regarding FCPA compliance.

Solar energy companies should consider providing FCPA training to agents in a language in which the agent is sufficiently proficient and should have agents certify that they have received such training.

Each foreign environment presents a different set of specific risks regarding the engagement of agents. Variables include the extent to which a foreign government operates through quasi-governmental entities, bookkeeping and recordation practices such as how receipts and invoices are issued , the emergence of new schemes for kickbacks and secreting income pools for bribing, and other factors. Any company that has occasion to hire an agent to represent it outside the United States should have a compliance program in place.

Any company doing business beyond the borders of the United States through a subsidiary is potentially liable for any FCPA violations by the subsidiary. Two theories are typically pointed to, under which courts hold parents liable for FCPA violations by their subsidiaries. First, under the alter ego theory, a parent will be held liable for the actions of a subsidiary if the parent dominates the subsidiary by having control over ownership, shared directors, or shared officers, or by other means.

Neither of these theories places much weight on whether the subsidiary is wholly or partially owned. The general manager of the subsidiary was accused of making corrupt payments to avoid inspections and other customs requirements. There was no allegation or suggestion that RLC had any knowledge of or otherwise participated in the bribery scheme. However, the subsidiary had no anti-corruption program, and RLC provided no anti-corruption training or education to the subsidiary.

As discussed above in Section I. A continuing stream of DOJ and SEC enforcement actions emphasizes the importance of parent companies establishing a robust compliance program and plugging their subsidiaries into such a compliance program.

Compliance programs should include at a minimum written policies, recurrent training in languages other than English, if necessary , and internal auditing of controls.

Additionally, parent companies should have agreements with subsidiaries they do not control including joint venture partners and passive investment vehicles that provide for FCPA representation and covenants by the subsidiary, termination in the event of actions or policies that create FCPA risk to the parent, annual certification, right to inspect books and records, and other FCPA compliance-enhancing provisions.

Solar energy companies face substantial risk of successor liability under the anti-bribery provisions of the FCPA when acquiring or investing in foreign targets. DOJ and SEC enforcement actions indicate that successor liability may attach 1 if a bribe was paid to secure a benefit that the acquiring company will share and 2 if the acquiring company has knowledge of such corrupt payment.

As with other aspects of FCPA enforcement, companies may be deemed to have known of the corrupt behavior if they demonstrate conscious disregard or deliberate ignorance of the fact that such payments were made. While asset acquisitions generally do not trigger FCPA successor liability, recent administrative rulings by the U.

Department of Commerce in the context of export control violations, and favorable comments of such rulings by DOJ officials, suggest that the DOJ may seek to impose successor liability on asset acquisitions in the future. In a opinion, the DOJ suggested pre-acquisition actions of a foreign target not previously subject to the FCPA could still lead to successor liability.

Private Actions. The FCPA does not contain a private right of action. For example, in Alba v. Alcoa, Aluminum Bahrain B. FCPA-related private actions tend to be derivative actions like this one, in which shareholder claims that officers and directors breached fiduciary duties by causing or permitting the company to violate the FCPA.

Indeed, such lawsuits may become a common tool for companies seeking justice against their competitors for winning contracts and gaining other business advantages through bribery of foreign officials.

On December 15, , Siemens pleaded guilty in U. Some of these officials expect bribes from companies or third parties engaged by companies in exchange for favorable treatment. The Siemens settlement provides many additional lessons and reminders for solar energy companies, including:. Aug, Vol. Author s : Cohen, Joel M. Abstract: Despite the marked increase in high-profile Foreign Corrupt Practices Act "FCPA" enforcement activity, it remains unsettled whether the FCPA's definition of "foreign official" includes employees of foreign companies that are owned or controlled by those companies' governments.

This is an issue that transnational companies face daily in determining how to proceed in foreign jurisdictions. The definition of "foreign official" does not explicitly include such employees, nor does it define what constitutes state ownership or control.