Inside counsel would be wise to consider the significant recent increase in enforcement of the Foreign Corrupt Practices Act (FCPA) of 1977, as amended when conducting due diligence in connection with an acquisition of a foreign target or a target with international operations, because the target’s conduct may be your company’s FCPA liability upon consummation of the acquisition, even if, in the case of a foreign target with no prior nexus to the United States, the target’s conduct is not in violation of the FCPA prior to the acquisition.
The FCPA prohibits U.S. citizens and U.S. companies, and their officers, directors and employees, from offering, promising, making or authorizing corrupt payments or gifts of anything of value to foreign officials for the purpose of influencing a foreign official’s decision, inducing a foreign official to violate his or her duty or gaining an unfair business advantage. Foreign citizens and foreign companies undertaking any part of such activities in U.S. territory or in interstate commerce are also subject to the law. The FCPA also mandates certain financial controls and financial reporting requirements on U.S. public companies. The law is interpreted broadly. A gift or payment can be cash, an expensive holiday gift, a donation to the official’s favorite charity or, possibly, a job for a foreign official’s child. A foreign official can be any employee or officer of any foreign government or any department, instrumentality or agency of a foreign government, including an officer or employee of a state-owned or state-controlled company, or a candidate for foreign political office.