As many as a thousand foreign companies whose shares are traded in the U.S. can be punished under U.S. law for paying bribes to public officials anywhere. The law even reaches non-Americans acting outside the United States. Violators face enormous damage to their reputations, huge fines and time in U.S jails.
SINGAPORE–LAWFUEL – The Law Newswire – August 2, 2007 – Companies located anywhere in the world whose shares are traded on a U.S. stock exchange are subject to the United States Foreign Corrupt Practices Act. The FCPA, as it is known, makes it illegal to bribe foreign public officials in order to obtain or retain business or gain any unfair advantage.
“Most business people are shocked by the reach of the FCPA,” said Richard L. Cassin, an American lawyer with the Singapore-based international law firm, Cassin Law LLC. “The FCPA even criminalizes behavior between two non-U.S. persons who are acting entirely outside the borders of the United States. That’s unusual and alarming by any standard.”
For example, explains Cassin, the FCPA applies directly to more than 440 non-U.S. companies whose shares are registered on either the New York Stock Exchange or the NASDAQ. Another 600 or so have shares registered on the OTC and may be subject to the FCPA.
Among the non-U.S. companies listed on the NYSE or the NASDAQ are PRC firms China Life Insurance, CNOOC and China Telcom. India’s Infosys is included, as are Mexico’s Group Televisa and Japan’s Kirin Brewery.
Ironically, the actions of these companies — even on their home turf or in third countries — may trigger violations of the U.S. antibribery law.
An FCPA offense can inflict permanent reputational damage and lead to fines of tens of millions of dollars. Shareholders, directors, officers, employees and agents who violate the FCPA face up to five years in prison.
“The only way a company can protect itself in advance against the potentially catastrophic consequences of an FCPA violation is to have an effective compliance program,” Cassin said. “Such programs help prevent violations, and also detect, disclose and correct violations if they happen.”
Corporate compliance programs, according to Cassin, should include written policies that clearly prohibit bribing government officials everywhere, high-level oversight within the company, monitoring and reporting of suspected wrongdoing, and protection for whistleblowers, among other features.
About Cassin Law LLC
Cassin Law LLC (www.cassinlaw.com) is an American law firm with an international practice based in Singapore. It acts as regional counsel in Asia to American and other companies, often helping them comply with United States laws, including the Foreign Corrupt Practices Act.