International Corruption

The Foreign Corrupt Practices Act of 1977, (15 U.S.C. §§ 78dd-1, et seq.) makes it illegal for certain people and entities to pay foreign government officials to obtain or retain business. The FCPA has two main provisions: the first deals with bribing foreign officials, the second with accounting transparency requirements. These two elements were designed to help both criminal and civil enforcement agencies fight international corruption and encourage more equitable business practices around the world.

The potential penalties for FCPA violations are extensive. Corporations can be fined up to $2 million, CEO’S, shareholders and employees may face fines of up to $100,000 and imprisonment for up to five years. Moreover, employers may not compensate any of their employees for any penalties incurred for violations of the FCPA. The SEC and Attorney General have the authority to punish violators with civil actions for FCPA violations, which can lead to $10,000 per violation against any corporation or its officers, employees, agents or shareholders.

Kleptocracy literally means “the rule by thieves” and is used to refer to a form of political corruption whereby the government derives personal gain at the expense of the people. This is usually done through bribery and embezzling public funds. Although corruption in foreign governments may not seem like something that should concern American law enforcement, American financial institutions are often directly involved through the laundering of illicit funds. The FBI fights international money laundering by tracing the movement of assets overseas and, in cooperation with foreign partners, seizes and returns assets back to legitimate authorities.

Punishments for money laundering depend on whether you were aware that the finances in question were the proceeds of some unlawful activity and you attempted to conceal the same. If you were aware, you can be tried under 18 U.S.C. §1956 and face a fine of up to $500,000 and imprisonment of up to 20 years. If you were not aware, you can still be charged under 18 U.S.C. §1957 and face imprisonment of up to 10 years. For both of these charges, the sentence depends on a number of factors, including whether or not the defendant has a history of money laundering and the facts concerning that.

Antitrust violations or anti-competitive behavior is another form of international corruption and includes price fixing and bid rigging, which destroys competition in the marketplace and inevitably leads to higher prices for the consumer. There are three core federal antitrust laws: the Sherman Act, the Federal Trade Commission Act, and the Clayton Act.

The Sherman Act bans “every contract, combination, or conspiracy in restraint of trade,” and any “monopolization, attempted monopolization, or conspiracy or combination to monopolize.” The Supreme Court decided that the Sherman Act does not prohibit every restraint of trade, only those that are unreasonable, meaning there is room for interpretation. However, price fixing, bid rigging and dividing markets are never permitted.

Sherman Act violations carry with it harsh penalties and although most of them are civil in nature, there is a criminal component that the Department of Justice may employ. Criminal penalties under the Sherman Act can include fines of up to $100 million for a corporation and $1 million for an individual, along with up to 10 years in prison. The maximum fine may be double the amount the conspirators gained from the illegal acts or twice the money lost by the victims of the crime, if either of those amounts is over $100 million.

The Federal Trade Commission Act bans “unfair methods of competition” and “unfair or deceptive acts or practices.” The Supreme Court has ruled that all violations of the Sherman Act also violate the FTC Act. Therefore, even though the FTC does not actually enforce the Sherman Act, it carries with it legislative authority to prosecute and regulate the same type of behavior. The FTC Act also covers other anticompetitive practices outside of the scope of the Sherman Act.

The Clayton Act addresses specific practices such as interlocking directorates and mergers (not covered by the Sherman Act). Under the Clayton Act, any merger or acquisition that “may be substantially to lessen competition, or to tend to create a monopoly,” is prohibited. It also regulates certain discriminatory prices, services, and allowances in business transactions. Companies planning a large merger or acquisition must give the government advance notice. Individuals and corporations can sue for treble damages under this act if they have been harmed either by the Sherman or Clayton Act. Additional relief includes equitable relief such as an injunction prohibiting anticompetitive practice in the future.

Criminal penalties under the Sherman Act can include fines of up to $100 million for a corporation and $1 million for an individual, along with up to 10 years in prison. The maximum fine may be double the amount the conspirators gained from the illegal acts or twice the money lost by the victims of the crime, if either of those amounts is over $100 million.

The Federal Trade Commission Act bans “unfair methods of competition” and “unfair or deceptive acts or practices.” The Supreme Court has ruled that all violations of the Sherman Act also violate the FTC Act. Therefore, even though the FTC does not actually enforce the Sherman Act, it carries with it legislative authority to prosecute and regulate the same type of behavior. The FTC Act also covers other anticompetitive practices outside of the scope of the Sherman Act.

The Clayton Act addresses specific practices such as interlocking directorates and mergers (not covered by the Sherman Act). Under the Clayton Act, any merger or acquisition that “may be substantially to lessen competition, or to tend to create a monopoly,” is prohibited. It also regulates certain discriminatory prices, services, and allowances in business transactions. Companies planning a large merger or acquisition must give the government advance notice. Individuals and corporations can sue for treble damages under this act if they have been harmed either by the Sherman or Clayton Act. Additional relief includes a court order such as an injunction prohibiting anticompetitive practice in the future.