FCPA Defenses

An FCPA charge under 15 U.S.C. § 78dd-1 looks formidable in a chart and much less so once it is separated into elements. The government must prove that the defendant is covered by the issuer provision, that a payment or an offer or a promise or an authorization was made, that the recipient falls within the categories the statute names, that the defendant acted corruptly, that the purpose was to influence official conduct or secure an improper advantage, and that the object was to obtain or retain business. In third-party cases it must also prove knowledge as the statute defines it. This page works through the defenses element by element. It states no penalty figure, no threshold, and no limitations period for this provision. To discuss a specific matter, call (888) 437-7747.

Corrupt Intent

The word “corruptly” carries most of the weight in the provision, and it is where individual defenses are usually strongest. A payment is not corrupt merely because it was made to a person connected with a government. The government must show a wrongful intent to influence the recipient in the recipient’s official capacity. Payments made under duress, payments made to protect personal safety, payments demanded as extortion, and payments an employee made in the honest belief that they were permitted are all inconsistent with that intent.

Because intent is proved by inference from documents, the defense is built from what the defendant did contemporaneously: approvals sought, questions asked, entries recorded accurately, disclosure to supervisors or to compliance personnel, and adherence to a policy. A person who documented a payment openly in the company’s records was not concealing it, and concealment is one of the strongest inferences the government otherwise relies on.

Whether the Recipient Was a Foreign Official

The statutory categories are specific: an officer or employee of a foreign government or of a department, agency, or instrumentality of one, a person acting in an official capacity for such an entity, an officer or employee of a public international organization, a foreign political party or an official of one, or a candidate for foreign political office. Employees of commercial counterparties are not covered by this provision, and payments between private companies are a different problem entirely.

The contested ground is the word “instrumentality”. Many economies feature enterprises with partial state ownership, state-appointed directors, or a public function performed by a nominally commercial entity. Whether such an enterprise is an instrumentality, and whether its staff are therefore officials, depends on facts about ownership, control, funding, and function. That is a genuine defense in the right case, and it is developed with evidence about the entity rather than with argument.

Business Purpose and the Official Act

The provision requires that the payment be intended to assist in obtaining or retaining business, or in directing business to a person. It also requires a purpose connected to official conduct: influencing an act or decision, inducing an act or omission in violation of a lawful duty, securing an improper advantage, or inducing the official to use influence with a foreign government. Payments that had neither purpose fall outside the prohibition.

Disputes here are practical. A payment that resolved a private commercial dispute, a payment that had nothing to do with any pending decision, a payment made after a contract was already awarded on the merits, and a payment made to a person with no authority over anything the payer wanted can all fail the purpose elements. The defense reconstructs the decision that was actually pending and asks whether the recipient had any role in it.

Knowledge and the Conscious-Avoidance Theory

Where an intermediary is involved, the government must prove that the defendant knew that all or part of the payment would go to a covered recipient. The provision defines knowledge to include awareness of a high probability of the circumstance, unless the person actually believed it did not exist. Prosecutors use that definition to argue that a defendant deliberately avoided learning what was obvious.

The answer is evidence of what the person actually did. Diligence performed on the intermediary, contract terms requiring compliance, audit rights, certifications obtained, training completed, questions asked and answered, and commissions set at ordinary commercial rates all rebut the inference. So does evidence that the person was deceived by others who concealed the arrangement, which is common where a local agent operated well outside the visibility of the personnel now charged.

The Exception and the Affirmative Defenses

The provision excepts a facilitating or expediting payment made to secure the performance of a routine governmental action, meaning an ordinary non-discretionary function rather than a decision about awarding or continuing business. The exception is narrow, and an internal classification does not settle the question, but where a payment genuinely secured only the processing of a document or the provision of an ordinary service, the exception applies.

Two affirmative defenses appear in the same provision. One applies where the payment was lawful under the written laws and regulations of the foreign official’s country, which is demanding because written law rarely permits such payments even where practice tolerates them. The other applies where the payment was a reasonable and bona fide expenditure, such as travel and lodging, directly related to promoting, demonstrating, or explaining products or services, or to executing or performing a contract with a foreign government or agency. The defendant bears the burden on both, and both live or die on documents made at the time.

Jurisdiction, Charging, and Evidentiary Defenses

Coverage itself is a defense. Section 78dd-1 applies to issuers and to those acting on their behalf, and a person outside that category is not reached by this provision. The provision reaches conduct involving the mails or an instrumentality of interstate commerce, and it also reaches acts outside the United States taken by issuers organized under United States law and by their United States national personnel. Each of those routes has requirements the government must meet.

Evidence is the other battleground. Proof in these cases comes from foreign records, from cooperating witnesses abroad, from translated documents, and from material gathered by a company’s own investigators. Authentication, translation accuracy, the reliability of witnesses who have their own exposure, and the circumstances of internal-investigation interviews conducted at the government’s request are all litigable. So is the scope of any search of devices and cloud accounts.

Frequently Asked Questions

Is it a defense that the payment was extorted?

Where a payment was demanded under threat of harm, it is inconsistent with corrupt intent, and payments made to protect personal safety are treated differently from payments made to win business. The distinction is between a demand a person could not safely refuse and an economic demand that made a deal easier. The facts of the demand, and what the person did about it afterward, decide which category applies.

Does the FCPA cover payments to employees of private companies?

Not under this provision. Section 78dd-1 reaches foreign officials, foreign political parties and their officials, candidates for foreign political office, and officials of public international organizations. Commercial bribery between private parties is addressed by other laws entirely. Whether a state-owned or state-controlled enterprise counts as an instrumentality of a government, making its staff officials, is a separate and frequently contested question.

Can an employee be charged for a payment made by a local agent?

Only if the knowledge element is met. Awareness of a high probability that part of a commission would reach an official can suffice, unless the person actually believed it would not. Evidence of due diligence, contract protections, audit rights, and questions the employee asked is the substance of the answer to that theory, which is why those records should be gathered before any interview.

Is approval by a supervisor or by compliance a defense?

It is strong evidence against corrupt intent, provided the approval was sought with the relevant facts disclosed and the answer given was followed. An approval obtained on an incomplete description accomplishes little. Preserve the request, the response, and the timing, because the value of this defense lies in the contemporaneous record rather than in later recollection.

What if the payment was recorded openly in the company books?

Accurate, open recording cuts against concealment and therefore against corrupt intent, and it also matters to the separate accounting requirements that apply to issuers. It is not conclusive, since a payment can be both recorded and improper, but the government’s narrative in these cases usually depends on concealment, and open recording removes that thread.

When is the right time to raise these defenses?

Before charges exist, wherever possible. FCPA matters develop slowly, and a submission that shows a missing element, an intermediary who deceived the client, or an entity that is not an instrumentality can change a charging decision. Once an indictment is returned, the same points must be argued against a case the government has already committed to in public.

Working With Law Offices Of SRIS, P.C.

An individual’s FCPA defense is different from the company’s, and the elements that are hardest to prove against a person are corrupt intent and knowledge. Law Offices Of SRIS, P.C. defends federal white collar matters, tests each element against the documents that actually exist, and litigates the evidentiary problems these cross-border investigations create.

Mr. Sris, Owner and Founder of Law Offices Of SRIS, P.C., is a former prosecutor and is admitted in Virginia, Maryland, the District of Columbia, New Jersey, and New York. The firm has been practicing since 1997. Mr. Sris and the firm’s Of Counsel attorneys handle criminal defense matters across those jurisdictions, which matters in federal practice because a single investigation frequently reaches conduct, witnesses, and records in more than one state. Mr. Sris brings a background in accounting and information systems from George Mason University, applied to complex financial and technology-related cases.

The firm serves Northern Virginia from 1655 Fort Myer Dr, Suite 700, Room 719, Arlington, VA 22209 and central Virginia from 7400 Beaufont Springs Drive, Suite 300, Room 395, Richmond, VA 23225. By appointment. Call (888) 437-7747 to schedule. Request a consultation. Reach our location at (888) 437-7747.

Related pages

• FCPA Defense Lawyer
• FCPA Penalties and Sentencing
• FCPA Elements of the Offense
• Charged Under 15 U.S.C. 78dd-1: What Happens Next

This page provides general information about defenses to federal FCPA charges under 15 U.S.C. § 78dd-1 and does not create an attorney-client relationship. Case results depend on a variety of factors unique to each case. Results may vary.

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These defences apply to one offence. Our page on FCPA charges sets out that offence from start to finish.