The biggest enforcement year in FCPA history
27 companies paid almost HK$19.35 billion (U$2.48 billion) to resolve US Foreign Corrupt Practices Act (FCPA) cases in 2016. That makes the year that most of us would rather forget the biggest enforcement year in FCPA history. An average of almost HK$717,000,000 per company!
Of the 27 cases settled in 2016, fifteen, or more than half, involved actions or payments that took place in China.
Hong Kong companies simply cannot afford to ignore the FCPA, particularly listed ones who almost certainly have both business in China and some form of US nexus.
Individuals should beware too. Enforcement action is increasingly being taken against individuals involved in FCPA violations.
2 people received sentences (one to prison and one to probation) for FCPA violations in 2016. A further 10 individuals are waiting for the courts to decide their fate.
The recent arrest of Oliver Schmidt, Volkswagen’s former US compliance manager, on fraud charges is another demonstration of this. Schmidt was arrested when he visited Miami on January 7, 2017. This week 6 VW executives and employees, including Schmidt, were indicted in connection with the emissions scandal.
Foreign officials on the receiving end of transactions are not immune from US prosecution either. Although the FCPA does not reach the bribe takers in the foreign jurisdiction, the US Department of Justice was able to successfully charge seven foreign government officials with money laundering related offences during the year.
The good news is that the vast majority of the rules and requirements set out in the FCPA are similar to those found in Hong Kong’s Prevention of Bribery Ordinance (Cap 201) and the Independent Commission Against Corruption Ordinance (Cap 204). Ensuring that your organisation is complying with Hong Kong laws in this regard will largely ensure that you avoid hefty fines imposed by US regulators. If you think your organisation has a US nexus and might be subject to the FCPA, we suggest that you seek advice from the many reputable law firms in Hong Kong with a US practice and put a strong AML and compliance program and processes in place.