Wednesday, January 23, 2013

Anti-Bribery - U.S. FCPA and Omani Law

There has been renewed interest recently in relation to the interpretation and application of the U.S. Foreign Corrupt Practices Act (“FCPA”) due to the issuance on 14 November, 2012, by the U.S. Department of Justice (“DOJ”) and U.S. Securities and Exchange Commission (“SEC”), of a guide entitled “A Resource Guide to the U.S. Foreign Corrupt Practices Act” (the “Guide”). The Guide clarifies the U.S. government’s current position on various FCPA-related issues, thereby increasing one’s ability to determine whether FCPA enforcement action is likely in a given situation.

The FCPA’s anti-bribery provisions apply to U.S. companies and individuals, irrespective of whether they act within, or wholly outside of, the United States (i.e., “domestic concerns”). The FCPA’s anti-bribery provisions also apply to any company which has securities listed on a U.S. exchange, or any company that has shares quoted in the over-the counter market and is required to file periodic reports with the SEC (i.e., “issuers”). Foreign companies that have American Depository Receipts (“ADRs”) listed on a U.S. exchange are also issuers.

In addition, the officers, directors, employees, agents, and stockholders of domestic concerns and issuers are also subject to the FCPA. Moreover, the FCPA’s anti-bribery provisions also apply to a foreign person or entity that engages in any act in furtherance of a corrupt payment while in the United States. Furthermore, FCPA liability exists if a foreign national or company conspires with, aids and abets, or acts as an agent of an issuer or domestic concern, regardless of whether the foreign national or company engages in any action in the United States.

According to the Guide, a “foreign company or individual may be held liable for . . . conspiring to violate the FCPA, even if the foreign company or individual did not take any act in furtherance of the corrupt payment while in the territory of the United States” The basis is that, in accordance with traditional conspiracy law, the United States “generally has jurisdiction over all the conspirators where at least one conspirator is an issuer, domestic concern, or commits a reasonably foreseeable overt act within the United States” Thus, for example, a foreign individual or company that conspires to violate the FCPA with someone who commits a reasonably foreseeable overt act within the United States can be prosecuted for conspiracy.

Given the various jurisdictional tools that the U.S. government has at its disposal, foreign individuals and companies should recognize that their interaction with U.S. individuals or companies can subject them to FCPA violations. Foreign individuals and companies should therefore consider potential FCPA exposure issues when structuring any business dealings that have a U.S. nexus, whether through travel, correspondence, telecommunication, banking, or engaging with U.S. joint venture partners, and should take proper legal advice if any doubts exist in this respect.

In any event, anti-bribery legal provisions are not restricted to the U.S. and similar anti-bribery rules exist elsewhere as well, including in jurisdictions such as Oman. The Omani Penal Code and the Law for the Protection of Public Funds and Avoidance of Conflicts of Interest (the “Anti-Corruption Law”) prohibits giving, accepting and mediating bribes, and prohibits this most forcefully and specifically in the context of public sector employees.

Oman’s Anti-Corruption Law provides a list of specific acts that are deemed to be illegal when done by public sector employees. Prohibited acts include:

  • exploiting the status of government employment for personal benefit; 
  • granting or facilitating a special benefit or preferential treatment for a natural of juristic person, without a justified reason; 
  • behaving in a way that negatively affects the reputation of the government and its civil service sector; personally benefiting or sharing in profits from government work in which the employee is involved or for which the employee is responsible; 
  • using the employee’s influence to favour, support, mediate on behalf of, sponsor or facilitate individuals or entities which desire to have commercial dealings with the government, in respect of any project which comes within the scope of the employee’s assigned work; 
  • receiving any outside consideration (directly or indirectly) for the work the employee performs within the scope of his employment, or as a result of it; 
  • having work or positions (paid or unpaid) outside of the employee’s government job without the approval of the government; 
  • and using public funds for the employee’s personal benefit or allowing misuse of public funds by others.