United States Laws of Anti-Corruption and Bribery
 
 
 United States Laws of Anti-Corruption and Bribery 
 
 

There are several statutes in the United States that make it illegal to bribe a federal official. That said, the most important one makes federal public corruption a criminal act. It is statute 18 U.S.C. 201. There are two subparts to section 201. Section 201(b) makes the payment, offer, and receipt of bribes a criminal act, while section 201(c) criminalizes the payment, offer and receipts of illegal gratuities. Section 201(b) is prosecuted harder than section 201(c).

Private to Public Bribery in the United States

The laws below apply to crimes of bribery between an individual or company and a public official. Since both subparts of statute 18 U.S.C. 201 contain a different definition of bribery, let's discuss the definition spelled out in each.

18 U.S.C. 201(b)

This subpart of the statute deals with giving and receiving bribes. The prosecution must show that something was corruptly given, offered, or promised to a public official. The giver of a bribe must have had intent to influence an official act. When prosecuting the recipient of the bribe, the prosecution must show that something of value was corruptly sought, demanded, received, accepted, or agreed upon. The intent of the recipient must have been to be influenced in his or her performance of an official act.

18 U.S.C. 201(c)

An illegal gratuity is paid for or because of an illegal act. For the giver, the prosecution must show that something was corruptly given, offered, or promised to a public official. When prosecuting the recipient of the bribe, the prosecution must show that something of value was corruptly sought, demanded, received, accepted, or agreed upon. While bribery involves the intent to influence or be influenced, an illegal gratuity only requires that an illegal gift was given or accepted.

The Definition of a Public Official

The United States defines a public official as:

1. Member of Congress

2. Delegate

3. Resident Commissioner

4. An employee who acts on behalf of the United States

5. An employee who acts on behalf of any department or branch of Government in any official function or under the authority of any such department, including the District of Columbia.

6. Juror

7. Anyone who has ever been selected to public office, including those who were nominated or appointed. It also includes anyone who has been officially informed that the person will be nominated or appointed.
 
 

Consequences for Private to Public Bribery

Under 18 U.S.C. 201(b):

1. Up to 15 years' imprisonment

2. A fine of up to $250,000 for individuals and up to $500,000 for organizations - or up to three times the value of the bribe (whichever is greater). In addition, disqualification from federal office of any kind.

Under 18 U.S.C. 201(c):

1. Up to two years' imprisonment

2. A fine of up to $250,000 for individuals and up to $500,000 for organizations

Domestic Bribery in the United States

The Securities Exchange Commission (SEC) and the Department of Justice (DOJ) are both authorized to punish those guilty of domestic bribery. The DOJ has the power to criminally punish domestic bribery under Federal laws. These laws include the Travel Act, 18 U.S.C 1952, as well as mail and wire fraud statutes, 18 U.S.C 1341, 1243, and 1346.

The SEC can investigate domestic bribes when the bribes violate the SEC's accounting provisions, Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. The SEC can also refer cases to the DOJ for criminal prosecution if they were willful violations.

Definition of Domestic Bribery

There are various definitions of domestic bribery in the United States based on the Federal laws that govern domestic bribery.

The Travel Act makes it illegal to travel or use the mail with the intent to distribute proceeds of any illegal activity, including bribes or violations of the FCPA.

The federal mail and wire fraud statutes, 18 U.S.C 1341, 1243, and 1346 make it illegal to use the mail or interstate wire communications to either execute a scheme for defraud or deprive someone of money or property. The US Supreme court, in the case of Skilling v. United States, held that fraud includes bribes and kickbacks made to employees of private firms.

The SEC may also go after publicly-traded companies for commercial bribery under the FCPA's accounting provisions. These provisions require publicly-traded companies to keep their books accurate and maintain internal controls. The SEC can go after individuals, as well as issuers that are required to file reports with the SEC and issuers of registered securities. This includes entities who trade on the U.S. exchange.
 
 
 
Consequences

For violations of the Travel Act, there are penalties for individuals and legal entities.

For individuals:

1. Imprisonment for no more than five years when the individual intended to promote, facilitate, or distribute the proceeds of a bribe. Or up to 20 years' imprisonment if the individual committed violence to further the bribe. Up to life imprisonment is an option if the violence caused death.

For entities:

1. Up to 2X the gross gain from the bribe or $500,000, whichever is greater.

 

For mail and wire fraud violations, there are penalties for individuals and legal entities.

For individuals:

1. Imprisonment for no longer than 20 years

2. Up to 2X the gross gain from the bribe or $250,000, whichever is greater.

The exception is if the bribe affects a financial institution or relates to a president-declared major emergency or disaster. Then, the individual faces up to 30 years' imprisonment and/or a fine of up to one million dollars.

For entities:

1. Up to 2X the gross gain from the bribe or $500,000, whichever is greater.

 

For wilful accounting violations, there are penalties for individuals and legal entities.

1. Imprisonment of up to 20 years.

2. Up to 2X the gross gain from the bribe or 5 million dollars, whichever is greater.

For entities:

1. Up to 2X the gross gain from the bribe or 25 million dollars, whichever is greater.

 

For non-wilful accounting violations, there are penalties for individuals and legal entities.

For individuals:

1. A fine not to be more than the gross gain from the bribe or $7500- $150,000, whichever is greater. The amount is based on the egregiousness of the crime.

For entities:

1. A fine not to be more than the gross gain from the bribe or $7500- $725,000, whichever is greater. The amount is based on the egregiousness of the crime.

The Corruption of a Foreign Public Official
 
 

The Foreign Corrupt Practices Act of 1977 (or the FCPA) as amended, 15 U.S.C 78dd-1, et seq, prohibits the corruption of foreign public officials. The FCPA includes provisions for bribery and accounting.

The bribery provision in the FCPA prohibits:

1. Offering to pay

2. Paying

3. Promising to pay

4. And authorizing the payment of anything of value, including money

The FCPA makes the act of doing any of the above to a foreign public official in order to influence that official to act, not act, or secure advantage a criminal offense.

The accounting provisions on the FCPA require companies that has securities listed in the U.S. to:

1. Make and keep accurate books and records to reflect the transactions of the company

2. Maintain a system of internal accounting controls

NOTE: In April 2016, the DOJ announced the FCPA Pilot program with the intention of giving more guidance and policy information on the benefits companies get when making voluntary disclosures of their own corrupt conduct in FCPA cases. This program can possibly provide a 50% reduction off the bottom end of the fine range of the sentencing guidelines for companies that self-disclose corruption, cooperate, and engage in remediation.

The Definition of Corruption of a Foreign Public Official

As was stated earlier in this article, he FCPA prohibits issuers of securities and anyone acting on behalf of an issuer, as well as U.S. citizens, residents, companies incorporated in or having their primary place of business in the U.S., and some non-U.S. entities and individuals from:

1. Making a payment, offer, or promise to a foreign public official. This includes cash, as well as tangible and intangible gifts, favors, or benefits.

2. Having direct or indirect knowledge of a bribe made or being made to a foreign public official.

3. Corrupting a foreign public official to use his or her position to give business to an individual or company. There must be intent to wrongfully influence the recipient to use his or her position to wrongfully obtain, direct, or retain business.

The Definition of a Public Official

A foreign public official is defined as:

1. Any officer or employee of a foreign federal government

2. Any officer or employee of a department or agency of a public international organization.

3. Anyone who is acting on behalf of any foreign government or public international organization.

4. Employees of foreign state-owned enterprises are also considered foreign public officials under the FCPA.

Consequences

Criminal penalties for violations of the anti-bribery provisions in the FCPA include:

1. Up to five years in prison for each violation

2. A fine of up to $250,000 for each violation

3. For violations of the accounting provisions, individuals can receive up to 20 years in prison and a fine of up to five million dollars.

For legal entities:

1. Up to two million dollars in fines for each violation of the anti-bribery provisions

2. Up to 25 million dollars in fines for each violation of the accounting provisions

The SEC can also assess civil penalties and seize gains made from bribery or violations of the accounting provisions.

Civil penalties can be up to $16,000 per violation for anti-bribery violations. Civil penalties can range from $7,500 to $150,000 for individuals and $75,000 to $725,00 for companies per violation.

Facilitation Payments

A facilitation payment is defined as a payment made to a public official or government agency to expedite an action or process. The payment is made to benefit the party making the payment. The FCPA makes a small exception for such payments that are made to expedite routine government actions. These are also known as grease payments. They are different from bribes, because facilitation payments are made to secure goods or services to which the person making the payment is already entitled. Once again, though, the exception is small. The U.S. authorities have pursued anti-bribery charges in the past against those who tried to claim the exception. In order to avoid violating the FCPA's accounting provisions, these transactions should be listed as facilitation payments in the books. However, that opens up criminal liability in areas where facilitation payments are not permitted. It is not advised that any individual or company rely on facilitation payments to conduct business. The legal exception for these types of payments is too small, and the risk is too high.

Compliance Programs

A compliance program is a corporate program that specifies a company's policies, procedures, and actions to mitigate risks and detect violations of the laws and regulations regarding corruption and bribery.

Although it is not illegal for a company not to have a compliance program in place, having a compliance program can mitigate and possibility eliminate corporate criminal liability.

It is highly recommended that all companies establish a compliance program that at least does the following:

1. Creates standards and procedures to detect and prevent criminal acts within the company.

2. Makes sure that company leaders understand and oversee the program. In addition, certain leaders should be given the power to implement the program.

3. Puts safeguards into place so people who have criminal backgrounds aren't put in leadership positions.

4. Conducts training programs so all employees understand the standards and procedures of the program. The company should also communicate these standards and procedures periodically to employees.

5. Monitors the program and employee conduct. Regular audits should also be performed. There should also be a reporting system put into place for employees who need to report suspected misconduct.

6. Responds immediately to alleged misconduct.

 
 
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