The former president and CEO of BizJet International Sales, Inc. pleaded guilty to violations of the Foreign Corrupt Practices Act (“FCPA”) for his participation in an international scheme to bribe Mexican and Panamanian government officials. The FCPA is a U.S. anti-bribery statute that applies to, among others, U.S. companies and individuals and prohibits bribes to foreign officials to obtain or retain business.
The case has all the attributes of a hot FCPA enforcement action – the existence of a shell corporation through which BizJet made several of the illegal payments, thousands of dollars in bribes, and bribes disguised as gifts, commissions, referral fees, and incentives. The payments were made in connection with BizJet’s attempt to secure aircraft maintenance contracts with various clients, among whom were Mexican and Panamanian foreign officials and agencies.
The BizJet case is a good opportunity to revisit basic FCPA principles. Disguising bribes as incentives, referral fees, gifts, and similar valuables, does not take the activity out of FCPA realm. The FCPA covers “anything of value,” regardless of the characterization of the thing. Foreign Corrupt Practices Act, 15 U.S.C. §§78dd-1(a), 78dd-2(h)(1)(A), 78dd-3(f)(1) (1977). As in past cases, “value” can exist in the form of gifts, trips, and other perks that raise red flags in light of the nature of the transaction at issue.
As the DOJ and SEC have pointed out, gifts incentives, commissions, and other fees are permitted, but whether the thing of value provided to the foreign official turns into a bribe is an analysis made on a case-by-case basis depending on the facts and circumstances of each case. For that reason, companies and individuals doing business abroad should consult with counsel to ensure that seemingly benign interactions with foreign officials are not really bribes under the FCPA.
Further, using an intermediary to make the illegal payment does not shield the decision makers from FCPA liability. In the BizJet case, many of the payments were made through Avionica International & Associates Inc., a company that was wholly owned and operated by a BizJet executive. The FCPA specifically prohibits payments to “any person, while knowing that all or a portion of such money or thing of value will be offered, given, or promised, directly or indirectly.” 15 U.S.C. §§ 78dd-1(a)(3), 78dd-2(a)(3), 78dd-3(a)(3). Thus, using a shell corporation, an intermediary, does not shield the actor from liability. Other theories of liability, such as aiding and abetting and conspiracy, also serve to prosecute parties who cannot be otherwise prosecuted because they did not commit the offense directly.
Every U.S.-based company and individual doing business abroad, regardless of size, sophistication, or complexity of the transaction, should be aware of the FCPA, its requirements, and penalties. Even where involvement of the foreign official in the transaction seems remote or unlikely, it is good business have an FCPA compliance manual in place to avoid inadvertent violations that can result in serious civil and criminal penalties.
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