We Work With Whistleblowers To Expose Fraud Against The Government

Foreign Corrupt Practices Act

Blow the whistle on bribery and corruption abroad

Overseas, bribery of foreign officials is a widespread problem due to the opaqueness of global business and the difficulty in overseeing from a distance. However, the Foreign Corrupt Practices Act allows individuals to bring more transparency to global businesses and prevent bribery abroad.

While first enacted in 1977, the FCPA later enacted protection for FCPA whistleblowers in 2010 with the Dodd–Frank Wall Street Reform and Consumer Protection Act. In addition to protecting potential whistleblowers from retaliation, the Acts allow for compensation to those individuals who provide the SEC with information about violations..

Scope of the FCPA

The FCPA includes two key components: anti-bribery provisions and accounting requirements. The anti-bribery provisions prohibit individuals and companies from influencing foreign officials through money or gifts in order to obtain or retain business. This also applies to foreign companies or foreign nationals who engage in corrupt practices while in the United States.

The accounting requirement prevents the use of accounting methods designed to disguise corrupt payments. Companies must make and keep accurate books and records and maintain adequate internal accounting controls.

Application and purpose of the FCPA

The FCPA makes it unlawful for certain persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. Its purpose is to prohibit corrupt payments to foreign officials for the purpose of obtaining or retaining business or obtaining an improper advantage. This includes foreign bribery, corruption, fraud, and money laundering.

It applies to all U.S. persons, U.S. companies, certain foreign issuers of securities, and foreign firms and persons who cause “an act in furtherance of such a corrupt payment to take place within the territory of the United States” through six anti-corruption programs:

Public integrity prosecutions of U.S. public officials;
Prosecutions of U.S. individuals that pay bribes to foreign officials;
Prosecutions of U.S. taxpayers who seek to conceal foreign accounts;
Pursuit of those who misuse the U.S. financial system through money laundering and other corrupt schemes;
The pioneering Kleptocracy Initiative, which uses investigation and litigation to recover the proceeds of foreign official corruption and return the proceeds to the citizens who have been victimized by corruption; and
Assistance to foreign counterparts in fighting corruption.

Red Flags for FCPA violations

The business transaction takes place in a nation or company known for corruption
A request for abnormally high compensation or commissions
The individual(s) involved have a history of bribery allegations
The involved parties have a bad reputation in the industry
Warnings, alerts, alarms, or notifications from a consumer reporting agency
Bribes falsely characterized as “commissions” or “consulting fees”
Payments are made through third parties for no discernable reason
Payments are only accepted in non-traceable formats such as cash or directed to offshore bank accounts
Excessive commissions to third-party agents or consultants
Unreasonably large discounts to third-party distributors or agents
Third-party shell companies incorporated in an offshore jurisdiction
Campaign contributions paid in connection with a government contract
Irregularities or a lack of transparency in accounting and a lack of internal accounting controls
Pressure to use a specific third-party

Examples of FCPA Violations

In one of the more jaw-dropping recent examples, in October 2024, Raytheon became the latest company to settle a FCPA claim in connection with defective pricing, foreign bribery, and export control schemes in order to win business through bribery in Qatar. Over the course of several years, Raytheon employees bribed a high-level Qatari military official to obtain lucrative defense contracts and concealed the bribe payments by falsifying documents to the government. From 2012–2013 and again in 2017–2018, Raytheon employees provided false and fraudulent information to the DOD during contract negotiations concerning two contracts with the U.S. for the benefit of a foreign partner, misleading the DOD into awarding the two contracts at inflated prices.

Other recent examples include New York-based aerospace manufacturer Moog, who paid bribes to various Indian officials in order to win contracts and funneled them through third party agents and distributors; a $10 million settlement from John Deere for making illegal bribery payments to win multiple contracts in Thailand; a $127 million settlement by Swiss-based commodity trader Trafigura for its bribery of Brazilian officials to illegally obtain business through the Southern District of Florida; and a $661 million settlement by Swiss oil trader Gunvor for its corrupt scheme to pay substantial bribes to Ecuadorean government officials to secure business with Ecuador.

Protections for whistleblowers? I am concerned about my privacy:

Understandably, the biggest concern for many potential whistleblowers is the prospect of blowback or retaliation for speaking up. With the help of an attorney, whistleblowers can file anonymous actions.

In addition, Sarbanes–Oxley (SOX) and Dodd–Frank both have protections afforded for whistleblowers that apply for potential whistleblowers under the FCPA. Notably, SOX protects an employee who reports an FCPA violation to either their supervisor or the federal government from all forms of retaliation. Similarly, Dodd–Frank protects whistleblowers who work for publicly traded companies and are reporting a violation covered by the FCPA. In order to be protected under Dodd–Frank, the whistleblower must report the misconduct to the SEC. It also provides whistleblowers with a right to file a private action in court.

Rewards for whistleblowers

In addition to protecting whistleblowers from retaliation, Dodd–Frank also provides financial rewards for those whistleblowers: a qualified whistleblower whose information leads to the SEC’s recovery of $1 million or more may be entitled to receive between 10–30% of the SEC’s recovery.

Given the complexities in filing a whistleblower claim and seeking whistleblower protection, these matters should be hired by an experienced attorney. Failing to report in the right place, right way, or missing a deadline could result in the whistleblower losing their protection from retaliation or ability to claim a whistleblower reward. Weinstein Caggiano is here to help you navigate this complex system. Call us or email us today for a free consultation to see what we can do for you.