HOUSE_OVERSIGHT_022518.jpg

Examples of Improper Travel and Entertainment # a $12,000 birthday trip for a government decision- maker from Mexico that included visits to wineries and dinners = $10,000 spent on dinners, drinks, and entertainment for a government official "a trip to Italy for eight Iraqi government officials that consisted primarily of sightseeing and included $1,000 in “pocket money” for each official " a trip to Paris for a government official and his wife that consisted primarily of touring activities via a chauffeur-driven vehicle the company’s facilities, in reality, no training occurred on many of these trips and the company had no facilities at those locations. Approximately $670,000 of the $7 million was falsely recorded as “training” expenses.” Likewise, a New Jersey-based telecommunications company spent millions of dollars on approximately 315 trips for Chinese government officials, ostensibly to inspect factories and train the officials in using the company’s equipment.” In reality, during many of these trips, the off- cials spent little or no time visiting the company’s facilities, but instead visited tourist destinations such as Hawaii, Las Vegas, the Grand Canyon, Niagara Falls, Disney World, Universal Studios, and New York City.”® Some of the trips were characterized as “factory inspections” or “training” with government customers but consisted primarily or entirely of sightseeing to locations chosen by the officials, typically lasting two weeks and costing between $25,000 and $55,000 per trip. In some instances, the company gave the government officials $500 to $1,000 per day in spend- ing money and paid all lodging, transportation, food, and entertainment expenses. The company either failed to record these expenses or improperly recorded them as “consulting fees” in its corporate books and records. The The FCPA: Anti-Bribery Provisions company also failed to implement appropriate internal con- trols to monitor the provision of travel and other things of value to Chinese government officials.” Companies also may violate the FCPA if they give payments or gifts to third parties, like an official's family members, as an indirect way of corruptly influencing a for- eign official. For example, one defendant paid personal bills and provided airline tickets to a cousin and close friend of the foreign official whose influence the defendant sought in obtaining contracts.'” The defendant was convicted at trial and received a prison sentence.’ As part of an effective compliance program, a com- pany should have clear and easily accessible guidelines and processes in place for gift-giving by the company’s directors, officers, employees, and agents. Though not necessarily appropriate for every business, many larger companies have automated gift-giving clearance pro- cesses and have set clear monetary thresholds for gifts along with annual limitations, with limited exceptions for gifts approved by appropriate management. Clear guidelines and processes can be an effective and efficient means for controlling gift-giving, deterring improper gifts, and protecting corporate assets. The FCPA does not prohibit gift-giving. Rather, just like its domestic bribery counterparts, the FCPA prohibits the payments of bribes, including those disguised as gifts. Charitable Contributions Companies often engage in charitable giving as part of legitimate local outreach. The FCPA does not prohibit charitable contributions or prevent corporations from act- ing as good corporate citizens. Companies, however, can- not use the pretense of charitable contributions as a way to funnel bribes to government officials. HOUSE_OVERSIGHT_022518