The FCPA prohibits payments made to any person “while knowing” that all or a portion of the money or thing of value will be offered or provided, directly or indirectly, to any foreign official, foreign political party, party official, or candidate. In other words, the payor cannot avoid liability by directing or allowing a payment to be made through a third party.
Under the statute, knowing includes actual knowledge, a “firm belief” or awareness of a “high probability” that a circumstance exists or is “substantially certain” to occur, and willful blindness.1 The payor cannot avoid liability by deliberately choosing not to inquire or investigate.
A showing of knowledge is typically based on circumstantial evidence that the person was aware of red flags and failed to resolve them or prevent the improper payment. Common red flags include:
- the third party has a poor reputation for integrity, ethical behavior, and legitimate payment practices;
- the third party has ties to the government or foreign officials;
- questionable or unusual circumstances in dealings with the third party;
- questionable or unusual accounting, invoices, or payment requests by the third party;
- the industry in question or country involved has a reputation for corruption; and
- the third party lacks proper qualifications and capabilities, or charges an unusually high rate for its services.2
115 USC §§ 78dd-1(f)(2), 78dd-2(h)(3), 78dd-3(f)(3).
2 DOJ & SEC, A Resource Guide to the U.S. Foreign Corrupt Practices Act 22-23 (2012).