April 2014

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Page 23 of 51

Executive Spotlight 22 | www.cedmag.com | Construction Equipment Distribution | April 2014 ("Don't Mess With Musya" continued from page 19) Doing Business Abroad – Or Thinking About It? Be Sure to Abide By the Foreign Corrupt Practices Act By ChrisTian a. Klein The Foreign Corrupt Practices act (FCPa) is a federal law enforced by the U.S. Department of Justice (DOJ) that criminalizes payments to foreign government officials to influence them in their official acts or to obtain or retain business. Here are some things you should know about the law if you're doing business internationally: Who's covered? It's a safe bet you're covered by the law. It applies to both publicly traded and private compa- nies, as well as to U.S. citizens and residents. It also applies to foreign companies and individuals while in the territory of the U.S., and to nonemployee foreign agents working on your behalf. What does the law prohibit? The law prohibits paying (or promising to pay) foreign government officials (or their friends and relatives) to influence them to use their official position to help you obtain or retain business or to give you an unfair business advantage. This could include winning or preventing termination of a government contract, preventing a competitor from getting a contract or being allowed to operate, circumventing the procure- ment process or import rules, getting nonpublic informa- tion about a pending project, improperly influencing the judicial process, or getting an exemption from existing regulations. Does the law prohibit ever giving something of value to a foreign government official? The law doesn't prohibit all gifts to foreign officials. It generally prohibits giving things of value to improperly influence them in carrying out their duties. Giving company promo- tional items and paying for reasonable meals and enter- tainment expenses isn't likely to trigger a prosecution. But the DOJ assumes that the larger or more extravagant the gift, the more likely it was given with an improper purpose in mind. What does the DOJ consider in determining whether a gift violates the FCPA? Factors prosecutors consider include: n Size and reasonableness of the gift – paying airfare and basic expenses for a foreign official to inspect your facility in the U.S. probably wouldn't violate the law if there's a legitimate business reason for the trip; but flying the official and his family first class and taking them to Disney World for a week would almost cer tainly raise eyebrows. n Transparency – is the gift or expense properly recorded on a company's books? (mandatory for public companies) n Legality – is the gift permissible under the laws of the foreign official's home country? n Purpose – is there an indication that the gift was given "corruptly" to influence the foreign official in his official duties? How to avoid running afoul of the law. If you're doing business internationally, make sure you and your employees understand the FCPA. Create company compliance guidelines, which could include gift limits, gift clearance processes, and reimbursement rules. The DOJ also puts a premium on transparency, so make sure that gifts are properly noted in company records. Where to get more information. The DOJ has a website –http://www.justice.gov/criminal/fraud/fcpa/ – with information about the law and an extensive compliance guide. (http://www.justice.gov/criminal/fraud/fcpa/guide. pdf). You can also request a formal opinion from the DOJ about whether conduct you're considering is permissible. The FCPA is complicated and there are many nuances. This article is intended as a brief introduction; it is not legal advice. If you have questions, consult the DOJ website or your attorney. ChrisTian a. Klein is AED's vice president of Govern- ment Affairs. 16_Hoffman_Export_feature_KP.indd 22 3/27/14 4:24 PM

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