Five travel expense related FCPA violations
Here’s a tip for potential Foreign Corrupt Practices Act whistleblowers: travel expenses clearly fall within FCPA guidelines.
A FCPA whistleblower is often an employee or insider who often times assumes incorrectly that a bribe only constitutes a violation of the FCPA if actual cash changes hands to an elected foreign official. One common FCPA whistleblower misperception is that a company can always pay for the travel expenses of foreign officials.
This is simply not true.
The FCPA prohibits the payment of “anything of value” but the statute itself does not define this term. The DOJ, SEC and courts have given this language a broad definition to include the standard travel expenses associated with a business trip, including entertainment, meals, airfare, gifts, lodging and drinks. Importantly, there is not a de minimis threshold.
Here are five red flags for travel related FCPA whistleblower violations.
- Who arranges for the travel of foreign officials? Often times a company does not have a central travel department and leaves the travel arrangements to the foreign official himself, or to a third party travel agency. Such a policy can lead to the company knowingly paying for non-business related travel either before or after the business portion of the trip. This would potentially violate the FCPA.
- What guidelines are articulated to employees? Companies with strong FCPA internal guidelines and enforcement procedures clearly articulate to employees the rules of the road. Does your company?
- How are expense reports generated and reviewed? Companies with strong FCPA internal guidelines may require a more detailed expense report when company personnel are entertaining foreign officials. Does your company?
- Does you company pay for family members and spouses of foreign officials? Clearly doing so may violate the FCPA. What is your company’s policy?
- Does you company distinguish between travel to and from US verses among foreign countries? FCPA violations can occur even if the travel is not to or from the United States. Does you company handle the payment of travel expenses differently when the trip is between between two foreign countries?
Understand that it is absolutely legitimate and certainly does not violate the FCPA for a U.S. company to pay for the travel expenses of foreign officials – in their capacity as a customer or potential customer - to travel to meet company personnel, inspect products or company facilities, or even to execute a contract. But the payment does potentially become a FCPA violation, however, if it is to cover a non-business expense.