The Fine Line Between Commission and Bribery

The FCPA states in article eight of the Inter-American Convention Against Corruption (IACA) that "each State Party shall prohibit and

punish the offering or granting, directly or indirectly, by its nationals, persons having their habitual residence in its territory, and businesses domiciled there, to a government official of another State, of any article of monetary value, or other benefit, such as a gift, favor, promise or advantage, in connection with any economic or commercial transaction in exchange for any act or omission in the performance of that official's public functions."

Probably the most high profile of cases of overseas bribery was the well-publicized dismissal of four executives from Lucent Technologies as a result of alleged transnational bribery committed to obtain special treatment from the recipients of the bribes in Saudi Arabia.

While businesses revel in their impeccable accounting of expenditure, and valiantly affirm that their officials are all clean, we must realize that with more and more businesses going overseas, it is no longer as easy to tell if what you are paying your business counterpart in China or Saudi Arabia is a commission or a bribe. Often, it is a gray line which divides between the two.

The United States had been fighting overseas bribery alone for over 20 years, and only 20 years later on the urging of the United States, international organizations such as the United Nations, the European Union and the World Bank has stepped up their anti-corruption efforts on a global scale.

When that Chinese company charges you certain administrative fees, it sounds like a legitimate payment for the paperwork that has to be done to get that deal going. Or could it be a euphemism for the underhand payments that go on in the darker world of business dealings? One could not be entirely sure.

Payments demanded by overseas officials may harbor the hidden cost of paying off their local officials, making you an accessory to bribery even if you are not aware of such payments. Such agents are difficult to spot. Look out for invoices with unexplained charges, such as an inexplicably large administrative fee. Make sure that you make it clear to your overseas counterparts that you view corruption as a practice to be frowned upon, and that under no condition will you or your company condone any payments of such nature.

The consequence of bribing overseas officials in the United States, as stated by the FCPA, is a fine of up to $2,000,000.