Through the Securities and Exchange Commission (SEC)’s Whistleblower Program, individuals with information concerning violations of Foreign Corrupt Practices Act (FCPA) can report misconduct to the government. The SEC Whistleblower Program provides for the potential for robust awards to successful FCPA whistleblowers as well as protection against retaliation for blowing the whistle. Through the SEC’s Whistleblower Program, individuals with information concerning violations of FCPA can report misconduct to the government. The SEC Whistleblower Program provides for the potential for robust awards to successful FCPA whistleblowers as well as protection against retaliation for blowing the whistle.

FCPA: Quick Facts


 I. The Foreign Corrupt Practices Act: An Overview

The SEC and Department of Justice (DOJ) share joint responsibility for enforcing the FCPA. The FCPA is the federal government’s premier statute for policing corruption of foreign officials. The FCPA applies worldwide.

First, the FCPA prohibits the payment of bribes to foreign officials where such bribes are provided to assist in obtaining or retaining business. In other words, a covered company paying a bribe to a foreign official for some commercial purpose (e.g., to secure a contract) will run afoul of the FCPA. The FCPA covers direct and indirect payments (e.g., a company or individual may run afoul of the FCPA if the bribe is paid to a foreign official’s family member). The anti-bribery provisions apply to a range of actors, including American citizens, domestic companies, and certain foreign issuers of securities, as well as those companies’ officers, employees, shareholders, and agents (e.g., consultants).

Second, the FCPA requires that companies with securities listed in the United States comply with certain related accounting standards which are aimed at furthering the law’s anti-bribery objections. Companies covered by the books and records provisions must (a) make and maintain books and records that accurately and fairly reflect the transactions of the corporation and (b) create and maintain a sufficient system of internal accounting controls. The idea behind the accounting requirements is that companies engaged in bribery often falsely record illicit payments on their books and other records.

FCPA enforcement has been a top priority for the SEC and DOJ in recent years. The SEC, in fact, has its own unit focused entirely on enforcing the FCPA. Civil and criminal cases under the FCPA have resulted in some of the largest corporate fines in history. A review of major FCPA and FCPA-related recoveries shows that FCPA enforcement is robust and has ensnared both domestic and foreign companies.

Notably, while bribes can be transparent (e.g., paying a government official money directly), bribes are often provided in a concealed manner. Whistleblowers should be on the lookout for various FCPA red flags:

Payments to Related Companies: If a company is dealing with an individual or entity that is associated with a foreign official (e.g., a company that is owned by a foreign official or someone close to that official), that may indicate illegal conduct.

Payments to Family Members: In some cases, the bribe may not be paid directly to the foreign official but may instead be paid to one of his or her family members or someone else close to the foreign officials (or, as noted above, a company associated with such a connected individual).

Fake Services & Dubious Invoices: Companies may try to facilitate bribes by paying companies or individuals associated with government officials bribes which are listed on invoices as seemingly legitimate payments but where the payor never received the goods or services described.

Overpaying for Services: Bribes can also be paid when a company overpays for goods and services or pays for goods and services that the company does not actually need.

Unusual Discounts: Conversely, a company may offer unusual discounts to an entity associated with a foreign official in order to provide an illegal payment.

Shell Companies: When companies send payments to shell companies, particularly those in offshore jurisdictions, this may indicate that something is amiss.

Entertainment and Travel: Corporate personnel may engage in bribery by of foreign officials and then label those expenses as “travel” or “entertainment expenses (or other innocuous descriptions).

Unqualified Vendors: A company may purchase goods or services from an unqualified vendor associated with a foreign official. Particularly when a more reputable and/or competitive vendor is available, this may be a red flag and suggest that a company is dealing with a given vendor in order to surreptitiously bribe to a foreign official.


II. The FCPA and the SEC Whistleblower Program

Given that the SEC shares joint jurisdiction over FCPA enforcement, whistleblowers can and have used the SEC Whistleblower Program to submit tips relating to foreign bribery schemes. In fact, the largest whistleblower award provided to a single whistleblower (under any whistleblower program) is the $279 million award provided to an FCPA whistleblower who provided the SEC with information relating to the Ericsson case described above.

Further, the SEC Whistleblower Program has a “related action” provision. Under that provision, a whistleblower who is otherwise eligible for an award related to a successful SEC enforcement action can also obtain an award in connection with so-called “related actions.” Related actions include those cases brought by the Department of Justice and certain other regulatory authorities which are based upon the same original information submitted by the whistleblower to the SEC and which lead to monetary sanctions exceeding $1 million. That is critical in the context of the FCPA given that FCPA enforcement is enforced by the SEC and DOJ. Thus, FCPA resolutions often include an SEC settlement and a separate resolution with the DOJ. Take, for example, a scenario where a whistleblower submits a tip to the SEC concerning Company X’s violations of the FCPA. The whistleblower’s original information results in successful enforcement actions. Company X agrees to pay $200 million in monetary sanctions as part of an SEC resolution and another $400 million in monetary sanctions as part of a related criminal resolution with the DOJ. In that scenario, an eligible whistleblower could obtain an award out of not just the $200 million SEC settlement but also the $400 million DOJ resolution (i.e., $600 million total).

Given that FCPA cases can lead to sizable sanctions and eligible whistleblowers can be awarded between 10% and 30% of the covered monetary sanctions recovered, awards available to FCPA whistleblowers can be very robust.


III. Blowing the Whistle on FCPA Violations

 The SEC is keenly interested in hearing from individuals with valuable information concerning FCPA violations. Virtually anyone can be an FCPA whistleblower.  FCPA whistleblowers can be American or foreign citizens. Indeed, given that violations of the FCPA largely occur on foreign soil, a foreign citizen may an ideal whistleblower. The scope of the statute is worldwide (i.e., it is not limited to developing countries), but the FCPA has often targeted corrupt payments in developing countries. That is consistent with the fact that in many developing countries the bribery of government officials is more common.

Whistleblowers are not required to be corporate insiders either. What matters most is that the whistleblower has valuable original information and that such information is relayed to relevant regulators in the most clear and persuasive manner possible.

Before deciding whether to file an FCPA-related whistleblower claim, it is typically prudent to discuss your options with an experienced whistleblower attorney. Experience counsel can address the risks and benefits of submitting a whistleblower tip to the SEC. Further, a whistleblower who is represented by counsel is permitted to file an SEC tip anonymously while remaining eligible for an award.

Each year, the SEC receives thousands of tips from whistleblowers. In fact, the SEC received over 12,300 tips from whistleblowers in fiscal year 2022. The SEC pursues only a small number of whistleblower tips and issues awards to an even smaller number of whistleblowers. That makes submission of a forceful and convincing whistleblower tip even more critical. A whistleblower must ensure that his or her submission stands out among the thousands of other tips received by the SEC’s whistleblower office and gets a fair review.

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