Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Business Crimes BulletinKickerFeaturesTopicsCommercial LawRegulationSectionsNewsLJN Newsletters

FCPA Anti-Bribery Liability for a Subsidiary's Conduct

By Laurence A. Urgenson, William J. Stuckwisch, and Brigham Q. Cannon
December 26, 2012

In their recently issued joint guidance on the Foreign Corrupt Practices Act (FCPA), the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) explained that a parent company may be liable under the FCPA's anti-bribery provisions for the actions of a subsidiary not only when the parent directly participated in the subsidiary's misconduct, but also “under traditional agency principles.” FCPA: A Resource Guide to the U.S. Foreign Corrupt Practices Act, at 27 (Nov. 14, 2012) (Guidance). To determine whether a subsidiary is an agent of its parent such that its knowledge and conduct are imputed to the parent, the DOJ and the SEC said that they evaluate “the parent's control ' including the parent's knowledge and direction of the subsidiary's actions, both generally and in the context of the specific transaction.” Id. (emphasis added). Although in previously settled cases the SEC occasionally had employed an expansive agency theory to hold a parent liable under the FCPA's anti-bribery provisions for its subsidiary's conduct, the DOJ's previous public guidance, the “Lay Person's Guide to the FCPA,” espoused a narrower theory of parent-company liability, explaining that “U.S. parent companies may be held liable for the acts of foreign subsidiaries where they authorized, directed, or controlled the activity in question.” Foreign Corrupt Practices Act: Antibribery Provisions, at 3 (emphasis added) (available at www.justice.gov/criminal/fraud/fcpa/docs/lay-persons-guide.pdf).

The new Guidance thus raises the question of how much, if any, knowledge and control of a subsidiary's bribery, as opposed to its actions generally, the government believes is necessary for a parent to be held liable under the FCPA's anti-bribery provisions ' and whether the answer is different for the DOJ than for the SEC. The Guidance's one illustration of the agency theory, the SEC's 2009 settled administrative action against United Industrial Corporation (UIC), provides little insight. The Guidance's description seems to suggest that the parent must have some level of knowledge and control over the improper payment, noting that in the UIC case: 1) “[T]he parent's legal department approved the retention of the third-party agent through whom the bribes were arranged despite a lack of documented due diligence and an agency agreement that violated corporate policy”; and 2) “[A]n official of the parent approved one of the payments to the third-party agent.” Guidance at 28.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Law Firms are Reducing Redundant Real Estate by Bringing Support Services Back to the Office Image

A trend analysis of the benefits and challenges of bringing back administrative, word processing and billing services to law offices.

Bankruptcy Sales: Finding a Diamond In the Rough Image

There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.

Bit Parts Image

Summary Judgment Denied Defendant in Declaratory Action by Producer of To Kill a Mockingbird Broadway Play Seeking Amateur Theatrical Rights

Risks of “Baseball Arbitration” in Resolving Real Estate Disputes Image

“Baseball arbitration” refers to the process used in Major League Baseball in which if an eligible player's representative and the club ownership cannot reach a compensation agreement through negotiation, each party enters a final submission and during a formal hearing each side — player and management — presents its case and then the designated panel of arbitrators chooses one of the salary bids with no other result being allowed. This method has become increasingly popular even beyond the sport of baseball.

Disconnect Between In-House and Outside Counsel Image

'Disconnect Between In-House and Outside Counsel is a continuation of the discussion of client expectations and the disconnect that often occurs. And although the outside attorneys should be pursuing how inside-counsel actually think, inside counsel should make an effort to impart this information without waiting to be asked.