MODEL COMPANY POLICY AND PROCEDURE FOR FOREIGN CORRUPT PRACTICES ACT

John A. Detzner
Neville Peterson LLP
Washington, D.C.

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I.     SUMMARY OF FCPA REQUIREMENTS

     The FCPA provisions are comprised of two principal sections: the antibribery and corrupt payment provisions; and the recordkeeping and accounting provisions.

     A.     Antibribery and Corrupt Payment Provisions

     The antibribery and corrupt payment provisions of the FCPA prohibit any corrupt offer, payment, promise to pay, or authorization to pay any money, gift, or anything of value to any foreign governmental official, any official of a public international organization, or any foreign political party, candidate or official, for the purpose of:

• influencing any act, or failure to act, in the official capacity of that foreign official or party, or
  
  
• inducing the foreign official or party to use influence to affect a decision of a foreign government or agency,

in order to obtain or retain business for anyone, direct business to anyone, or secure any other improper advantage.

     Payments, offers, promises or authorizations to pay any other person, U.S. or foreign, are likewise prohibited if there is "knowledge" that any portion of that money or gift will be offered, given or promised to a foreign official or foreign political party or candidate for any of the unlawful purposes outlined above. This "knowledge" standard includes any situation in which "any reasonable person would have realized the existence of the circumstances."

     Under certain limited circumstances, these prohibitions may not apply to "facilitating" or "expediting" payments made to a foreign official for the purpose of securing or expediting routine governmental actions, such as: the issuance of visas, work permits, and licenses; the clearance of goods through Customs; or the provision of public services such as police protection, mail delivery, and public utilities. Similarly, it may be permissible to offer or pay for certain reasonable and bona fide expenditures, such as travel and lodging expenses of a foreign official, if such expenses are directly related to the promotion or demonstration of products or services, or to the execution or performance of a contract with a foreign government or agency.

     Even an extremely nominal payment or gift to a foreign official, however, may amount to a violation of the FCPA if the requisite elements of a violation are present. Company legal counsel therefore should be consulted before making any offer, payment, promise to pay, or authorization to pay any foreign official.

     B.     Recordkeeping and Accounting Provisions

     The recordkeeping and accounting provisions of the FCPA require each division and subsidiary to maintain reasonably detailed books and records, as well as a system of internal accounting controls, in order to reflect accurately all transactions and dispositions of assets. These provisions apply to both domestic and foreign operations, and are meant to include domestic reporting and disclosure practices as well as those involved in foreign payments. "Reasonable detail" is defined to mean "such level of detail and degree of assurance as would satisfy prudent officials in the conduct of their own affairs."

     It is important to note that there is no standard of "materiality" under the FCPA, and each division and subsidiary must have reasonable record keeping and accounting controls for all payments, not merely sums that would be material in the traditional financial sense.

II.     PENALTIES FOR FCPA VIOLATIONS

     Companies found in violation of the antibribery and corrupt payment provisions of the FCPA may be fined up to $2 million. Company officers, directors, employees or agents found guilty of violating these provisions of the FCPA may be fined up to $100,000 and imprisoned for up to five (5) years. The FCPA expressly prohibits a company from reimbursing any company employee or agent against whom a fine or penalty has been imposed.

     Companies found in violation of the record keeping and accounting provisions of the FCPA may be fined up to $2.5 million. Company officers, directors, employees or agents found guilty of violating these provisions may be fined up to $1 million or imprisoned for up to ten (10) years.

III.     FCPA PROCEDURE

     Each division and subsidiary will have a point of contact who is familiar with FCPA prohibitions, requirements and penalties. Any company employee who wants to offer or provide, directly or indirectly, anything of value to any foreign official must first consult with the division or subsidiary point of contact for FCPA questions.

     All employees, whether located in the United States or abroad, are responsible for FCPA compliance and the procedures to ensure FCPA compliance. All managers and supervisory personnel are expected to monitor continued compliance with the FCPA, ensure that reviews are routinely conducted, and maintain cur-rent, adequate controls that meet the highest moral, ethical and professional standards of the company.

     Any action in violation of the FCPA, or any of the ethical and business standards as outlined in the "Code of Ethics," is prohibited. All company employees who become aware of apparent FCPA violations should notify immediately their supervisor or the company legal counsel. Any question or uncertainty regarding compliance with this policy should be brought to the attention of the company legal counsel.

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