Affiliates
You work for a U.S. company with global operations that is an “issuer” under the FCPA. After investigating an allegation of improper payments by your Chinese affiliate, you conclude that the affiliate’s president, a U.S. citizen residing in China, authorized a third-party representative to pay a cash bribe of $1,000 to secure a contract. The payment is recorded on the affiliate’s books as a “consulting fee.”

• Has the U.S. company violated the FCPA?
• Has the Chinese affiliate?
• Has the president of the Chinese affiliate?
• What if the affiliate’s president is a Chinese national?
• What if the affiliate is a joint venture and the U.S. company only owns 40 percent of the joint venture?

Foreign Subsidiaries
Your company trades on the NYSE and owns 40 percent of an electronics manufacturing subsidiary in a foreign country. Two foreign investment partners own the other 40 percent and 20 percent of the subsidiary. 

Although it is not the majority owner, your company provides all substantive training for local employees, has audit rights over the subsidiary’s books and records, and appoints one member to the subsidiary’s board.

During a yearly audit, your company learns that one of the subsidiary’s engineers gave three cell phones to a local official in charge of approving manufacturing licenses. Two weeks later, your company’s license was granted.

The engineer requested reimbursement for the cost of the cell phones, listing them simply as “equipment” on the reimbursement request.

• Is the subsidiary subject to the FCPA?
• Does your company have FCPA exposure?
• If so, did the engineer violate the FCPA by giving the cell phones to the local official?
• Did the subsidiary violate the FCPA by categorizing the cell phones as “equipment”?

If you have any questions regarding these scenarios, please contact us.