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LJN NewslettersNewsSectionsThe Corporate Counselor

My Agent Did What?

BY David W. Simon, Rohan Virginkar
November 26, 2010

International companies often engage third-party agents or consultants to help them operate more efficiently and effectively in foreign locales. There are many reasons why an agent might be necessary, including the frequent need to navigate complex foreign law requirements. However, outsourcing company activities is not without risk, as U.S. law can create liability for a company, and sometimes even its officers, for the actions of third parties taken on a company's behalf. This article examines the risks presented by the use of third parties when doing business internationally, with a focus on the potential for liability under the United States' Foreign Corrupt Practices Act (“FCPA”). It also offers suggestions for how companies may insulate themselves against FCPA liability for the actions of its agents, and how they should address issues as they arise.

FCPA Enforcement Environment

The FCPA is jointly enforced by the DOJ and the SEC. In recent years, both agencies have increased the number of investigations into, and actions filed against, both corporations and individuals who have violated FCPA provisions. In 2007, the DOJ and the SEC brought 38 enforcement actions; in 2008, 33 enforcement actions; and through November 2009, 31 actions. Moreover, in the first quarter of 2010 alone, the U.S. government brought or resolved charges against 36 companies and individuals. During this time, authorities have brought nearly 100 enforcement actions involving the conduct of intermediaries.

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