FCPA Anti-Bribery Liability for a Subsidiary's Conduct

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).