Who Is a Foreign Official? Foreign Corrupt Practices Act (FCPA) Liability Litmus Test

The Foreign Corrupt Practices Act is a major concern for any professional or company with overseas business operations or who is looking at international expansion, and brings up a number of questions: What counts as a violation? How about gifts? Is this really a bribe?

But one question that’s frequently mulled around FCPA hits the core of the actual regulation: Who is considered a foreign official? Among other things, the FCPA prohibits bribery (the corrupt payment of money or anything of value) to a “foreign official” in order to obtain or retain business.

Definition of a “Foreign Official,” according to the FCPA

There are several ways a person can be considered a foreign official according to FCPA. Outside of those clearly employed by the government or government agencies, several others fall under the foreign official heading, including the following:

• A legislator
• A member of a political party
• A candidate for political office
• A member of a royal family who has official governmental responsibilities
• A consultant acting for or on behalf of a government or government agent
• A public international organization
• An official or employee of a state-controlled or state-owned business

The last on the list—employees of state-controlled or state-owned businesses—can be the most confusing, and is a common umbrella that FCPA violations fall under. Consider a country like China, where countless seemingly private entities may have some state affiliation. Under the FCPA, employees of such entities could be considered government officials, and giving or offering to give such employees anything of value could be deemed a violation of the FCPA.

The government’s focus on FCPA enforcement has never been greater, and penalties for violations can be severe. Avoid and limit risks that can have a serious impact on your business by working with your trusted advisors to make sure you are in compliance.

By Roy McDonald, Partner at DLA Piper's San Francisco office. Learn more about the firm’s FCPA work here.