Alert

Alert: Congress Introduces the Foreign Business Bribery Prohibition Act of 2011

December 19, 2011

On November 30, 2011, Congressman Ed Perlmutter (D-Colorado) introduced H.R. 3531, the “Foreign Business Bribery Prohibition Act of 2011.” Under H.R. 3531, if a U.S. person or company can establish that a foreign entity prevented them from gaining business by violating the anti-bribery provisions of the Foreign Corrupt Practices Act, and in doing so gained business of its own, they could sue for treble damages, fees and costs. If passed, this would mark the first opportunity for private businesses to sue for damages as a result of violations of the FCPA.

The bill seeks to amend Section 104A of the FCPA (15 U.S.C. §78dd-3) which governs actions by “persons other than issuers or domestic concerns.” Section 104A was added to the FCPA in 1998 to extend the jurisdictional reach of the FCPA to foreign entities who commit violations “while in the territory of the United States.” The bill provides that any “foreign concern” that violates the anti-bribery provisions of the FCPA shall be liable in a private right of action to “any issuer that is subject to section 30A of the Securities Exchange Act of 1934, domestic concern that is subject to section 104 of this Act, or other United States person that is damaged by the violation…” A “foreign concern” is defined as any person other than an issuer that is subject to section 30A of the Securities Exchange Act of 1934, a domestic concern that is subject to section 104 of the FCPA, or another United States person.

In order to recover, the plaintiff must “allege and prove” that the foreign concern violated the anti-bribery provisions of subsection (a) and that the violation either “prevented the plaintiff from obtaining or retaining business…” and that the violation “assisted the foreign concern in obtaining or retaining such business.” Damages would be calculated as equal to the higher of (i) the total amount of the contract the defendant gained or (ii) the total amount of the contract that the plaintiff failed to gain. Additionally, H.R. 3531 provides for mandatory treble damages and the recovery of attorney’s fees and costs for any violation of subsection (a).

As of November 30, the bill was referred to the House Committee on Energy and Commerce, as well as the House Committee on the Judiciary.

McGlinchey Stafford’s White Collar and Government Investigations practice works with clients at all levels in defense of federal and state law enforcement.