USA Law and Practice Contributed by: Eric Bruce and Justin Simeone, Freshfields US LLP
2.5 Intermediaries The FCPA and domestic statutes apply to offences committed through an intermediary. Liability against a principal may arise for payments made by an agent or intermediary if the principal “knew” about the misconduct. This includes when the principal was aware of a high probability that the agent was making improper payments, even if the principal did not know about a specific payment or consciously avoided learning about the payment (ie, remained “wilfully blind” to it). Companies subject to US jurisdiction commonly con - duct due diligence on prospective intermediaries to mitigate these risks. For example, “red flags” in this type of diligence may include commission payments to the intermediary in excess of market value, a family or other relationships between an agent and a gov - ernment official, or a recommendation of a particular agent by a government official. 2.6 Lobbyists The national legislation obligates firms and individuals across industry sectors to disclose efforts to influence public officials. There are two key statutes that con - cern domestic and foreign lobbying activities. The Lobbying Disclosure Act (LDA) is codified in 2 USC, Section 1601 et seq. The LDA defines a “lob - byist” as an individual who spends more than 20% of their time each quarter on “lobbying activities”, which encompass communications that seek to influence federal legislation, regulation, administration, and nomination processes. It does not apply to media organisations. The LDA requires lobbying entities to register and provide quarterly reports on lobbying activities. The Clerk of the House and Secretary of the Senate administer the law. The penalties include fines of up to USD200,000 per violation and, in some cases, up to five years in prison. In turn, the Foreign Agent Registration Act (FARA) is codified in 22 USC, Section 611 et seq. The FARA defines a “foreign agent” as an individual who, on behalf of a “foreign principal”, engages in political activities, acts in a public relations capacity, solicits or dispenses anything of value, or provides repre -
sentation before any US government agency or offi - cial. A “foreign principal” is a foreign government or political party, a person outside the US (unless a US national), or group of persons organised under the law of, or having its principal place of business in, a foreign country. It does not apply to certain religious entities, academic groups, and legal representatives in legal proceedings. Foreign agents must register with the Attorney General within ten days of starting their activities, even if there is no monetary compensation for their work, and they must comply with semi-annual reporting obligations. The penalties include fines of up to USD250,000 for each violation and up to five years in prison. Most federal crimes are subject to a five-year stat - ute of limitations, although criminal violations of the FCPA’s accounting provisions are subject to a six-year limitations period. In some circumstances, prosecu - tors may be legally permitted to charge defendants for conduct that pre-dates the limitations period. For example, if the conduct is part of an ongoing scheme or conspiracy, the limitations period begins to run at the end of the scheme. However, as long as one act in furtherance of the conspiracy occurred within the five- year period, a conspiracy charge would still be timely. State statutes of limitations vary between jurisdic - tions. 3.2 Geographical Reach of Applicable Legislation 3. Scope of Application 3.1 Limitation Period Defendants are often prosecuted even where most of the criminal conduct was committed abroad, but extraterritorial jurisdiction varies from one statute to another. Non-US conduct may be covered by US law where either the specific statute applies extraterritori - ally, or there is a US nexus (eg, the scheme involves a US bank account). Extraterritoriality US law on extraterritoriality is complex and changes with judicial decisions and legislative action. Differ - ent statutes apply outside the USA in different ways.
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