The U.S. Foreign Corruption Practice Act (“FCPA”) makes it unlawful and penalizes U.S. companies, their directors and executives if they pay directly or through third parties anything of value to foreign public officials for purposes of obtaining unethical economic benefits.

Many cases exist where multinational companies that have perpetrated actions prohibited by the FCPA were investigated and penalized by U.S. authorities. Those companies have had to pay millionaire fines. In certain cases, the executives of the companies involved in corrupt practices have also been penalized.

The scope of U.S. and several other countries’ anti-corruption laws goes beyond their national borders. As an example of such international scope, below is examined a case where a multinational company was investigated and penalized in the U.S. due to corrupt practices committed in, among other countries, Ecuador.

Bridgestone Corporation (“Bridgestone”) is a Japanese company that manufactures and sells industrial products.  The company sought to sell its marine hoses (hoses that are used to transport oil from tanker-vessels to shore) in Latin America. Between years 1999 and 2007, a Bridgestone subsidiary made US$ 2 million payments to public officials of State entities in Argentina, Brazil, Mexico, Venezuela and Ecuador for purposes of achieving sales of its products.

The U.S. Department of Justice (“DOJ”) filed a criminal accusation against Bridgestone on grounds of conspiracy to violate the FCPA.  The company pleaded guilty in 2011 and agreed to pay a US$ 28 million fine[1].

Furthermore, Misao Hioki, International Sales Manager for industrial products and responsible for authorizing those illegal payments during 2004-2007, was also indicted.  He pleaded guilty in 2008 and was sentenced to 24 months imprisonment and ordered to pay a US$ 80,000 fine.

The above case demonstrates the reach of the FCPA on business activities in Latin America, including activities carried out in Ecuador. The companies, their subsidiaries, agents and franchisees – when subject to the FCPA – must maintain robust compliance programs to prevent and detect corruption practices that might result in substantial sanctions against the company and its executives.

[1] The DOJ accusation also included charges for participating in a collusive agreement with other manufacturers of marine hoses in violation of the Sherman Act (competition law).  Both Bridgestone and its International Sales Manager admitted being guilty of that violation.

Warning: This newsletter by Pérez, Bustamante & Ponce is not and cannot be used as legal advice or opinion since it is merely of an informative nature.

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