Oct 18, 2012

Foreign Corrupt Practice Act Basics for Korean-Based Companies

If you are working for a U.S. Company with an office in Korea or you are working for a company from most other developed and developing economies you may be subject to punishment under the laws of your home country related to the interactions of you or your employees with foreign government employees.  If you want to say out of the clink and avoid embarrassment to your company by actions of your employees in Korea, please read and understand the following.

Prior to engaging in any activity that may be construed as a "corrupt payment" under law, please consult with an attorney in order to decide whether the action may be construed as a "corrupt payment."  The terminology "corrupt payment" is the term utilized under the U.S. Foreign Corrupt Practice Act.  Other like terminology is used by other nations.  

Under the U.S. Foreign Corrupt Practice Act a Corrupt Payment is defined, inter alia, as giving anything of value with the intent to:
  1. Influence an act or decision of a foreign government official in the official capacity of the foreign official;
  2. Induce a foreign official to act or not to act in violation of his/her lawful duty;
  3. Induce a foreign official to improperly use his/her influence or power in the organization to impact any act or decision; and
  4. Obtain an "improper" advantage (catch-all). 
Please note that many "foreign officials" may include "quasi-government" officials.  The Korean government has many "independent" companies that are controlled, in fact, by the Korean government.
  
Acts in Korea that may be deemed a "corrupt payment" under law include:
  1. Compensating a government official travel expense if certain specific protocol is not met and the family of the government official travel expenses are, also, paid or the primary purpose of the trip is not "business," but "entertainment."
  2. Gifts that are over US$ 25 in value or are given frequently to the same individual.
  3. Meals over US$ 50 per person or that are frequently meals provided to the same individual.
  4. Providing employment to a family member of a government official
Actions by agents or third-party representatives may, also, be deemed a violation of law.
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SeanHayes@ipglegal.com IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S. www.ipglegal.com