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ResourcesCorporate and Tax AdvisoryUS Corporate LawThe Foreign Corrupt Practices Act (FCPA) And Doing Business in Thailand

The Foreign Corrupt Practices Act (FCPA) And Doing Business in Thailand

Transcript of the above video:

In this video, we're going to briefly be talking about the FCPA a.k.a that's an acronym for the Foreign Corrupt Practices Act and we're going to talk about just in general terms, a few things that have come up in a recent article I've read with respect to corrupt or I should say transparency and corruption and things to having to do with business not only here in Thailand but sort of in a regional context.

So to be clear, the Foreign Corrupt Practices Act is exactly what the name of the Act implies it is. It's an act that's designed to regulate mostly American companies or Americans. Americans as individuals too in many cases who are operating outside of the United States. It's basically designed not only to discourage but to create criminal penalties associated with things like bribery and corruption. Although there are certain frameworks created under the FCPA which define certain conduct and also exempt certain conduct. And we're not going to go into great detail in this video with respect to the exactitude of how the FCPA operates, but just sort of keep in mind that the U.S. has these sort of legal frameworks in place.

The U.K., United Kingdom fairly recently, relatively recently came up with their own similar framework with respect to these kinds of issues. It's my understanding it's largely rather similar to the FCPA although there are some key differences. But that being said, there is a recent article in The Nation, on The Nation website which is www.nationmultimedia.com which is a newspaper here in Thailand. The article is entitled “Thai firms at risk from long arm of anti-bribery and corruption laws.” It was published August 14th, 2017 and to quote directly from the article “There have been signs that awareness of bribery and corruption risk have been improving in Thailand's private sector in recent years. However, as Thai companies grow and expand their business interactions into ASEAN and beyond, one often overlooked risk is the increased explode to extraterritorial anti-bribery and corruption laws so-called A, B and C laws.”

To quote further, “Moreover, they often don't realize that extraterritorial laws have been successfully enforced even when a company's connection to the foreign regulator’s country appears tenuous. In Thailand, we've seen this become a problem when for example, a multinational company takes an interest in buying or partnering with a local firm but upon conducting their due diligence realized that the local firm’s successful track record was in part achieved by paying bribes to obtain business.”

I strongly urge anybody who's interested in this topic and watching this video to go to NationMultimedia.com website. Check out this article in depth as it's rather interesting. That's far more in it than what we're going to get into in this article or in this video. But that being said, it's something worth commenting upon which is as the sort of business world here in this region becomes smaller, so as business entities become more regional and start to cross transnational boundaries, physical boundaries and begin doing business on sort of a regional context. It's something to keep a good eye on with respect to regulatory compliance in any of the nations in which one is conducting specific types of business activity as certain anti-corruption laws and anti-corruption laws may look one way in one jurisdiction and they may have an entirely different nuance to them or probably have an entirely different regulatory framework in another jurisdiction. And the ramifications of that can be rather difficult to not only understand or foresee but also one has to structure one's enterprise in such a way to comply with such regulations and one has to undertake one's business activity in such a way to not only comply with the regulations but ensure that one can, at the same time, maintain a profitable enterprise.

So for example as the article mentioned, a firm let’s say of Thai origin maybe buying out a firm in another jurisdiction in the ASEAN region for example, and they may come to find out that “oh goodness you know, sort of kickbacks and bribery where the sort of the order of the day as it were under this business we're looking to acquire.” It may not be in our interest to acquire it as doing so and continuing the business as it was done prior to acquisition could result in serious criminal penalties in multiple jurisdictions. If there's an American component to that or a U.K. component to that business enterprise that multinational, then perhaps the FCPA could become involved in the U.K'.s anti foreign corrupt practices regime could get involved which could result in really quite a legal quagmire with respect to that said activity. And as a result, you know one can end up in a position where they're sitting around paying a bunch of legal fees rather than just getting down to doing business.

Again, the thing to take away from this video do the due diligence with respect to you know transnational, transactional issues. And also, once the due diligence is done it's a good idea to retain professional legal services to ascertain whether or not one's business model is going to be viable notwithstanding this sort of customs of the local jurisdiction.