FCPA Compliance and Investigation Defense for the Hospitality Industry - Federal Lawyer
WSJ logo
Forbes logo
Fox News logo
Bloomberg logo
Los Angeles Times logo
The Epoch Times logo
Telemundo logo
NY Post logo
NBC logo
Daily Beast logo
USA Today logo
Miami Herald logo
CNBC logo
Dallas News logo

FCPA Compliance and Investigation Defense for the Hospitality Industry

Experienced FCPA Defense Team

If you are under investigation for bribery or corruption, it is time to hire a FCPA defense attorney immediately.

The hospitality industry—composed of gaming, entertainment, hotel chains, etc.—have recently seen a host of investigations brought against them for engaging in bribery and corruption under the FCPA.

This is especially true as hospitality companies seek to expand their business into South America, Asia, and foreign emerging markets that are deemed good tourist destinations.

Companies in the hospitality industry need to understand that such plans for expansion necessitate that they understand the reach of the FCPA as well as the laws of the foreign country in which they desire to expand.

Penalties for FCPA violations include civil and criminal penalties, jail time, disgorgement, injunctions, and reputational harm. Securing the services of legal counsel is the best way to guard against liability.

At Oberheiden, P.C., our defense attorneys are experienced in dealing with various compliance issues under the FCPA for companies in the hospitality industry. We can help you fight these charges and defend your success.

Do not wait to contact an experienced attorney in FCPA defense today. Put Oberheiden, P.C. on your side to advise you on FCPA investigations and defense to protect the future of your business.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden

Founder

Attorney-at-Law

John W. Sellers
John W. Sellers

Former Senior Trial Attorney
U.S. Department of Justice

Local Counsel

Joanne Fine DeLena
Joanne Fine DeLena

Former Assistant U.S. Attorney

Local Counsel

Joe Brown
Joe Brown

Former U.S. Attorney & Former District Attorney

Local Trial & Defense Counsel

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Aaron L. Wiley
Aaron L. Wiley

Former Federal Prosecutor

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (OIG)

Michael Koslow
Michael Koslow

Former Supervisory Special Agent (FBI)

Chris Quick
Chris Quick

Former Special Agent (FBI & IRS-CI)

Kevin M. Sheridan
Kevin M. Sheridan

Former Special Agent (FBI)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Dennis A. Wichern
Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

What is the FCPA?

The Foreign Corrupt Practices Act (“FCPA”) is a federal statute enacted in 1977 that contains important provisions on (1) antibribery—15 U.S.C. §§ 78dd-1, 78dd-2, and 78dd-3, and (2) accounting and recordkeeping provisions—15 U.S.C. § 78m(b).

The FCPA makes it unlawful for individuals and companies to bribe foreign officials in order to obtain or retain business and requires companies to keep adequate books, records, and internal controls. Both aim to combat corruption, fraud, and bribery in business practices, especially with respect to foreign officials, foreign parties, and foreign transactions.

These issues are especially prevalent in the hospitality industry. For instance, hospitality companies thrive on delivering promotions to guests such as meals, entertainment, and other complimentary items of value.

Global hospitality companies could easily find themselves in a legal proceeding for FCPA violations due to the blurred line between these “lawful promotions” and “unlawful bribery.” Federal authorities understand this predicament and use it to heavily scrutinize hospitality companies operating in foreign countries.

The Inherent Risk Factors of FCPA Compliance for Hospitality Companies

Operating an international hospitality company—whether focused on entertainment, hotel, gaming, media, etc.—carries an unavoidable risk of corruption and bribery.

As the hospitality industry continues to expand internationally, routine factors such as location, market, government, business partners, financing, suppliers, and franchisees all become risk factors for corruption and bribery.

The first source of potential corruption and bribery for international hospitality companies expanding abroad involves finding the land. The acquisition of real estate and securing the location for the business in the emerging market is possible only if local foreign authorities, council, customs, and the foreign government are all satisfied.

Constructing a hospitality company at the desired location demands licenses, permits, and foreign government approval, which is oftentimes riddled with bribes. This predicament forces hospitality companies into a difficult position: expand and pay the bribe or give up that market.

Coordination—bribes—may also be required when securing any of the following for your new hospitality development in the foreign market:

  • Local foreign police for the security of guests;
  • Local foreign suppliers and transporters for equipment;
  • Approval by government officials or agents for permits or licenses, especially where the work is done on government-leased land;
  • Customs agents when importing goods and materials for the new hospitality company;
  • Water and trash personnel to ensure the premises are clean and safe;
  • Local suppliers and vendors in order to open the premises and keep it open;
  • Finalizing contracts with franchisees also in the foreign country;
  • Acquiring visas and permits for filming;
  • Hiring local personnel to work in the new company in the foreign country;
  • Obtaining relevant partnerships or ventures with foreign persons for the successful operation of the business.

The above list is not all exhaustive of the possible risk factors inherent in the hospitality industry—especially for hospitality companies seeking to expand their business into foreign markets or work with foreign parties.

If you have any questions about any of the above risk factors or something else, do not hesitate to give our team of FCPA attorneys a call today.

Hospitality Promotion or Bribery?

Key characteristics of the hospitality industry are promotions, free giveaways, free hotel nights, drink vouchers, entertainment tickets, movie passes, or any other promotion of a product or service involving something of value.

However, there is a fine line between hospitality promotion and bribery involving these items. Federal agencies including the Department of Justice (“DOJ”) and Securities and Exchange Commission (“SEC”) scrutinize those transactions and deals that straddle this line. For this reason, it is critical to be wary of the differences.

For instance, foreign officials may request certain bribes—or things of value—in order for the company to receive a permit or license. These things of value could entail hotel rooms, free vacations, meals, and entertainment.

The tricky part is that these items are all essential to the hospitality industry. Nevertheless, they do represent the giving of something of value to a foreign official in return for some benefit. Thus, it is quite easy for hospitality companies expanding or operating in a foreign country to be caught in the middle of a FCPA investigation.

The way to solve the above issue is straightforward: make sure your business implements a robust, comprehensive compliance program that identifies, corrects, and monitors operations for instances of fraud, bribery, and corruption.

Managing FCPA Compliance Risks in the Hospitality Industry

Expansions and developments into foreign areas including China, the Middle East, and India are especially vulnerable to FCPA challenges by the U.S. government. These areas are not only involved in extensive government corruption and bribery but also have very low levels of government control.

Further, such areas contain their own laws and procedures for dealing with international business transactions and business expansion, which must be adhered to. Some of these foreign laws run afoul of applicable U.S. statutes such as the FCPA. For these reasons, it is critical for hospitality companies to be proactive and limit their liability exposure.

The following checklist describes key actions for hospitality companies to take to manage FCPA compliance risks when dealing with foreign parties and foreign transactions:

  • Implement a company-wide compliance program that detects, monitors, and remedies fraud, corruption, and bribery.
  • Develop a country risk profile before deciding to expand there;
  • Perform due diligence on all business partners, suppliers, franchisees, joint ventures, etc.;
  • Maintain strong internal controls and accounting practices that monitor payments and expenses in foreign countries as well as to and from foreign parties;
  • Understand the business law, policies, and customs in the foreign country first;
  • Implement regular training sessions on anti-corruption and anti-bribery and how to be compliant with the FCPA;
  • Identify relevant risk factors in the foreign country and carefully evaluate them prior to concluding any foreign contracts or agreements;
  • Maintain a strong tone at the top policy for all company personnel, including a clear but detailed code of conduct and code of ethics;
  • Retain an independent anti-corruption compliance team to help company personnel understand the importance of FCPA compliance and to conduct regular audits of the company;
  • Place special emphasis on third parties, foreign officials, and foreign transactions within the company’s compliance program;
  • Keep detailed records and documentation of all transactions, maintain consistent monitoring, and update compliance polices as the law and business environment evolves;
  • Implement a safe and secure whistleblower policy that is free from retaliation;
  • Ensure a fair but stern disciplinary process for personnel violating internal company policies and external federal statutes.

Our team of FCPA defense attorneys can help ensure all of the above items on this checklist and more. Give us a call today to find out more. We are here to help you.

Need Advice with the FCPA for the Hospitality Industry?

If you are being investigated for FCPA violations or are worried an investigation may be coming, do not wait to retain a FCPA defense attorney.

Hospitality companies expanding into new markets in foreign countries should be wary of the potential reach of the FCPA as well as how easy it is to get caught up in corruption and bribery charges.

Federal agencies will stop at nothing to root out all instances of corruption and bribery by hospitality companies, especially those that attempt to disguise bribes as lawful hospitality promotions.

To protect themselves, many companies strive to set up a robust, comprehensive, and detailed compliance program. We can help you do the same.

At Oberheiden, P.C., our attorneys regularly advise clients on setting up compliance programs to be better prepared when entering or expanding into new foreign markets. Our team of FCPA defense attorneys are also experienced in guiding our clients through the investigative process and limiting risk and liability.

Call us or contact our office for a free consultation to protect your business, future, and reputation.

If you are under
investigation
you should contact us today

Contact the Experienced Attorneys of Oberheiden, P.C. Now for a Confidential Consultation

Contact Us Now