Frequently Asked Questions
Effective Date: November 24, 2015
1. What is the Foreign Corrupt Practices Act (FCPA)?
The FCPA is a federal law that prohibits, among other things, corrupt payments to foreign officials for the purposes of obtaining business abroad.
2. Does the FCPA apply to universities?
The FCPA applies to Loyola and its employees and agents, as described further below. Loyola has a FCPA Policy, which is available here.
3. Does the FCPA only apply when I am in a foreign country?
The FCPA also applies to actions taken in the U.S.
4. Who are typical foreign officials as it relates to Loyola’s research or education?
Examples of foreign officials include: (a) administrators and faculty at foreign state universities; (b) advisors to ministries, government agencies or government officials; (c) healthcare professionals at government owned or controlled hospitals; and (d) employees of a public international organization.
5. Am I allowed to give small gifts to foreign officials?
The FCPA applies to anything of value including gifts. As general guidelines, any gifts to foreign officials must: (a) not be extravagant; (b) be reasonable, modest and of nominal value in the applicable locality; (c) be directly related to a legitimate Loyola business purpose; (d) be infrequently given; and (e) not be offered for an improper purpose that would violate the FCPA, such as gifts made in return for any favor or benefit or to improperly influence any foreign official’s decision. Examples of appropriate gifts could include Loyola-themed paperweights and Loyola t-shirts. Caution and care must be taken when considering providing gifts to a foreign official. Any Loyola employee having questions or concerns about gifts and the FCPA should contact the University Controller’s Office.
6. Can I pay for foreign officials travel expenses?
Loyola will generally only reimburse those travel expenses that are necessary to cover the business aspects of any trip, but any reimbursement depends on the specific facts of the situation. For example, if a foreign official must visit one of Loyola’s facilities to conduct an official inspection in order to issue a permit, and the locality allows the permit seeker to pay for the travel expenses, it may be acceptable for Loyola to pay for the expense. However, employees must keep in mind the following guidelines: (a) Loyola cannot pay for any expenses that are not related to the necessity of the trip; (b) Loyola cannot be involved in the selection of which foreign official will make the inspection; (c) Loyola cannot pay for side-trips that have a personal benefit to the foreign official; (d) the class and cost of travel must be consistent with Loyola’s allowances for travel by Loyola personnel; (e) Loyola cannot pay for travel expenses for friends or family members; and (f) employees are also responsible for keeping adequate records to document the reasonableness and legitimacy of these expenses. Caution and care must be taken when considering paying the travel expenses of a foreign official. Any employee having questions or concerns about travel expenses and the FCPA should contact the University Controller’s Office.
7. What are common situations that might be considered payments that violate the FCPA?
Examples of payments that violate the FCPA may include: (a) unreasonable payment of travel expenses, gifts, entertainment, or hospitality of foreign officials; (b) acceptance of cash or anything of value in excess of modest gifts and hospitality from anyone doing or seeking to do business with Loyola; (c) contracting with an entity owned or recommended by a foreign official or owned by his or her family members; and (d) promises of admission or acceptance to Loyola.
8. Are there any payments to foreign officials that are allowed under the FCPA?
Certain payments are allowed to facilitate or expedite routine governmental actions in which there is no discretion or decision making on the part of the foreign official. An example is making a payment to a foreign government office to expedite the granting of a permit or license that you are otherwise entitled to receive. Caution and care must be taken when considering any payments to a foreign official. Any Loyola employee having questions or concerns about such payments and the FCPA should contact the University Controller’s Office.
9. Do I need to be concerned about third parties I might hire to conduct Loyola business in a foreign country?
As indicated above, the FCPA applies to agents and other third parties who work on behalf of Loyola. Examples of such third parties include: local attorneys, tax advisors, accountants, consultants, lobbyists, real estate brokers, joint venture partners, contractors, suppliers and immigration service providers. Before engaging third parties to act on behalf of Loyola in dealing with foreign officials, it is important to conduct due diligence to determine the third party’s awareness and compliance with provisions of the FCPA.
10. What are the penalties for violating the FCPA?
Violation of the FCPA can result in very significant fines against Loyola and can subject the employee to fines and imprisonment. Loyola can be fined up to $2,000,000, and Loyola employees in violation can be fined up to $100,000 and/or imprisoned for up to 5 years. Employees that violate the FCPA and the Loyola FCPA Policy may also be subject to discipline up to and including termination, depending on the circumstances.
11. What are examples of how the FCPA might apply to Loyola?
Example 1: You are planning on conducting field research as part of an archeological study in Mexico. You learn that you must obtain a permit from the government in Mexico in order to conduct the research on that site. You contact an agent in Mexico who helps you complete an application and walks you through the permitting process. The agent contacts you a few weeks later and lets you know that the government officials have some concerns about the research due to its possible physical impact to the site. The agent states that he is a friend of the official in charge of issuing the research permit, and for a modest cash payment, he would be willing to issue you the permit immediately so that you could begin your research.
Conclusion: Payment to the agent would be a violation of the FCPA. The payment to the foreign official was designed to influence him into improperly approving the payment. The issuance of the permit was a discretionary act.
Example 2: Loyola is considering entering into a joint program agreement with a government-run university in Vietnam. As part of the planning process, you invite the faculty of the government-run university to Loyola’s campus to discuss the program and meet some of the faculty members at Loyola who will be involved in the program. You select the faculty members from Vietnam who you would like to bring. You coordinate all travel reservations, and you arrange payment for them and their spouses to stay at the Four Seasons. You provide them with a limousine and driver, tickets to a Chicago Cubs game and the theatre and take them out to dinner at a nice restaurant.
Conclusion: In this instance, you are clearly providing something of value to a foreign official. The payment of travel for spouses, limousine, tickets to the Cubs game and theater and nice dinner were extravagant and not reasonably related to the purpose of the visit. Your motive of a corrupt purpose may be determined from the facts of the case. These items must have been offered in order to induce the government-run university to enter into a program agreement with Loyola.
12. Are there any red flags I should be aware of in regards to ensuring compliance with the FCPA?
Red flags relating to the FCPA include: (a) dealings with a country that has a history or reputation for corruption; (b) a request for compensation at a level substantially above the going rate for that type of work in the relevant country; (c) a request that the compensation be made in a third country or to a third party; (d) a request for payments in cash or transactions are recorded as “cash” or checks are drawn to cash; (e) a request for reimbursement of expenses that are poorly documented; (f) lack of experience or expertise in the area for which an agent is being hired; (g) inability to contribute anything to an agreement except influence; (h) family or business ties with persons in a position to grant Loyola government licenses or approvals; (i) refusal to enter into a written agreement; (j) over-invoicing or lack of standard invoices; and (k) refusal to agree to reasonable financial and other controls.
13. Who should I contact for help with the FCPA policy or FCPA questions?
Please contact the Controller’s Office with any questions or concerns about the FCPA at 312-915-8706.