Those that have been following the FCPA reform debate over the past year have been anxiously awaiting introduction of an actual bill in Congress. Yesterday, Congressman Ed Perlmutter (D-CO) introduced a reform bill, but not that one.
The bill Perlmutter introduced (see here) is H.R. 3531, the “Foreign Business Bribery Prohibition Act of 2011.” As noted in this previous post, this development has been anticipated for some time and H.R. 3531 is substantively similar to H.R. 2152 that Perlmutter previously introduced in April 2009. See here and here for prior posts.
As drafted, H.R. 3531 would “authorize certain private rights of action under the [FCPA] for violations by foreign concerns that damage domestic business.” However, the bill would have limited application as it seeks to amend only the 78dd-3 prong of the FCPA. This prong of the FCPA is applicable to conduct by “persons other than issuers or domestic concerns” and has the most narrow jurisdictional scope – particularly after Judge Richard Leon’s ruling in the Africa Sting case (see here for the prior post).
H.R. 3531 provides as follows. Any “foreign concern” (defined to mean a person other than an “issuer” or a “domestic concern” under the FCPA) that violates the FCPA’s anti-bribery provisions “shall be liable” to any “issuer” or “domestic concern” or “other United States person” that is “damaged by the violation” of the FCPA’s anti-bribery provisions “for damages caused to such issuer, domestic concern, or other person by the violation.”
As to “proof of damages,” H.R. 3531 states that a plaintiff must allege and prove that “the defendant foreign concern violated” the anti-bribery provisions and that the violations “prevented the plaintiff from obtaining or retaining business for or with any person” and “assisted the foreign concern in obtaining or retaining such business.”
As to “measure of damages,” H.R. 3531 allows the “higher of the two following amounts” (1) “the total amount of the contract or agreement that the defendant gained in obtaining or retaining business by means of the violation” or (2) “the total amount of the contract or agreement that the plaintiff failed to gain because of the defendant’s obtaining or retaining business by means of the violation.” H.R. 3531 also allows from “treble damages” “togther with a reasonable attorney’s fee and costs.”
Because a “foreign concern” (as defined in H.R. 3531) can only violate the FCPA “while in the territory of the U.S.”, Perlmutter’s bill will have limited application. Moreover, even though the premable of the bill states that its purpose is to authorize certain private rights of action for violations by foreign concerns “that damage domestic businesses” given that any “issuer” can be a plaintiff, the bill would also authorize numerous foreign companies with shares traded on a U.S. Exchange to bring a private cause of action against a “foreign concern.”
H.R. 3531 has been referred to the Committee on Energy and Commerce and the Committee on the Judiciary.