“When the U.S. Congress enacted the Foreign Corrupt Practices Act (“FCPA”) in 1977, the public record revealed a debate over what should constitute “knowledge” of an improper payment under the anti-bribery provisions of the statute. There was no controversy over “actual knowledge” since it was clear that a company or individual could be culpable if he or she actually knew about a bribe scheme. However, Congress extended this concept to include what is known as “constructive knowledge.” According to the language of the statute, knowledge exists when a person is aware that a “result is substantially certain to occur” or a person has a “firm belief that such circumstance exists.” The term “knowing” includes the concepts of “conscious disregard,” “deliberate ignorance,” and “willful blindness.”
In essence, this means that a company, or one of its executives, could face criminal liability under the FCPA if signs of potential bribery, or “red flags,” are reasonably evident in a transaction and nothing is done to resolve the red flags. If the company, for example, learns at some point in the future that a bribe was paid, liability could arise even if no one at the company actually knew or intended for a bribe to be paid. Merely failing to address the red flags may facilitate allegations by U.S. authorities that the company or one of its executives violated the FCPA.”
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