FCPA Reporting by In-House Counsel: When the Contracts Tell a Different Story

For in-house counsel considering an FCPA whistleblower case, privilege questions belong in the first conversation with our experts. You may recognize the distributor agreement that differs from the approved version, the missing sales records or the explanation that never matched the shipment. We work with you to connect those facts and assess the award opportunity with FCPA whistleblower counsel.

What You Know and How You Learned It

Your work may put you close to the transactions behind a Foreign Corrupt Practices Act concern. We examine what you observed firsthand and what you learned while representing the company, with FCPA whistleblower counsel addressing the questions specific to your role.

The business itself can be spread across several organizations. A parent approves a transaction, a subsidiary records it, a distributor receives a discount and a government customer awards the contract. The person who approved the payment, the intermediary who received it and the official controlling the business decision may sit in different entities and countries. An insider who knows those relationships can explain connections that a contract’s signature page leaves out.

That is why we begin with the transaction you recognize. A distributor’s customer price, the manufacturer’s approved discount, the payment authorization and the accounting entry answer different questions about where value went. Your account of who questioned the transaction and what happened afterward can connect the commercial records to decisions inside the business.

Who Qualifies for an SEC Award?

An eligible individual who voluntarily supplies original information leading to a successful Securities and Exchange Commission enforcement action with monetary sanctions exceeding $1 million can qualify for an award. The SEC’s whistleblower FAQ describes a reward range of 10% to 30% of collected monetary sanctions in the action and qualifying related actions.

Original information can come from independent knowledge or analysis. The SEC distinguishes facts that are not publicly available from analysis that reveals something not generally known. An insider may understand why a particular invoice, agreement or approval matters because they know the transaction behind it.

We assess the award opportunity alongside how the information came to you. We bring that factual account to FCPA whistleblower counsel, so the assessment rests on your actual work and responsibilities.

Bio-Rad’s Missing Sales Records

Bio-Rad’s general counsel raised concerns about Chinese distributor transactions after efforts to obtain sales documentation exposed discrepancies. The Ninth Circuit’s account shows how a commercial records problem developed into concerns about bribery and inaccurate books.

The initial documentation problem involved a licensor’s audit and missing records of end-user prices, primarily in China. The general counsel and an in-house patent attorney repeatedly sought the sales documents. Eventually, they obtained a complete packet for a particular transaction. The general counsel testified that the patent attorney thought the documents showed bribery and that he then told the chief executive about the potential bribery.

The court also recounted a local manager telling the general counsel that he had never visited a main distributor to look for documents, despite its failure to comply with requests. The missing records and the effort to obtain them were both part of the account. An in-house reader may recognize that distinction: the unanswered request, the person responsible for following it up and the transaction that remains unexplained.

Employee accounts added a different discrepancy. The court recounted a report that the shipping paperwork and the products inside the shipment did not match:

That account puts the discrepancy where a business insider can see it: the stated quantity and the shipped quantity. We would want to understand who authorized the extra products, who received their value and how the company recorded them. The concern was about goods moving through a distribution channel, with the paperwork telling a narrower story.

The Translation Dropped the Compliance Terms

The general counsel also discovered that Chinese distributor contracts differed from the English-language agreements the company had approved. According to the opinion, employees had used an older template that lacked the Foreign Corrupt Practices Act compliance provisions.

The contracts also provided unauthorized incentives in free products when sales targets were met. The general counsel’s team brought those provisions to his attention, and he included the free-product concerns, missing documentation and distributor-contract language in a memorandum to the audit committee.

We see the obvious question: what did the approved agreement actually govern? An agreement can look familiar while the version used by the local business changes its substance. Here, the court’s account ties the older template to omitted compliance language and unauthorized incentives, the details someone reviewing both versions would recognize.

The audit committee authorized an outside investigation. The opinion records that the investigators reported finding no evidence of a Foreign Corrupt Practices Act violation or attempted violation in China at that point. Bio-Rad’s separate government resolution concerned Vietnam, Thailand and Russia.

When the Payment Survives the Compliance Objection

Fresenius Medical Care supplies a parallel involving changes to the way payments were described and routed. In its settled administrative order, the SEC alleged that a senior manager in China cautioned an employee against using the term bonus because of internal legal compliance concerns. The underlying incentive payments were tied partly to treatments and new patients, and internal emails suggested an effort to influence clinic procurement decisions.

The SEC also alleged that a directive prohibiting use of a Serbian agent was bypassed through a transport vendor. An executive approved payments through the vendor, which then paid doctors. The prohibition was in place. The payment found another path.

A case study published in the Journal of Forensic and Investigative Accounting in 2022 identified the persistence of the conduct despite warnings and policies:

For us, the connection to the in-house reader is what happened after a concern reached the business. A changed label, a replacement vendor and the approval for the next payment can show how a transaction continued. That is a more revealing story than the existence of a compliance policy on its own.

Can an Existing Investigation Still Use My Information?

Yes, new information can significantly contribute to the success of an existing SEC investigation. The SEC also recognizes information that opens an investigation, reopens one or leads to a new line of inquiry. The useful question is what your contribution adds to the enforcement work.

A corrected SEC award order from August 2023 illustrates the distinction. Successful whistleblowers contributed different combinations of documents, firsthand facts, witnesses and interviews.

Another SEC award order, issued in May 2021, credited initial information that led to investigations in one country and company reporting in another region. The agency recognized that contribution while examining its connection to the final charges. The order illustrates why we look at what the information set in motion as well as what the insider first described.

We examine the connection between the conduct you reported and the assistance you provided. A transaction explained, a witness identified or an interview that connects an approval to a payment can help make that contribution concrete.

The Claim Has to Match the Conduct

We work through the possible case with you, including the source of the information, the underlying transactions and any internal or agency reporting already made. If your work crosses borders, we bring in FCPA whistleblower counsel who can address the questions specific to where you worked.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. That is a separate law addressing fraud against the government. We identify the case supported by the conduct and the money involved.

When Your Work Put the Discrepancy in View

If reviewing contracts, investigating a transaction or advising the business brought possible foreign bribery to your attention, speak with our whistleblower experts about what you encountered. We build the factual case with you and bring in FCPA whistleblower lawyers experienced in the questions facing in-house counsel. We stay beside you through the process to build your strongest FCPA whistleblower case.