FCPA Jurisdiction Over Foreign Companies, Subsidiaries, and Agents: Who Approved the Payment, and for Whom?

FCPA jurisdiction over foreign companies depends on the company’s securities registration, reporting duties, U.S. business ties, or conduct in the United States, and can reach people acting for a covered company. A foreign headquarters is only the beginning of the question. If you know who approved a consultant, which subsidiary paid the invoice, or whose accounts absorbed the expense, you may hold the facts that connect an overseas bribery scheme to U.S. enforcement.

The Foreign Corrupt Practices Act reaches corrupt offers, payments and authorizations intended to obtain or retain business through foreign officials. Its accounting provisions also reach inaccurate issuer books and deficient internal accounting controls. The jurisdiction question connects those acts to a particular company or person: the parent signing off, the subsidiary paying, or the executive directing the work. Honest competitors lose when an official’s private payoff decides who gets the business.

When Is a Foreign Company an Issuer?

A foreign company can be an issuer because its securities are registered under U.S. securities law or because it must file the specified reports with the Securities and Exchange Commission. The Foreign Corrupt Practices Act’s issuer provisions reach qualifying foreign businesses as well as American ones. The exact company named in the registration and reports matters, especially when the business uses one brand across several subsidiaries.

Embraer illustrates the distinction. In its civil complaint against the aircraft manufacturer, the SEC identified a company incorporated and headquartered in Brazil whose registered shares traded through American Depositary Receipts on the New York Stock Exchange. The company had reporting obligations and was an issuer. Its Brazilian headquarters and its U.S. securities connection were both part of the same business.

For an insider, issuer status makes the accounting trail especially important. The SEC alleged that Embraer’s U.S. subsidiary recorded improper payments as legitimate expenses and that those entries flowed into the parent’s financial statements. The person responsible for consolidating accounts can see a different part of the scheme from the salesperson who arranged the commission. We follow both the payment’s purpose and the description that reached the accounts, because each can explain a different part of the company’s responsibility.

Does a Private Company Need a U.S. Listing?

A private company can fall within the Foreign Corrupt Practices Act as a domestic concern through U.S. organization or a principal place of business in the United States. A securities listing is unnecessary for that route. The law’s domestic-concern provisions also cover U.S. citizens, nationals and residents, alongside the specified people acting for covered businesses.

A foreign-owned group therefore needs an entity-by-entity examination. Where was the paying subsidiary formed, where was its principal place of business, and which entity employed the person approving the payment? An incorporation record answers one question. A local payroll, reporting line or contract answers another.

For covered U.S. companies and citizens, the bribery law can also reach corrupt payments approved abroad even when no email or transfer passes through the United States. The approving person’s citizenship and the company’s place of organization can therefore matter alongside the invoice.

This matters when an employee sees only the local operation. The consultant may work entirely overseas while the approval comes from a U.S. business. We connect the commercial transaction to the company making the decision, including the ownership and reporting arrangements that sit behind the name on the invoice.

What U.S. Conduct Can Connect a Foreign Company?

The Foreign Corrupt Practices Act’s territorial provisions can reach foreign companies and people outside the issuer and domestic-concern categories when they act in the United States to advance a corrupt payment. An approval given during a U.S. visit can connect an overseas deal to the United States, as the Airbus agreement shows.

Airbus supplies a concrete example. Under its 2020 deferred prosecution agreement, the company admitted conduct involving business partners, services never provided and benefits for Chinese airline officials. The admitted account included an approval email sent on February 14, 2014, while an executive was in the United States.

The executive’s location when giving approval is the useful connection. It identifies a person doing something in U.S. territory in the course of the scheme. An employee who knows where an approval was given can add information that the payment ledger alone does not contain.

Embraer’s SEC complaint described another connection: payments from its subsidiary’s New York bank account and a payment-instruction email passing through a U.S. server. That complaint also identified Embraer’s issuer status.

These distinctions keep the inquiry concrete. We connect the approval, transfer or communication to the person who made it, where that person was, and the company for which that person acted.

How Do Parents, Subsidiaries and Agents Connect?

The parent, subsidiary, joint venture and agent may each control a different part of the same transaction. A parent may approve a budget, a subsidiary sign the engagement, a consultant receive the money, and a government customer award the contract. Ownership, voting rights, budgets, approvals and accounting consolidation help show how those roles fit together.

Agency asks whose work the person agreed to do and who had the authority to direct it. The agreement may be written down or shown by how the people worked together. In a multinational group, the instructions behind a shared project can matter as much as the company name on the contract.

That is why we examine the instructions as well as the organization chart. Who could change the assignment, approve the terms, bind the company to the agreement or end the relationship? Those details connect what an insider saw to the particular company responsible for the work.

For an issuer holding 50% or less of another company’s voting power, the accounting law requires a reasonable, good-faith effort to use its influence to secure adequate internal accounting controls. An insider’s knowledge of voting rights, budget approvals and audit follow-up can help us understand how that influence worked.

Embraer’s Alleged U.S. Payment Route

The SEC alleged that Embraer used a Delaware subsidiary, Embraer Representations LLC, and its New York bank account to make improper payments overseas. The complaint separately identified senior executives’ authorizations and the consolidation of the subsidiary’s accounts into the parent. Those were distinct links in the alleged scheme, each with its own records.

The Dominican Republic allegations show why the contract’s country could mislead someone reviewing the expense. The SEC alleged that the subsidiary signed a consulting agreement to promote aircraft sales in Jordan, then paid the intermediary even though Embraer never received a Jordan contract. Internal correspondence instead connected the payments to aircraft sold to the Dominican government.

The complaint described the response when employees raised questions about the promised commission:

We see the absurdity in that alleged instruction: the commission survived the questions, and the questions became something to route around. The same complaint alleged that the subsidiary’s sales-commission entries became selling expenses in the parent’s financial statements. The approval messages, consulting contract, bank transfers and consolidated entries describe different parts of one transaction.

Consolidated Accounts Can Carry the Concealment Upward

A 2022 case study in the Journal of Forensic and Investigative Accounting examines how Fresenius Medical Care’s local payment practices reached its consolidated books. Its Saudi Arabia discussion follows employee checks converted to cash and false expense descriptions carried into the wider company’s accounts. The study connects the local cash mechanism with the accounting that made it appear routine.

The SEC’s Fresenius order described employees cashing checks and returning the cash to a subsidiary manager. According to the SEC, the transactions were falsely recorded as project marketing expenses and collection commissions in subsidiary books that Fresenius consolidated. For someone in group finance, the connection may be the description carried into the parent ledger, while someone in the subsidiary knows what happened to the cash.

How Did Agency Decide a Foreign National’s FCPA Acquittal?

FCPA jurisdiction over a foreign national turned on agency in an Alstom executive’s acquittal: prosecutors had to prove that he acted as an agent of the group’s U.S. subsidiary. The Second Circuit’s 2022 opinion shows why the person’s employer, location and actual authority mattered. The case concerned his relationship with Alstom Power Inc., the subsidiary located in Connecticut.

The criminal case concerned the Tarahan power project in Indonesia. The government alleged that consultants helped bribe officials to secure a $118 million power contract. The executive worked for a U.K. subsidiary and was assigned to work in France. He was not an American citizen, was not employed by the American subsidiary and did not enter the United States during the alleged scheme.

An earlier ruling left prosecutors needing to prove that he acted as the American subsidiary’s agent. The jury initially convicted him on the foreign-bribery counts, but the trial court later acquitted him on those counts because that proof was insufficient. The change in outcome makes the evidence worth understanding: the issue was who could control his work.

The appeals court acknowledged evidence that he revised agreements, sought approvals and helped identify consultants. But he and his American counterparts worked in separate, parallel employment structures. The American subsidiary’s representative had not hired him, could not fire him and had no say over his compensation. The court also found insufficient evidence that the subsidiary could control the scope and duration of its relationship with him.

The distinction was between controlling a project and controlling this person’s work as an agent. The court found that his support flowed from his position within Alstom’s international support organization, rather than authority the American subsidiary had given him to act on its behalf. For an insider who sees instructions cross between companies, who can actually direct or end the assignment is a consequential fact.

The parent company’s position was separate. Alstom S.A.’s 2014 guilty plea covered false accounting records and failures in internal accounting controls. The executive’s acquittal did not undo the company’s plea. The company responsible for the books and the person directing an assignment each need their own examination.

Which Records Show the Company’s U.S. Connection?

The useful records connect company identity, authority, location and payment. An insider may understand one part of that chain particularly well: who really approved the consultant, which account paid, or why an expense entered the parent’s books under a different description.

• Registration and company records identify the issuer, the subsidiary’s place of organization and the business whose operations are being examined. Ownership and reporting information connect the names used across the group.
• Employment records and reporting lines identify the person’s employer and the authority others had over the assignment. Instructions, approval limits and the ability to end the relationship help explain actual control.
• Consulting agreements and approval messages identify who engaged the intermediary, what work was promised and who could change the terms. They connect the supposed service to the commercial decision it was meant to influence.
• Travel and location records can put the person giving approval in a particular place at the relevant time. The Airbus approval illustrates why location belongs beside the message itself.
• Bank records and accounting entries identify the paying entity, account, recipient and expense description. Consolidation records show whether that description reached the parent’s financial statements.

The value lies in connecting those records. In Embraer, the alleged Jordan sales paperwork and the internal account of the Dominican transaction told different stories about the same payment. In Alstom’s executive case, project communications showed collaboration while the employment and authority evidence left the claimed agency relationship unproved. Your knowledge of how the business actually works can explain the difference.

Can I Sue Privately Under the FCPA?

Individuals cannot sue privately under the Foreign Corrupt Practices Act, as the Justice Department and SEC resource guide explains. Whether the company falls within the law and whether a whistleblower qualifies for an agency award are separate questions that we examine with you.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. That is a different law addressing fraud against the government, with a different process from a foreign-bribery report. If your information involves overseas payments, we work through the company’s connections and the reporting and reward questions together, with whistleblower lawyers who understand foreign bribery cases.

You Know Who Gave the Approval

If you know how an overseas payment moved between the parent, subsidiary and intermediary, speak with our whistleblower experts about the people and records behind it. We work beside you to build the case around the actual decisions, connect you with FCPA whistleblower lawyers who understand cross-border company relationships, and stay with you through the process.