CFE Bribery and Corruption 5 — Questions and Answers
Question 1: Which of the following elements must be proven to establish a violation of the FCPA's anti-bribery provisions?
- A payment or offer of payment to a foreign official to obtain or retain business (Correct answer)
- Proof that the foreign official actually took the desired action after receiving payment
- Evidence that the payment was recorded in the company's financial statements
- A written agreement between the payer and the foreign official
Correct answer: A payment or offer of payment to a foreign official to obtain or retain business
The FCPA requires proof of a payment or offer to a foreign official with corrupt intent to obtain or retain business; the official's follow-through action is not required.
Question 2: A company discovers its subsidiary in a foreign country made improper payments to government officials. The company voluntarily discloses this to the DOJ and SEC. What is the MOST likely outcome compared to non-disclosure?
- Reduced penalties and potential declination of prosecution due to cooperation credit (Correct answer)
- Automatic immunity from prosecution under safe harbor provisions
- No difference because voluntary disclosure does not affect FCPA enforcement outcomes
- Increased scrutiny leading to harsher penalties for self-reporting
Correct answer: Reduced penalties and potential declination of prosecution due to cooperation credit
The DOJ and SEC's FCPA Corporate Enforcement Policy provides significant credit—including possible declinations—for companies that voluntarily disclose, cooperate, and remediate.
Question 3: Which of the following is the BEST example of a 'red flag' in a company's gift and entertainment records that warrants further investigation for bribery?
- Frequent expensive gifts to the same foreign official clustered around contract award dates (Correct answer)
- A single lunch with a domestic vendor representative costing $75
- Annual holiday gifts sent to all clients valued at $25 each
- Business meals attended by multiple company and client employees
Correct answer: Frequent expensive gifts to the same foreign official clustered around contract award dates
A pattern of expensive gifts to the same official concentrated around contract decisions is a strong indicator that the gifts are bribes intended to influence procurement outcomes.
Question 4: A company's anti-bribery policy prohibits giving gifts to foreign officials but makes an exception for promotional items of nominal value. This exception is MOST consistent with:
- The FCPA's affirmative defense for reasonable and bona fide promotional expenditures (Correct answer)
- The UK Bribery Act's prohibition on all gifts to foreign officials regardless of value
- OECD Anti-Bribery Convention requirements for zero tolerance
- The Foreign Agents Registration Act's disclosure requirements
Correct answer: The FCPA's affirmative defense for reasonable and bona fide promotional expenditures
The FCPA provides an affirmative defense for payments that are lawful under the written laws of the foreign country and are reasonable bona fide promotional expenditures.
Question 5: When interviewing a whistleblower who reports a bribery scheme, a fraud examiner should FIRST:
- Assess the credibility of the allegation and document the information provided without prejudging the outcome (Correct answer)
- Immediately confront the accused employee with the allegations
- Report the allegation directly to law enforcement before conducting any internal review
- Require the whistleblower to provide written evidence before proceeding
Correct answer: Assess the credibility of the allegation and document the information provided without prejudging the outcome
Fraud examiners should first evaluate the allegation's credibility and thoroughly document what the whistleblower reports, maintaining objectivity before taking further action.
Question 6: An effective corporate anti-corruption compliance program should include which of the following as a core element?
- Risk-based due diligence on third parties commensurate with the corruption risk they present (Correct answer)
- A blanket prohibition on all business entertainment globally regardless of local customs
- Outsourcing all compliance functions to external legal counsel
- Restricting business operations to countries with a CPI score above 70
Correct answer: Risk-based due diligence on third parties commensurate with the corruption risk they present
Risk-based third-party due diligence is a cornerstone of effective anti-corruption programs because third parties are the most common conduit for corrupt payments.
Question 7: Which of the following would MOST likely qualify as 'instrumentalities of a foreign government' under the FCPA?
- A government-controlled national oil company whose board is appointed by the ministry of energy (Correct answer)
- A privately held company that supplies goods exclusively to the foreign government
- A publicly traded foreign company that has government pension funds as minority shareholders
- A foreign nonprofit organization that receives partial government grant funding
Correct answer: A government-controlled national oil company whose board is appointed by the ministry of energy
Courts have consistently held that state-owned enterprises controlled by and performing a function of the government qualify as instrumentalities under the FCPA.
CFE Bribery and Corruption 5
Which of the following elements must be proven to establish a violation of the FCPA's anti-bribery provisions?