Continued from page 15
Additional Resources
In addition to consulting with compliance experts, EB-5
issuers can find additional information in the DOJ’s Foreign
Corrupt Practices Act Resource Guide at http://www.justice.gov/
criminal/fraud/fcpa/guidance/guide.pdf and on the “Spotlight
on FCPA” section on the SEC’s website at http://www.sec.gov/
spotlight/fcpa.shtml.
Accounting Provisions –
Applicable Only to Public Companies
In addition to the anti-bribery rules, the FCPA contains accounting provisions that apply to public companies. Companies
with a class of securities registered under the Securities Exchange
Act of 1934 must maintain sufficient control over their assets
to prevent any authorized payment. The accounting provisions
will generally not apply to EB-5 issuers, but that does not mean
that poor accounting controls will excuse officers or directors
when an employee or contractor uses company assets for bribery. It means only that the lack of control will not, in itself, be a
separate violation of law.
Conclusion
An issuer concerned about the propriety of a payment or gift
should take no comfort from the fact that such activity seems
to be a common local practice. “That’s the way everybody gets
things done over there” has never been an effective defense
under FCPA. From its inception, the law has sought to change
the way things are done, even in countries where corruption
has become deeply rooted in the business and political culture,
and even at the cost of U.S. companies losing business in the
short term to competitors from countries less concerned about
fostering corruption. Well-publicized enforcement actions
have been the regulators’ best educational tool for FCPA. EB-5
issuers who want to avoid serving as teaching models should
develop an effective compliance program before hiring offshore
agents or leaving U.S. shores.
16
★
For example, the proposed American Investment and Entrepreneurship
and Investment Act of 2015 (H.R. 616) would make the FCPA applicable
to the Program. It is likely that this language reflected a concern that corrupt
foreign officials might use the proceeds of corruption to invest under the EB-5
Program and become U.S. residents.
2
One of the ten “Hallmarks” in the Resource Guide involves diligence and
integration procedures when acquiring foreign businesses. This will seldom be
relevant to EB-5 issuers.
3
Resource Guide, p. 62.
1
Jor Law
Jor Law practices corporate
and business transactional law
in Los Angeles and is a founding shareholder of Homeier
& Law P.C. In addition to his
regular practice of representing companies of all sizes and
individuals in the areas of
finance, secured and unsecured lending, mergers
and acquisitions, licensing, securities, venture
capital, internet and new media, technology,
e-commerce, and other corporate transactions,
Jor routinely advises on corporate and securities
aspects of EB-5 related transactions.
Charles Kaufman, counsel at Homeier &
Law P.C., is a member of Homeier & Law’s
prominent EB-5 practice. Charles has advised
numerous companies in raising capital under the
program. As EB-5 transactions have become part
of the financial main stream, but also come under
unprecedented scrutiny, clients have sought out
his combined expertise in U.S. securities laws
and regulations and in the specialized demands
of EB-5 financing.
Charles Kaufman
EB5 INVESTORS MAGAZINE