Export with care.

The recycling industry is a global business. And, with more material being shipped outside of North America, cultural differences could pose problems for exporters who seek ways to boost their volumes. While shipping overseas can bring success, recyclers should also exercise caution.

Jeremy Levin, an attorney with Baker Botts, discussed the Foreign Corrupt Practices Act (FCPA) during the 2007 ISRI (Institute of Scrap Recycling Industries Inc.) Convention & Exposition. The purpose of the act, Levin noted, is to prohibit corrupt payments to foreign officials for the purpose of obtaining or retaining business or securing an improper advantage.

In his presentation, Levin noted that earlier this decade Schnitzer Steel was charged with violating this policy. The company settled with the two U.S. agencies and paid fines of slightly more than $15 million.

From a top-down approach, Levin noted that during the past two years, bribery cases have been brought forward from a number of higher-risk countries, including China, South Korea, India, Thailand, the Philippines and Indonesia.

In his presentation, Levin said that while Schnitzer is a high-profile scrap metal company that was cited, U.S. agencies are not only focused on similarly large corporations.

The companies that fall under the purview of the act are sometimes in question. U.S. or foreign companies that are listed on U.S. securities exchanges, other businesses organized in the U.S. or foreign persons who commit any act in furtherance of a corrupt act while in U.S. territories are subject to the act.

Companies that do not rail under this act would include foreign subsidiaries of U.S. companies while acting outside U.S. territories. However, a U.S. parent company may be liable for improper payments made by its foreign subsidiaries in certain circumstances.

So, what exactly is considered an illegal payment? According to Levin's reading of the act, these include an offer, payment or promise to pay to any foreign official, any foreign political party or official for the purpose of influencing that official or inducing that official to act or omit to act in violation of his lawful duty in order to assist in obtaining or retaining business.

Exceptions to the act include some gifts and hospitality, although there are limits and restrictions to these. Another exception would include facilitating payments to secure the performance of a routine government action. However, the payment must be a very modest amount.

As for the concept of what is considered a foreign official, Levin says that it would be any officer or employee of a foreign government of any department, agency or instrumentality.

Finally, Levin expressed significant caution over the use of third parties (often sales agents) who may be in a country where the chance of bribery may arise. These agents, who are often paid a commission for landing business, can cause the parent company a problem. It is the onus of the U.S. company to ensure that the independent agent who is working for the company abide by the FCPA.

Tip-offs for U.S. companies can include an agent's refusal to provide references or to allow auditing going forward, books and records that lack transparecy, unwillingness to share information regarding ownership of the other company involved in the deal; related to or has close ties with government officials, requires that his or her identity not be exposed, a potential foreign government customer recommends the agent, the agent lacks an office or staff and payment is to be made through confidential or convoluted means.

Levin said companies can elicit more specific information from agents, especially at the time of renewal, use detailed internal questionnaires to identify red flags, ensure that all agent roles and responsibilities or third parties are identified and reported and a better understanding of compensation arrangements.