Why Apple is probably in the clear over Foxconn’s bribery scandal

Foxconn, a Taiwanese company and one of Apple’s biggest manufacturers, is looking into allegations that at least one of its mainland Chinese staff accepted bribes from suppliers.

The controversy certainly will not be welcomed at Apple. But according to expert lawyers, under America’s Foreign Corrupt Practices Act (FCPA), which reaches a long arm of law into the foreign dealings of US companies, Apple does not have a legal problem here.

The FCPA, which was enacted in 1977 by the Carter Administration to stop US companies bribing foreign governments to win business, does have rules that mean US multinationals have to be very aware of potential criminality going on at their suppliers. As Jacob Frenkel, head of the securities enforcement and white-collar crime unit at Washington law firm Shulman Rogers, told Quartz:

“Although most bribes may not necessarily be paid by the corporation at the top of the food chain, there is potential liability for corrupt conduct in the supply chain.”

(Frenkel was not talking directly about Apple and Foxconn, as he is not involved in the case.)

Joseph Covington, another FCPA expert at law firm Jenner and Block, also not involved in the case, explains further that the US Justice Department can look at the behavior of an American company’s suppliers, not just of the company itself, because otherwise you may get multinationals “paying an intermediary in the knowledge that they will be paying someone off.” But if a supplier accepted bribes, rather than paying them, Apple is probably in the clear. The FCPA also only covers bribes made to foreign countries’ government officials.