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The Foreign Corrupt Practices Act

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The Foreign Corrupt Practices Act The Foreign Corrupt Practices Act (FCPA) of 1977 and the corresponding amendments set forth by the Omnibus Trade and Competitiveness Act of 1988 and Amendments of 1998 have tremendous ramifications for U.S. multinational companies at large, their subsidiaries, and foreign partners. While the main purpose of the original policy was to make it “unlawful to bribe foreign government officials to obtain or retain business”, the many statutes, their exceptions, and enforcement have gone through several iterations and most recently expanded jurisdiction of the law to non-U.S. territories. In bribery cases, several conditions involving the perpetrator, intent of the act, and the recipient of the bribe, must be met by the “corrupt act” for a breach to be founded. Similar stipulations apply to illegal payments made to third parties, specifically if such payments are used to filter or launder monetary bribes for a government official. The penalties levied if such conditions are proven, however, serve as compelling deterrents against fraudulent acts in global business practices (US Dept. of Justice, Lay-Person’s Guide). The FCPA was passed unanimously in both chambers of Congress and subsequently signed into law by President Jimmy Carter in 1977. Many initiatives thenceforward have been undertaken to broaden global cognizance of its provisions for US multinational corporations and to increase compliance in international operations. To facilitate understanding and provide accessible resources, related responsibilities have been divided among the U.S. Department of Justice, the U.S. Department of Commerce, and the Securities and Exchange Commission. The Department of Justice has even translated the FCPA into over a dozen languages, including Malay, the official language of Malaysia (US Dept. of Justice, Statute and Regulations). Other references for guidance, such as written responses from the Attorney General to FCPA inquiries, are provided for businesses to consult governmental sources before proceeding with business plans abroad (US Dept. of Justice, Lay-Person’s Guide). In regard to corruption and bribery by U.S. companies and their agents conducting business overseas, the State Department claims that the U.S. “has been a leader in the multinational effort to end bribery and corruption in international practices, a campaign... supported by the United Nations, the Organization of American States, the Organization for Economic Co-operation and Development (OECD), and other multilateral organizations and institutions” (U.S. Dept. of State). This statement clearly demonstrates that the need to address and deter corruption and bribery in the international business environment is recognized as an important initiative, worth pursuing and requiring the cooperation of many nations. Even though it took the U.S. nearly ten years to bring thirty-three countries on board to take part in a multinational anti-bribery initiative, they did so by signing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (US Dept. of Justice, Lay-Person’s Guide). The sanctions that are in place to punish noncompliance with the FCPA, including criminal and civil penalties, exist in the form of imprisonment and fines, and those sanctions are severe. Criminally, penal fines can reach up to $2 million or even exceed that amount in exceptional circumstances. These substantial fines are imposed on the individual and payable only by the individual, thus creating a strong incentive for independent agents to comply with the FCPA. Criminal charges can yield sentences of imprisonment for as long as five years. The monetary sanctions are not as high for civil punishments, and, as per usual civil proceedings, imprisonment cannot be imposed. Additionally, the government may take further action against companies or individuals found guilty of violating the FCPA which may ultimately result in a firm being barred from any future business relations involving the Federal government. This would be extremely detrimental to a firm’s reputation, which they often rely on for future partnerships, continuous growth, and success (US Dept. of Justice, Lay-Person’s Guide).…...

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