Free Essay

The Foreign Corrupt Practices Act

In: Other Topics

Submitted By stephanienewton
Words 648
Pages 3
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).

Similar Documents

Premium Essay

Foreign Corrupt Practices Act

...FCPA PAPER The Foreign Corrupt Practices Act of 1977 (FCPA) evolved from investigations by the Office of the Special Prosecutor that provided evidence of illegal acts perpetrated by U.S. firms in foreign lands. More than 400 U.S. companies admitted to making questionable payments to various foreign governments and political parties as part of an amnesty program (U.S. Department of Justice Given the environment of the 1970s and the proliferation of white-collar crimes (e.g., insider trading, bribery, false financial statements, etc.), particularly the payments made to foreign officials by corporations, Congress felt obligated to introduce legislation that led to the act. Congress's objective was to restore confidence in the manner U.S. companies’ transacted business. The FCPA is unique. Throughout history, governments have had laws making it illegal for governmental officials to take a bribe. One basic provision of the FCPA is that it prohibits U.S. partnerships, companies, and organizations from not only giving payments but also offering or authorizing payments to foreign officials or political parties with the objective of encouraging or assuring business relationships. There are two types of bribery provisions. The first prohibits any bribes made directly by the U.S. company. The second prohibits any organization from knowingly arranging for a bribe through an intermediary....

Words: 1222 - Pages: 5

Premium Essay

The Foreign Corrupt Practice Act

...The Foreign Corrupt Practice Act Abstract The paper explores the focus on the Foreign Corrupt Practice Act and its correlation with other governmental firms. In the United States, foreign transactions are closely viewed by the government to insure that no funds are being transferred to country foreign officials for business purposes. To avoid this type of activity, the Foreign Corrupt Practices Act was implemented. In this paper you will read about the FCPA as a whole as well as how it was implemented, by whom it is enforced, the violations, amongst others. Foreign Corrupt Practice Act There are many companies in the United States who conduct business with firms all over the world. This is the way the world is growing with other markets to be profitable and sustain their companies afloat. However, not all the companies have proper business ethics which can be an issue when doing business between the US and foreign companies who do not have any limits to their business laws. “For instance, in many foreign countries side payments to government officials for an exchange of a favorable business contract are not unusual.” (Hollowell &Miller, 2011,pg. 22). Due to the extensive amounts of these types of activity, congress passed the Foreign Corrupt Practice Act (FCPA) which prohibits any US business person from bribery to foreign officials for business purposes....

Words: 1128 - Pages: 5

Premium Essay

Foreign Corrupt Practice Act

...Introduction Team D’s assignment for week 6 was to read four articles and discuss the impact on business of meeting the Foreign Corrupt Practice Act (FCPA). As will be discovered from the discussion that ensues, businesses are having difficulties meeting the provisions of the Act. These difficulties are not always under the corporation’s complete control, yet they are issues that the corporations must contend with if they are to comply with the Foreign Corrupt Practice Act. In today’s growing global economy it is important for corporations to not only accept the FCPA, but embrace it and set a standard that can thrive towards successful objectives. Supplier Codes Can Help Handle Third-Party Risks In reviewing the article “Supplier Codes Can Help Handle Third-Party Risks” by Susan Kavanagh I discovered one problem that companies have meeting the Foreign Corrupt Practice Act (FCPA). Recent cases show that although corporations are investing more time and money into their ethics and compliance programs, they have not extended the same effort to abate third-party risks (Kavanagh, 2010). The article goes on to say that a corporation may have an outstanding program to meet the standards of the FCPA; however corporations are not passing the same standards of adherence down to their suppliers or third-party partners. Compliance across the board is mandatory to meet the FCPA. This includes the corporate level as well as the supply chain to make the final product....

Words: 504 - Pages: 3

Free Essay

Baker Hughes: Foreign Corrupt Practices Act Study Questions

...It is also the responsibility of the board of directors to be involved in policing foreign corrupt practices. If a company expects only the management to be...

Words: 1031 - Pages: 5

Premium Essay

Foreign Corrup Practices Act

...This Foreign Corrupt Practices Act was established in 1977. This act is a United States federal law; it is widely known primarily for two of its main requirements. The first one called Trade Act, addresses accounting transparency requirements that were under the Act of Securities Exchange of 1934. The other one concerns bribery of foreign officials. The Trade Act intended for the Attorney General to give guidance concerning the branch of justice's enforcement guidelines with respect to the Act to possible exporters and small businesses that are not able to obtain specialized counsel on facts related to the foreign corrupt practices. The United States of American firms in search of doing business in foreign markets must be conversant with the Foreign Corrupt Process Act since it tackles corrupt paying of money to foreign officials for the principle of obtaining or keeping business. Adding up, other statutes such as, the wire fraud and mail statutes accept the federal prosecution of infringement of state commercial bribery statutes....

Words: 3049 - Pages: 13

Free Essay


...I will use this information to explain what is in the act and what corporations must do to obey the act. 5) Foreign Corrupt Practices Act (1977). Major Acts of Congress. Ed. Brian K. Landsberg. Vol. 2. Gale Cengage, 2004. June 12, 2012. Retrieved June 9, 2012, from...

Words: 672 - Pages: 3

Free Essay

Government Regulation in the Accounting Industry

...Running Head: GOVERNMENT REGULATION IN THE ACCOUNTING INDUSTRY Government Regulation in the Accounting Industry Rebecca Gregory Kaplan University Outline Introduction Securities Acts of 1933 and 1934 • Brief History of the Securities Act of 1933 • Objectives of the Securities Act of 1933 • Summary of the Securities Act of 1933 • Necessity of the Securities Act of 1934 • Summary of the Securities Act of 1934 • Peat Marwick Fraud/Scandal The Foreign Corrupt Practices Act of 1977 • Brief History of the Foreign Corrupt Practices Act of 1977 • Summary of the Foreign Corrupt Practices Act of 1977 • Kellogg Brown & Root LLC Fraud/Scandal Sarbanes Oxley Act (SOX) • The Purpose of SOX • Summary of SOX • US Bank of Seattle Fraud/Scandal Conclusion Government Regulation in the Accounting Industry The Great Depression and the Crash of 1929 led the United States into the beginning of new regulations. The first of these regulations was the Securities Act of 1933, which had a goal of prohibiting deceit, misrepresentation, and fraud in the sale of securities. The abusive practices of many banks and Wall Street firms resulted in the creation of the Securities and Exchange Commission (SEC) in 1934. It was established by The Securities Act of 1934 and gave the SEC power to monitor the sale of securities in the U.S....

Words: 2860 - Pages: 12

Premium Essay

Week 5 Reflection Paper

...Learning Team Reflection Andre Parker, Kellie Baker, Michael Wheeler and Jeffery Stewart LAW/531 June 16, 2013 Erikka Hise The Foreign Corrupt Practices Act This assignment instructed us to read four articles concerning Legal Issues in International and Domestic Business Foreign Corrupt Practices Act. Within this assignment it discussed the crisis in corporation’s unethical practices. The Foreign Corrupt Practices Act of 1977 sparked the argument that United States companies are disadvantaged in international markets. The act has been controversial since its enactment, with some critics attacking it as ineffective and the American business community complaining that it places U.S. enterprises at a competitive disadvantage abroad. Since the late 1990s, however, it has become a model for international efforts to stamp out corruption and improve the business climate in the developing world. Civil lawsuits are another risk from poor FCPA compliance. Typically those claims are securities class-action lawsuits or shareholder derivative lawsuits, where plaintiffs argue that the FCPA problem (Klein & Aguilar, 2010). Nevertheless, in recent years FPCP had serious fraud litigations because some companies in other countries do not go by the FPCP. The Foreign Corrupt Practices Act Program Compliance professionals should conduct a regular internal control check on his or her Foreign Corrupt Practices Act program....

Words: 645 - Pages: 3

Premium Essay

Business Law Reflection

...James Blevins Learning Team Reflection This learning team reflection will discuss the compliance issues associated with the Foreign Corrupt Practice Act of 1977 (FCPA). What is Foreign Corrupt Practice Act? For those who don’t know might ask, well, the Foreign Corrupt Practice Act of 1977 which was introduced in the U.S Senate as S.303 by Mr. William Proxmire (D.W) and signed into law by president Jimmy Carter on December 19, 1977 is a United States Federal Law known primarily for two of its main provisions. One that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another one concerning bribery of foreign officials. The anti-bribery provision of the FCPA prohibits any person from making use of interstate commerce corruptly, in furtherance of an offer or payment of anything of value to a foreign official, Foreign Political Party, or Candidate for political office, for the purpose of influencing any act of that foreign official in violation of the duty of that of that official, or to secure any improper advantage in order to obtain or retain business. ("Wikipedia") The “Foreign Corrupt Practice Act” protects “American Values” it shields us from the rampant corrupt practices around the world. It holds us to the highest standards of ethics....

Words: 704 - Pages: 3

Premium Essay

Efficiency and Success of Government Regulations

...Three such laws that were implemented due to financial catastrophe include the Securities Act of 1933 & 1034, the Foreign Corrupt Practices Act of 1977, and the Sarbanes - Oxley Act. I. Securities Act of 1933 & 1934 A. Summary of Regulation * Securities Act of 1933 * First major federal legislation to regulate the offer and sale of securities * Created by Congress during the aftermath of the stock market crash of 1929 and during the ensuing Great Depression * Purpose is to make sure that buyers of securities receive complete and accurate information before investing (Graham, Hazarika, & Narasimhan, 2011) * Securities Act of 1934 * Created to provide governance of securities transactions on the secondary market (after issue) and regulate the exchanges and broker-dealers in order to protect public investors B. Analysis of Related Fraud/Scandal * Crash of 1929 * The most devastating Stock Market crash in US history * Signaled the start of the Great Depression * Great Depression * Followed a decade of progress that many people thought was going to continue * A period of deep social and economic stress * Gross National...

Words: 3180 - Pages: 13

Free Essay

Assignment 1 Res 351 the One-Stop Resource on the Foreign Corrupt Practices Act) the court case involving the “U.S. v. Lockheed (1994), the corporation and two of its executives were accused by the U.S. Department of Justice (DOJ) of paying a US $ one million bribe to a member of the Egyptian parliament in order to secure sale of aircraft to the Egyptian military.” Lockheed also submitted fraudulent statements to the Defense Security Assistance about the bribes This was a clear case of corruption in business practices that continue to go on today. Many large corporations have gotten away with this type of practice time and time again. I am also under the assumption this is not the first time Lockheed has consorted with other businesses by unethical means. This practice states; corruption is an integral part of business deemed to be normal practices. Lockheed plead guilty paying over $24 million in fines and penalties. The fines were a result of Lockheed violating the Foreign Corrupt Practices Act (FCPA). The Foreign Corrupt Practices Act was authored by Senator William Proxmire which was created to prevent U.S. corporations from using bribes to gain sales outside of the country (Professor M. R. Kumara Swamy, 2011). This act was enacted to eliminate…(Professor M. R. Kumara Swamy, 2011) “government corruption, subsidies and kickbacks.” The act has been over looked by U.S. corporations since it was established since 1977 and 1988 versions....

Words: 572 - Pages: 3

Premium Essay

Environmental Factors Paper

...This paper will analyze the influence of global economic interdependence and the effect on trade practices and agreements, examine the importance of demographics and physical infrastructure, and analyze the importance of cultural differences. Analyze the influence of Global Economic Interdependence and the Effect of Trade Practices and Agreements According to C.P. Chandrasekhar "Economic Interdependence And Instability In The Global Economy" (2005), “There is little disagreement among economists that economic integration and enhanced Interdependence have been the inevitable consequences of trade and financial liberalization since the late 1970s” One would think that the Augusta’s 19th Hole would not have an interest in the global market. Augusta’s 19th Hole primary interest is to garner the attention of the larger overseas corporations so that they may want to hold seminars or conference in Augusta, GA. Team B has business contacts overseas that are willing to hold seminars and conventions at the Augusta’s 19th Hole. Team B organization has a lucrative contract agreement with Sony in Japan. Sony...

Words: 1168 - Pages: 5

Premium Essay

International Business Ethics

...In America, business ethics can be employed because, in general, the disagreement between what actions are ethical and what actions are unethical in a single culture will be lesser than the disagreement between two entirely different cultures with different values and cultural practices. As a result, one business might believe it is acting perfectly in accordance with international business ethics, while another would view that first business as acting in a completely unethical fashion. Many businesses adopt the policies of cultural relativism, in which they attempt to take on the business ethics exhibited by the nation in which the business is working a particular deal, as opposed to attempting to carry any of their own business ethics across cultural boundaries. However, this practice is not without its own flaws. For more information on the basic issues and problems facing any attempts to form coherent international business ethics codes, click the link. One of the biggest problems facing any international business code of ethics is that standards for employment practices are not constant...

Words: 1192 - Pages: 5

Premium Essay

Sox Effects on Corporate Fraud

...Introduce the three government regulations covering the Securities Acts of 1933 and 1934, The Foreign Corrupt Practices of Act of 1977 and finally Sarbanes-Oxley Act. B. Origin of Securities Acts of 1933 and 1933 (Beatty, Samuelson & Bredeson, 2013) C. Genesis of the enactment of The Foreign Corrupt Practices of 1977. D. Origin of Sarbanes-Oxley Act and its enactment (retrieving information from: https: 11. Securities Acts of 1933 and 1934 A. Registration requirement includes the statement and prospectus B. Annual, Quarterly reports and Form 8-k C. Inside Trading D. Private Offerings E. Blue Sky Laws F. Antitrust (The Sherman Act, The Clayton Act, and The Robinson-Patman Act) 111. The Foreign Corrupt Practices Act (FCPA) of 1977 makes it illegal for an American businessperson to give anything of value to any foreign official in order to influence an official decision. A. Applicability of the Act B. Prohibitions under the Act C. Penalties for Violations of the Act 1. Criminal 2. Civil 3. others D. Defense under FCPA 1. Lawful payment 2. Bona fide expenditures E. Fraud/Scandal of the FCPA of 1977 1. Detection method 2. Importance of Early Detection 3. Big problems for small corporations/organizations 4. Types of fraud and who is involved 1V. Sarbanes Oxley Act A....

Words: 3193 - Pages: 13

Premium Essay

Environmental Factors Paper

...The influence of global economic interdependence and the effect of trade practices and agreements will be analyzed. The importance of demographics and physical infrastructure will be examined. The influence of cultural differences will be analyzed. The importance of social responsibility and ethics versus legal obligation will be examined. The effect of political systems and the influence of international relations will be analyzed. The influence of the Foreign Corrupt Practices Act of 1977, and the influence of local, national, and international legislation will be analyzed. Finally, the effect of technology will be explained. Starbucks began in 1971 as a roaster and retailer of whole bean, ground coffee, teas, and spices in only one store in Seattle, WA. Today, Starbucks has approximately 18,000 retail stores in 60 countries. Their mission, which they take pride in, is to inspire and nurture the human spirit- one person, one cup and one neighborhood at a time. As a global company, Starbuck relies on global economic interdependence; it helps increase the revenue. Starbucks has always believed in serving the best...

Words: 921 - Pages: 4