Understanding the Foreign Corrupt Practices Act (FCPA)

The Foreign Corrupt Practices Act (FCPA) is a United States federal law that was enacted in 1977. It is primarily aimed at preventing the bribery of foreign officials and ensuring accurate record-keeping by companies.

Background of the FCPA

The FCPA was introduced in response to revelations of widespread bribery of foreign officials by U.S. companies. The law was designed to restore public confidence in the integrity of the American business system.

Main Provisions of the FCPA

What does the Foreign Corrupt Practices Act cover?

The FCPA has two main provisions: the anti-bribery provisions and the accounting provisions. The anti-bribery provisions prohibit U.S. persons and businesses, as well as certain foreign issuers of securities, from bribing foreign government officials to obtain or retain business. The accounting provisions require companies whose securities are listed in the United States to meet certain accounting standards and maintain accurate books and records.

Anti-Bribery Provisions

The anti-bribery provisions make it unlawful to make payments or offer anything of value to foreign officials, political parties, or candidates for the purpose of influencing any act or decision in order to assist in obtaining or retaining business.

Accounting Provisions

The accounting provisions require publicly traded companies to maintain accurate records and have a system of internal controls to ensure that transactions are executed and assets are accessed only in accordance with management's authorization.

Enforcement and Penalties

The FCPA is enforced by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). Violations can result in significant fines and imprisonment for individuals, as well as substantial penalties for companies.

Examples of FCPA Violations

What are some examples of Foreign Corrupt Practices Act violations?

Examples of FCPA violations include a U.S. company paying bribes to foreign officials to win government contracts, or falsifying accounting records to conceal such payments. Companies have also been penalized for providing gifts, travel, or entertainment to foreign officials in exchange for business advantages.

Compliance and Best Practices

To comply with the FCPA, companies often implement robust compliance programs, conduct regular training for employees, and establish clear policies regarding interactions with foreign officials.