Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act (FCPA) marked the early beginnings of compliance programs in the United States. In the mid 1970s, United States Securities and Exchange Commission (SEC) investigations discovered that a significant number of American companies participated in bribery overseas. “Over 400 U.S. Companies admitted to making questionable or illegal payments to foreign government officials, politicians and political parties.” (United States Department of Justice 2006) One of the most infamous cases of its time was the admission by a Lockheed executive, to the Multinational Corporations Subcommittee of the Senate Foreign Relations Committee, that Lockheed had paid bribes in the amount of $22 million to Japanese government officials in the course of trying to sell its aircraft. This revelation came on the heels of the U.S. Government providing Lockheed with a $250 million emergency loan guarantee (Hishikawa 2003).
In an effort to restore faith in American business, in December 1977 the Foreign Corrupt Practices Act was signed into law. This anti-bribery provision makes it “unlawful for a U.S. person, and certain foreign issuers of securities, to make a corrupt payment to a foreign official for the purpose of obtaining or retaining business for or with, or directing business to, any person.” (United States Department of Justice 2006) The law also requires publicly traded companies “to maintain records that accurately and fairly represent the company’s transactions. Additionally, it requires these companies to have an adequate systems of internal accounting controls.” (United States Department of Justice 2006)
Following the passage of the FCPA, in 1988, the Congress became concerned that American companies were operating at a disadvantage because their foreign counterparts were, as a matter of practice, paying bribes to foreign officials and deducting those bribes as business expenses on their taxes. (United States Department of Justice 2006) Subsequently, the Executive Branch began negotiations with the Organisation for Economic Co-operation and Development (OECD), a 34-member nation coalition consisting of the United States and 33 other countries, to enact legislation similar to FCPA. In 1997, the OCED signed the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. (http://www.oecd.org/document/21/0,2340,en_2649_34859_2017813_1_1_1_1,00.html)
This regulation requires member nations to designate the payment of bribes to foreign offices as a crime and to follow the rules and regulations that govern bribery in international transactions. The U.S. ratified this convention and enacted implementing legislation in 1998. At this time, the FCPA was amendment to include territorial jurisdiction over foreign companies and nationals. A foreign company or person is now subject to the FCPA, if the company or person either directly or indirectly through agents, engages in acts which further the facilitation of corrupt payments taking place within the territory of the United States.
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Famous quotes containing the words foreign, corrupt, practices and/or act:
“Let us waive that agitated national topic, as to whether such multitudes of foreign poor should be landed on our American shores; let us waive it, with the one only thought, that if they can get here, they have God’s right to come.”
—Herman Melville (1819–1891)
“‘The old order changeth, yielding place to new
And God fulfils Himself in many ways,
Lest one good custom should corrupt the world.”
—Alfred Tennyson (1809–1892)
“Money made through dishonest practices will not last long.”
—Chinese proverb.
“Every act of the man inscribes itself in the memories of his fellows, and in his own manners and face. The air is full of sounds; the sky, of tokens; the ground is all memoranda and signatures; and every object covered over with hints, which speak to the intelligent.”
—Ralph Waldo Emerson (1803–1882)