USA Foreign Corrupt Practices Act

USA Foreign Corrupt Practices Act
Name	Foreign Corrupt Practices Act
Abbreviation	FCPA
Enacted	1977
Jurisdiction	United States
Related legislation	Sarbanes–Oxley Act, Dodd–Frank Wall Street Reform and Consumer Protection Act, UK Bribery Act 2010

USA Foreign Corrupt Practices Act The Foreign Corrupt Practices Act is a United States federal law enacted in 1977 addressing bribery of foreign officials and accounting transparency for issuers. It intersects with statutes, regulations, and enforcement actions involving corporations, financial institutions, accounting firms, and multinational United States Department of Justice and United States Securities and Exchange Commission oversight. The Act has influenced litigation, treaty negotiations, and corporate compliance programs across jurisdictions such as United Kingdom, Germany, France, China, and Brazil.

Overview

The Act contains anti-bribery provisions and accounting provisions that affect issuers listed with the Securities and Exchange Commission, multinational firms like General Electric, Siemens, Bayer, and auditing firms such as Ernst & Young, PricewaterhouseCoopers, and KPMG. Its passage followed investigations by the United States Senate Committee on Foreign Relations and reporting by media outlets including The New York Times and The Washington Post. The FCPA shaped interactions among entities including World Bank, International Monetary Fund, Organisation for Economic Co-operation and Development, and regional bodies like European Commission and African Union. Key legislative influences include the Foreign Corrupt Practices Act Amendments and oversight by committees such as the United States House Committee on the Judiciary.

Provisions and Requirements

The anti-bribery provisions prohibit corrupt payments to foreign officials, affecting conduct in countries like Russia, India, Mexico, Nigeria, and Saudi Arabia. The accounting provisions require accurate books and internal controls for issuers subject to Securities Exchange Act of 1934 filings and auditors engaged by firms listed on exchanges such as New York Stock Exchange and NASDAQ. Requirements implicate practitioners from Deloitte, Morgan Stanley, Goldman Sachs, and corporate counsel in companies like ExxonMobil, Chevron, IBM, and Apple Inc.. The statute interacts with treaty instruments like the United Nations Convention against Corruption and the OECD Anti-Bribery Convention and affects transactions governed by firms such as Citigroup and JPMorgan Chase.

Enforcement and Penalties

Enforcement is undertaken by the United States Department of Justice and the United States Securities and Exchange Commission, often in coordination with foreign authorities such as Serious Fraud Office (United Kingdom), Bundeskriminalamt, Agence Française Anticorruption, and China's Ministry of Public Security. Penalties have been levied against corporations including Siemens AG, Halliburton, Bristol-Myers Squibb, and Philips, and individuals such as executives from Bayer AG and Alstom. Sanctions may include criminal fines, disgorgement, deferred prosecution agreements with offices like the Southern District of New York, and monitorships overseen by law firms such as Skadden, Arps, Slate, Meagher & Flom and Debevoise & Plimpton. Enforcement has interacted with initiatives by the Financial Action Task Force and instruments like Mutual Legal Assistance Treaties.

Notable Cases and Enforcement Actions

High-profile matters include actions against Siemens AG for systemic bribery, Alstom for transactions during power project bids, and Goldman Sachs in relation to advisory work tied to sovereign wealth funds such as Qatar Investment Authority. Other significant cases involve Walmart, Panasonic, Odebrecht, Petrobras, and Rolls-Royce with cross-border investigations involving prosecutors from Brazilian Federal Police, Mexican Attorney General's Office, and Swiss Financial Market Supervisory Authority. Individual prosecutions have implicated executives prosecuted in venues including the Eastern District of New York, Southern District of Texas, and District of Columbia. Settlements often referenced corporate governance reforms adopted by companies like Nike and Siemens and compliance enhancements guided by firms such as Baker McKenzie.

Compliance and Corporate Governance

Robust compliance programs draw on guidance from the United States Sentencing Commission and standards set by industry groups like the National Association of Corporate Directors and International Chamber of Commerce. Companies implement risk assessments, third-party due diligence, anti-corruption training, and internal controls informed by practices at Pfizer, Johnson & Johnson, Microsoft, Oracle Corporation, and Cisco Systems. Internal audit functions collaborate with external auditors from BDO International and Grant Thornton and counsel from firms like Latham & Watkins and Cleary Gottlieb Steen & Hamilton. Corporate boards, audit committees, and chief compliance officers coordinate with compliance technology providers and ratings by agencies such as Standard & Poor's and Moody's Investors Service.

International Impact and Criticism

The Act has shaped global anti-corruption norms alongside the UK Bribery Act 2010 and influenced reform in jurisdictions such as India, South Africa, Japan, Australia, and Argentina. Critics include commentators from American Civil Liberties Union and scholars at institutions like Harvard Law School, Yale Law School, Stanford Law School, and Columbia Law School who argue about extraterritorial reach, selective enforcement, and effects on commercial competitiveness for firms operating in markets like Vietnam and Uzbekistan. Defenders cite cooperative enforcement with entities such as the Organisation for Economic Co-operation and Development and results in high-profile prosecutions supporting transparency advocated by Transparency International and development agencies including United States Agency for International Development.

Category:United States federal legislation