Foreign Corrupt Practices Act

Definition

The Foreign Corrupt Practices Act (FCPA) is a U.S. federal law that prohibits U.S. companies and individuals from bribing foreign government officials to obtain or retain business. It is a key piece of legislation aimed at combating corruption in international business transactions.

5 Must Know Facts For Your Next Test

1. The FCPA applies to U.S. companies, U.S. citizens, and foreign companies listed on U.S. stock exchanges.
2. Violations of the FCPA can result in significant fines and imprisonment for individuals and companies.
3. The FCPA has two main provisions: the anti-bribery provisions and the accounting provisions.
4. The FCPA allows for certain exceptions and affirmative defenses, such as facilitating payments and reasonable and bona fide expenditures.
5. Enforcement of the FCPA has increased significantly in recent years, with the U.S. government actively investigating and prosecuting violations.

Review Questions

• Explain the key provisions of the Foreign Corrupt Practices Act and how they relate to common business crimes.
  • The Foreign Corrupt Practices Act (FCPA) has two main provisions: the anti-bribery provisions and the accounting provisions. The anti-bribery provisions prohibit U.S. companies, U.S. citizens, and foreign companies listed on U.S. stock exchanges from bribing foreign government officials to obtain or retain business. The accounting provisions require companies to maintain accurate books and records, and have a system of internal accounting controls. These provisions are closely tied to common business crimes, such as fraud, embezzlement, and money laundering, as they aim to prevent the use of bribery and improper accounting practices to conceal illicit activities.
• Analyze the enforcement and penalties associated with violations of the Foreign Corrupt Practices Act.
  • Enforcement of the FCPA has increased significantly in recent years, with the U.S. government actively investigating and prosecuting violations. Violations of the FCPA can result in substantial fines and imprisonment for both individuals and companies. Individuals can face up to $250,000 in fines and up to 5 years in prison per violation, while companies can face fines of up to $2 million per violation. Additionally, companies may face significant reputational damage and loss of business opportunities as a result of FCPA violations. The severe penalties and increased enforcement highlight the seriousness with which the U.S. government views corruption in international business transactions.
• Evaluate the impact of the Foreign Corrupt Practices Act on the ethical conduct of businesses operating in global markets.
  • The Foreign Corrupt Practices Act has had a significant impact on the ethical conduct of businesses operating in global markets. By prohibiting bribery of foreign government officials, the FCPA has encouraged companies to develop robust compliance programs and implement more ethical business practices. This has helped to level the playing field and promote fair competition, as companies can no longer rely on bribery to gain a competitive advantage. Additionally, the FCPA's accounting provisions have improved transparency and accountability, making it more difficult for companies to engage in fraudulent activities. Overall, the FCPA has played a crucial role in combating corruption and promoting ethical business practices in the global marketplace.

Related terms

Bribery:

The act of offering, promising, giving, accepting, or soliciting of an advantage as an inducement for an action which is illegal, unethical or a breach of trust.

Corruption: The abuse of entrusted power for private gain, including the offering, giving, receiving, or soliciting, directly or indirectly, anything of value to influence the actions of another party.

Accounting Provisions: The FCPA's accounting provisions require companies to maintain accurate books and records, and have a system of internal accounting controls.