Foreign Corrupt Practices Act

Enacted in 1977, the Foreign Corrupt Practices Act (FCPA) makes it illegal for U.S. citizens, U.S. companies and certain foreign companies to bribe a foreign government official in order to obtain or retain business. However, despite the law’s good intentions, the government’s recent FCPA enforcement practices have created major uncertainty for American businesses and highlighted the need for reforms.

Since the FCPA was enacted, trade’s importance to the U.S. economy (as a percentage of GDP) has grown more than fifty percent, and exports of U.S. goods exceeded $2 trillion in 2012. At the same time, foreign governments have increasingly enmeshed themselves in private businesses. read more...

Unfortunately, the FCPA has not evolved to reflect these changes in the global economy – creating unprecedented uncertainty for American businesses selling goods and services overseas. They are now exposed to civil and criminal penalties for conduct that is, in many cases, beyond their control and knowledge.

For example, when an employee of an American company takes an employee of a company partially owned by the Chinese government to lunch or pays for his cab ride, does that constitute an FCPA violation? And what happens when a rogue employee knowingly violates a company’s internal FCPA compliance system? Should the company be held liable too?

To help address these and other questions, the Department of Justice and the Securities and Exchange Commission released unprecedented joint guidance on their enforcement of the FCPA in November 2012. While this guidance was an important first step towards providing businesses with much-needed clarity and certainty, more reforms are needed. These include ensuring that U.S. companies implementing robust anti-bribery programs are not punished for the actions of rogue employees. The government should also provide a clearer definition of who constitutes a “foreign official” under the statute. It is currently unclear when or whether a foreign government’s involvement in a business makes the company’s employees foreign officials. 

More information about ILR’s proposals for FCPA reform can be found in its 2010 white paper Restoring Balance: Proposed Amendments to the Foreign Corrupt Practices Act.

 

Research

Legal Limbo: Seeking Clarity in How and When the Department of Justice Declines to Prosecute

October 24, 2012 | This paper addresses the need for change and improvement in the process by which the Department of Justice ("DOJ" or "the Department") notifies subjects of its investigations that matters have been closed with no prosecution and in how the Department documents publicly the generic reasons behind these decisions.

Restoring Balance: Proposed Amendments to the Foreign Corrupt Practices Act

October 27, 2010 | This paper presents a series of amendments that would serve to improve the U.S. Foreign Corrupt Practices Act ('FCPA'). That statute was enacted by Congress and signed into law by President Carter in late 1977. Congress's primary aim in enacting the FCPA was to prohibit U.S. companies and companies operating in the U.S. from paying bribes to foreign government officials, politicians, and political parties for the purpose of obtaining business opportunities abroad.

All Results for Foreign Corrupt Practices Act

Exposing Corruption in the Chevron Amazon Case

August 20, 2014 | Insights

On March 4, 2014, the U.S. District Court for the Southern District of New York ruled that a $9.5 billion Ecuadorian judgment against Chevron Corporation for alleged contamination was the product of fraud and racketeering activity, finding it unenforceable. Read More »

Tags: Foreign Corrupt Practices Act

In The News Today - August 12, 2014

August 12, 2014 | Insights

The U.S. Supreme Court may hear a case seeking clarity on a key term in the Foreign Corrupt Practices Act (FCPA). Read More »

Tags: Foreign Corrupt Practices Act

In The News Today - May 19, 2014

May 19, 2014 | Insights

"Losing a shareholder lawsuit to a company could soon become more expensive," writes Liz Hoffman of The Wall Street Journal. Hoffman reports on the Delaware Supreme Court's recent decision to uphold, "a corporate bylaw that requires the losing party in litigation against the company to pay the winner's legal fees." Read More »

Tags: Foreign Corrupt Practices Act, Delaware

In the News - April 28, 2014

April 28, 2014 | Insights

The New York Times highlights the dubious BP gulf oil spill settlement claims that ILR has been highlighting for months. Read More »

Tags: Legal Ethics, Lawsuit Abuse Impact, Foreign Corrupt Practices Act

In the News - April 24, 2014

April 24, 2014 | Insights

Montana Attorney General Tim Fox has signaled his intention to defend the state's $10 million limit on the punitive damages a judge or jury can award an individual after a district judge ruled the cap is unconstitutional. Read More »

Tags: False Claims Act, Foreign Corrupt Practices Act, State Legal Reforms

The FCPA Probe that Crumbled

March 24, 2014 | Insights

Federal prosecutors are using stings, wiretaps, and undercover cooperators in FCPA investigations despite a recent operation that fell apart in what a judge called a "sad chapter" for criminal enforcement. Read More »

Tags: Foreign Corrupt Practices Act

Judge: Evidence Not Getting Any Fresher in FCPA Case

March 12, 2014 | Insights

The government's use of the Foreign Corrupt Practices Act has exploded in recent years, but the track record once those cases get some scrutiny isn't so good. Read More »

Tags: Foreign Corrupt Practices Act

In the News Today - March 6, 2014

March 06, 2014 | Insights

Yesterday, the Supreme Court heard arguments in Halliburton v. Erica P. John Fund, which could decide the future of the fraud on the market theory in securities class actions. Read More »

Tags: Foreign Corrupt Practices Act, Securities Litigation Reform

In the News Today - February 25, 2014

February 25, 2014 | Insights

With discovery accounting for 50 to 90 percent of litigation costs, the federal Advisory Committee on Civil Rules is considering changes to the Federal Rules of Civil Procedure that would narrow pretrial discovery burdens. Read More »

Tags: Class Actions, Discovery, Foreign Corrupt Practices Act

In the News Today - February 18, 2014

February 18, 2014 | Insights

The oil and gas industry has invested more than $60 billion in south Louisiana, but the state's legal environment is "preventing us from doing all the things that we could do," Louisiana Oil and Gas Association Vice President Gifford Briggs said. Read More »

Tags: Environmental Litigation, Foreign Corrupt Practices Act, Lawsuit Abuse Impact, Louisiana

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