International Business Transactions and the Foreign Corrupt Practices Act
Any company doing business abroad, must, at a minimum have some familiarity with the Foreign Corrupt Practices Act (the "FCPA"). Congress enacted the FCPA in 1977, in response to widespread bribery of foreign officials by United States business interests. Congress resolved to stop such bribery, not just because it is morally and economically suspect, but also because it was causing foreign policy problems for the United States.
The FCPA has two purposes. First, it seeks to prohibit the bribery of foreign officials. Second, it imposes certain accounting requirements on companies engaged in international business transactions.
The bribery provisions of the FCPA generally prohibit individuals and businesses from making "use of the mails or any other instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value," either directly or indirectly to any foreign official for the purpose of: (1) influencing any act or decision of such foreign official; (2) inducing such foreign official from violating his official duty; or (3) securing an improper advantage.
The accounting provisions of the FCPA require businesses to "make and keep records, and accounts, which in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of business entity" and to "devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances" of compliance with the FCPA.
Any person who willfully violates the FCPA, or any of the implementing regulations, is subject to a fine of not more than 5 million dollars and imprisonment for not more than 20 years. A business entity that willfully violates the FCPA is subject to a fine not to exceed 25 million dollars. The Department of Justice has established a Foreign Corrupt Practices Act Opinion Procedure by which any U.S. company or national may request a statement of the Justice Department's present enforcement intentions under the anti-bribery provisions of the FCPA regarding any proposed business conduct.
Penalties for FCPA Violations
Under current court rulings, the FCPA does not provide an individual with a private right of action under the FCPA. Instead, the enforcement of the FCPA is left to the Department of Justice and the Securities and Exchange Commission. However, conduct that violates the anti-bribery provisions of the FCPA may give rise to a private cause of action and treble damages under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), or to other actions under federal or state laws. For example, an action might be brought by a competitor who alleges that bribery has led to a company winning a foreign contract.
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