Question

Can you share with me a case study on the US foreign corrupt practice act.

Answer 1

Solution:

The Foreign Corrupt Practices Act (FCPA) forbids American businesses from bribing foreign officials. Beyond its moral implications, the FCPA can promote America's foreign policy and economic interests. Two fundamental problems with the FCPA have prevented it from serving its purposes. First, the two bodies given authority to bring suit under the FCPA, the Department of Justice and the Securities and Exchange Commission, have failed to enforce it effectively. Second, the provisions of the FCPA remain extremely vague despite amendments in 1988. In this Comment, the author argues that Congress should amend the FCPA to allow a private right of action that is restricted to competing American businesses. Such an amendment would enhance both enforcement and clarification of the FCPA. This will, in turn, allow American business to realize the FCPA's dormant benefits

The Foreign Corrupt Practices Act (FCPA), enacted in 1977, generally prohibits the payment of bribes to foreign officials to assist in obtaining or retaining business. The FCPA can apply to prohibited conduct anywhere in the world and extends to publicly traded companies and their officers, directors, employees, stockholders, and agents. Agents can include third party agents, consultants, distributors, joint-venture partners, and others.

The FCPA also requires issuers to maintain accurate books and records and have a system of internal controls sufficient to, among other things, provide reasonable assurances that transactions are executed and assets are accessed and accounted for in accordance with management's authorization.

The sanctions for FCPA violations can be significant. The SEC may bring civil enforcement actions against issuers and their officers, directors, employees, stockholders, and agents for violations of the anti-bribery or accounting provisions of the FCPA. Companies and individuals that have committed violations of the FCPA may have to disgorge their ill-gotten gains plus pay prejudgment interest and substantial civil penalties. Companies may also be subject to oversight by an independent consultant.

The SEC and the Department of Justice are jointly responsible for enforcing the FCPA. The SEC's Enforcement Division has created a specialized unit to further enhance its enforcement of the FCPA.

The Foreign Corrupt Practices Act (FCPA) applies to publicly traded companies and generally prohibits the payment of bribes to foreign officials to assist in obtaining or retaining business. The FCPA can apply to prohibited conduct anywhere in the world. The FCPA also requires that companies maintain accurate books and have processes and procedures in place to make sure all business transactions are compliant. In other words, their accounting practices must be transparent.

Anyone with decision making authority on behalf of the company can violate the FCPA and the company can be held liable. This includes third party agents, consultants, partners, and subsidiaries, among others.

Violations of the FCPA can lead to civil charges (governed by the Security and Exchange Commission (SEC)), criminal charges (the Department of Justice (DOJ)), or both and can result in hefty fines.