Anti-Bribery and the Foreign Corrupt Practices Act
Author | Marques O. Peterson and Lorriene Romero* |
Pages | 86-105 |
86
Chapter 6
Anti-Briberyand the Foreign Corrupt Practices Act
Marques O. Peterson and Lorriene Romero*
I.The Foreign Corrupt PracticesAct Overview
In 1977, Congress enacted the Foreign Corrupt Practices Act (FCPA).1 In the backdrop of
the Watergate scandal, and concerned that public-sector bribery had reached a level that could
undermine public confidence in the business community and negatively impact America’s image
abroad, Congress felt that the enactment of the FCPA would empower US companies to resist
the pressure to engage in foreign bribery.
The FCPA has anti-bribery and accounting provisions.The anti-bribery provisions
prohibit USpersons and businesses (domestic concerns), US and foreign companies listed on
stock exchanges in the United States or which are required to file periodic reports with the
Securities and Exchange Commission (issuers), and certain foreign persons and businesses acting
while in the territory of the UnitedStates (territorial jurisdiction), from making corrupt payments
to foreign officials to obtain or retain business.2The accounting provisions require issuers to
make and keep accurate books and records and to devise and maintain an adequate system of
internal accounting controls.3It is a violation of the accounting provisions for an individual or
business to knowingly falsify books or records or to knowingly circumvent or fail to implement a
system of internal controls.4
Responsibility for enforcement ofthe FCPA resides with both the Department of Justice
(DOJ) and the Securities andExchange Commission (SEC).In the past decade, not only have the
number of enforcement actions brought by DOJ and SEC increased, but the fines and penalties
they have captured have skyrocketed.Since its enactment, Congress has made several important
87
amendments to the FCPA that have increased the jurisdictional reach of the enforcement
agencies, set fines and penalties for violations, and expanded the affirmative defenses forthe
anti-bribery provisions.5
A.The Anti-Bribery Provisions
The anti-bribery provisions prohibit the corrupt payment, authorization of payment, or
promise of “anything of value” to a foreign official in order to influence an action by a foreign
official to obtain or retain business.
1.Coverage of the Anti-Bribery Provisions
Three categories of persons and entities are covered by the anti-bribery provisions: (1)
“issuers” and their officers, directors, employees, agents, and shareholders;6(2) “domestic
concerns” and their officers, directors, employees, agents, and shareholders;7and (3) certain
persons and entities, other than issuers and domestic concerns, acting while in the territory of the
United States.8
An “issuer” under the FCPA is a company that hasa class of securities registered under
Section 12 of the Exchange Act9or is required to file periodic and other reports with the SEC
under Section 15(d) of the Exchange Act.10“In practice, this means that any company with a
class of securities listed on a national securities exchange in the United States, or any company
with a class of securities quoted in the over-the-counter market in the United States and required
to file periodic reports with the SEC, is an issuer.”11 Accordingly, a non-UScompany can also be
an issuer.12For issuers, the FCPA also covers officers, directors, employees, agents, or
stockholders acting on behalf of an issuer, and also any co-conspirators.13
The next category to which the FCPA applies is“domestic concerns.”A domestic
concern is any individual who is a citizen, national, or resident of the United States, or any
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