Anti-Bribery and the Foreign Corrupt Practices Act

• Author: Marques O. Peterson and Lorriene Romero*
• Pages: 86-105

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Chapter 6

Anti-Bribery and the Foreign Corrupt Practices Act

Marques O. Peterson and Lorriene Romero*

I. The Foreign Corrupt Practices Ac t 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 US persons 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 United States (territorial jurisdiction), from making corrupt payments

to foreign officials to obtain or retain business.2 The accounting provisions require issuers to

make and keep accurate books and records and to devise and maintain an adequate system of

internal accounting controls.3 It 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 of the FCPA resides with both the Department of Justice

(DOJ) and the Securities and Exchange 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

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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 for the

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;7 and (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 has a class of securities registered under

Section 12 of the Exchange Act9 or 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-US company can also be

an issuer.12 For 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