What Is the Foreign Corrupt Practices Act? Here Is the Complete Explanation

TEMPO.CO, Jakarta - The Foreign Corrupt Practices Act is an anti-bribery policy enacted by the United States to regulate business industries investing in the country. There have been numerous high-profile cases of foreign bribery since the act was enacted in 1977. 

What exactly is the Foreign Corrupt Practices Act and how does it work to affect global trade markets? This article discusses a comprehensive look at the enforced law.  

What is the Foreign Corrupt Practices Act? 

The Foreign Corrupt Practices Act (FCPA) is a major U.S. law designed to curb corruption in international business transactions. This law specifically prohibits U.S. companies, individuals, and foreign parties listed on U.S. stock exchanges from offering bribes to foreign officials to facilitate business. Such bribes are not limited to direct cash payments but can include the promise of anything of value.

The reach of the FCPA extends beyond U.S. borders and applies not only to publicly traded companies in the United States, but also to private companies operating anywhere in the world. Enforcement is shared by the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ).

According to the DOJ, the FCPA was enacted to prevent certain categories of persons and entities from making payments to foreign government officials to secure or retain business opportunities.

Violating the Foreign Corrupt Practices Act

Individuals and corporations violating the Foreign Corrupt Practices Act (FCPA) may be subject to both civil and criminal penalties. Companies found guilty of violating the law may be fined, while individuals involved may also face imprisonment. 

Criminal prosecution of FCPA violations is handled by the Department of Justice (DOJ). Corporations can be fined up to $2 million per violation, or twice the amount of the bribe if it was intended to advance business interests. While the penalties for individuals are less severe, both corporations and individuals can still face imprisonment.

Courts have the authority to increase FCPA fines under the Alternative Fines Act (18 U.S.C. 3571[D]). As cited in White Collar Attorney, if an offender is found guilty or pleads guilty and the evidence supports it, the fine can be increased to twice the amount the offender sought to gain from the illicit financial transaction.

Famous Foreign Corrupt Practices Act Cases 

In recent years, there have been several high-profile FCPA violations, particularly in the Asia-Pacific region. Some of the most notable include KT Corporation and Oracle Corporation.

KT Corporation is one of the largest telecommunications service providers in Korea, with its American shares traded on the New York Stock Exchange. 

In 2017, the Constitutional Court of Korea found that KT Corporation, along with many Korean companies, made donations to two non-profit foundations known as Mir Foundation and K-Sports Foundation at the request of former President Park.  

Later in 2020, the SEC conducted a thorough investigation into related allegations regarding FCPA compliance. 

FCPA | Investopedia | White Collar Attorney

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