Page 10 - U.S. FOREIGN CORRUPT PRACTICES ACT

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

health, education, and infrastructure. It undermines had paid hundreds of millions of dollars in bribes
democratic values and public accountability and to foreign government officials to secure business
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weakens the rule of law. And it threatens stability overseas. SEC reported that companies were
and security by facilitating criminal activity within using secret “slush funds” to make illegal campaign
and across borders, such as the illegal trafficking contributions in the United States and corrupt
of people, weapons, and drugs. International payments to foreign officials abroad and were
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corruption also undercuts good governance and falsifying their corporate financial records to conceal
impedes U.S. efforts to promote freedom and the payments. 13

democracy, end poverty, and combat crime and Congress viewed passage of the FCPA as
terrorism across the globe. critical to stopping corporate bribery, which had
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Corruption is also bad for business. Corruption tarnished the image of U.S. businesses, impaired
public confidence in the financial integrity of U.S.
is anti-competitive, leading to distorted prices and
companies, and hampered the efficient functioning
disadvantaging honest businesses that do not
of the markets.
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pay bribes. It increases the cost of doing business

globally and inflates the cost of government
contracts in developing countries. Corruption also
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No problem does more to alienate
introduces significant uncertainty into business
citizens from their political leaders and
transactions: Contracts secured through bribery
institutions, and to undermine political
may be legally unenforceable, and paying bribes on
stability and economic development,
one contract often results in corrupt officials making than endemic corruption among the

ever-increasing demands. Bribery has destructive government, political party leaders,
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effects within a business as well, undermining judges, and bureaucrats.
employee confidence in a company’s management - USAID Anti-Corruption Strategy
and fostering a permissive atmosphere for other

kinds of corporate misconduct, such as employee
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self-dealing, embezzlement, financial fraud, and
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As Congress recognized when it passed the
anti-competitive behavior. Bribery thus raises the
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FCPA, corruption imposes enormous costs both at
risks of doing business, putting a company’s bottom
home and abroad, leading to market inefficiencies
line and reputation in jeopardy. Companies that pay
and instability, sub-standard products, and an unfair
bribes to win business ultimately undermine their
playing field for honest businesses. By enacting
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own long-term interests and the best interests of
a strong foreign bribery statute, Congress sought
their investors.
to minimize these destructive effects and help
Historical Background companies resist corrupt demands, while addressing
Congress enacted the FCPA in 1977 after the destructive foreign policy ramifications of
transnational bribery. The Act also prohibited off-
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revelations of widespread global corruption in
the wake of the Watergate political scandal. SEC the-books accounting through provisions designed
to “strengthen the accuracy of the corporate books
discovered that more than 400 U.S. companies

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