FOREIGN CORRUPT PRACTICES ACT
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 706
II. ACCOUNTING PROVISIONS 709 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Elements of the Accounting Provisions . . . . . . . . . . . . . . . . . 710
1. Covered Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 710
2. Record-Keeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 710
3. Internal Controls. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 711
B. Control Person Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . 713
C. Criminal Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 713
D. Related SEC Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 714
III. ANTI-BRIBERY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 714
A. Elements of the Anti-Bribery Provisions . . . . . . . . . . . . . . . . 715
1. Covered Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .
715
2. Qualifying Jurisdictional Acts 716
a. Nexus with U.S. Interstate Commerce. . . . . . . . . . . 716
b. Any Action Within or Outside U.S. Territory . . . . . 717
3. Anything of Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 719
4. Corruptly, Willfully, and Knowingly . . . . . . . . . . . . . . . 720
5. Foreign Official . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 721
6. Obtaining or Retaining Business . . . . . . . . . . . . . . . . . . 723
B. Permissible Payments and Affirmative Defenses . . . . . . . . . . 724
1. Grease Payments Exception . . . . . . . . . . . . . . . . . . . . . 724
2. Local Law Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 725
3. Reasonable and Bona Fide Business Expenditure Defense 726
C. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 727
1. Formal Regulatory Enforcement . . . . . . . . . . . . . . . . . . 727
2. Deferred and Non-Prosecution Agreements . . . . . . . . . . 728
3. Voluntary Disclosures to Enforcement Agencies . . . . . . 729
4. Private Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . 731
5. Advisory Guidelines and “No-Action” Letters . . . . . . . . 733
IV. PENALTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 734
A. Criminal Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 734
1. Individuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 734
2. Corporations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 735
B. Additional Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 739
1. Civil Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 739
2. Government Procurement Sanctions . . . . . . . . . . . . . . . 740
V. GLOBAL ANTI-CORRUPTION NETWORK . . . . . . . . . . . . . . . . . . . . . 740
A. World-Wide Anti-Bribery Efforts . . . . . . . . . . . . . . . . . . . . . 741
705
1. Organization for Economic Cooperation and Development
Convention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 741
2. The United Nations Convention Against Corruption . . . . 742
B. Regional Anti-Bribery Efforts. . . . . . . . . . . . . . . . . . . . . . . . 743
1. European Conventions and Domestic Law . . . . . . . . . . . 743
2. Other Anti-Bribery Conventions and Domestic Laws . . . 744
VI. FCPA CORPORATE COMPLIANCE PROGRAMS . . . . . . . . . . . . . . . . . 746
A. Benefits of Compliance Programs. . . . . . . . . . . . . . . . . . . . . 746
B. Designing and Implementing Corporate Compliance Programs 747
C. Ensuring FCPA Compliance in Dealings with Third Parties . 749
VII. RECENT AND ANTICIPATED DEVELOPMENTS. . . . . . . . . . . . . . . . . . 751
A. Enforcement and Penalties Statistics . . . . . . . . . . . . . . . . . . 751
B. Trends in Enforcement Methods . . . . . . . . . . . . . . . . . . . . . . 754
C. The Future of FCPA Enforcement . . . . . . . . . . . . . . . . . . . . 758
I. INTRODUCTION
In 1977, Congress amended the Securities Exchange Act of 1934 (“Exchange
Act”) and enacted the Foreign Corrupt Practices Act (“FCPA” or “the Act”).
1
The
FCPA’s passage followed an extensive Securities and Exchange Commission
(“SEC”) investigation and voluntary disclosure program in the 1970s, which
revealed that U.S. companies had paid hundreds of millions of dollars in bribes to
secure business from foreign officials.
2
Corporate bribery had hindered the markets
from operating efficiently and eroded public confidence in U.S. companies’ finan-
cial integrity.
3
See CRIM. DIV., U.S. D EP’T OF JUST. & ENF’T DIV., U.S. SEC. & EXCH. COMM’N, A RESOURCE GUIDE TO
THE U.S. FOREIGN CORRUPT PRACTICES ACT 2 (2d ed. 2020) [hereinafter FCPA RESOURCE GUIDE], https://www.
justice.gov/criminal-fraud/file/1292051/download.
Congress designed the FCPA to address these issues
4
through two
sets of provisions that regulate international corruption: the accounting provisions
and the anti-bribery provisions.
5
The FCPA’s accounting provisions require regular reports to the SEC, mainte-
nance of accurate records, and the establishment of internal compliance controls.
6
These provisions apply to both domestic and foreign companies traded on U.S.
1. Foreign Corrupt Practices Act of 1977, Pub. L. No. 95-213, 91 Stat. 1494 (codified as amended at 15 U.S.C.
§§ 78dd-1–3, 78ff, 78m(b), (d)(1), (g)–(h)), amended by Foreign Corrupt Practices Act Amendment of 1988,
Pub. L. No. 100-418, 102 Stat. 1107, 1415 (codified at 15 U.S.C. §§ 78dd-1–78dd-3, 78ff) and International
Anti-Bribery and Fair Competition Act of 1998, Pub. L. No. 105-366, 112 Stat. 3302 (codified at 15 U.S.C.
§§ 78dd-1–78dd-3, 78ff).
2. See S. REP. NO. 95-114, at 3–4 (1977); H.R. REP. NO. 95-640, at 4–5 (1977); U.S. SEC. & EXCH. COMM’N,
94TH CONG., REPORT OF THE SECURITIES AND EXCHANGE COMMISSION ON QUESTIONABLE AND ILLEGAL
CORPORATE PAYMENTS AND PRACTICES (Comm. Print May 1976); see also Theodore C. Sorensen, Improper
Payments Abroad: Perspectives and Proposals, 54 FOREIGN AFFS. 719 (1976) (discussing widespread support for
enactment of the FCPA in the aftermath of the Watergate scandal).
3.
4. See id.; see also Mike Koehler, The Story of the Foreign Corrupt Practices Act, 73 OHIO ST. L.J. 929, 932
(2012) (describing the various bribery schemes discovered in pre-FCPA inquiries).
5. See 15 U.S.C. §§ 78dd-1–3, 78ff, 78m(b), (d)(1), (g)–(h).
6. Id. § 78m(a)–(b). See infra Section II.A for discussion of the accounting provisions.
706 AMERICAN CRIMINAL LAW REVIEW [Vol. 62:705
stock exchanges.
7
The FCPA’s anti-bribery provisions criminalize the transfer of
money or other gifts to foreign officials and political actors with the intent to obtain
or retain business.
8
The anti-bribery prohibitions apply to conduct by securities
issuers, U.S. citizens and entities, and certain foreign nationals and entities.
9
The
SEC and the United States Department of Justice (“DOJ”) share civil enforcement
authority for the FCPA’s accounting and anti-bribery provisions.
10
However, the
DOJ has sole authority to enforce criminal sanctions under the Act.
11
Increased enforcement and severe fines have made understanding the FCPA im-
perative for businesses around the world. Although the SEC and the DOJ jointly
averaged only three prosecutions annually between 1978 and 2000,
12
since then
the number of enforcement actions per year has drastically increased.
13
See GIBSON, DUNN & CRUTCHER LLP, 2023 YEAR-END FCPA UPDATE (2024) [hereinafter GIBSON, DUNN
& CRUTCHER 2023 YEAR-END FCPA UPDATE], https://www.gibsondunn.com/2023-year-end-fcpa-update/?pdf=
display.
2010 saw
an annual peak of seventy-four total FCPA enforcement actions with penalties of
$1.8 billion,
14
See Paul T. Friedman, Ruti Smithline, & Angela E. Kleine, 2010: Another Record-Breaking Year for
FCPA Enforcement, Confirming “New Era”, MORRISON FOERSTER (Jan. 12, 2011), https://www.jdsupra.com/
legalnews/2010-another-record-breaking-year-for-f-55409/.
and in 2016 twenty-seven corporations charged with FCPA viola-
tions paid a record-breaking average of $223.4 million in criminal penalties.
15
See GIBSON, DUNN & CRUTCHER LLP, 2017 YEAR-END FCPA UPDATE 2 (2018) [hereinafter GIBSON,
DUNN & CRUTCHER 2017 YEAR-END FCPA UPDATE], https://www.gibsondunn.com/wp-content/uploads/2018/
01/2017-year-end-fcpa-update-1.pdf. The 2016 average was, however, distorted by six large enforcement
actions; the median corporate sanction was comparable to past years.
Moreover, there was an unprecedented total of four FCPA-related trials in 2019
and a record-breaking $2.8 billion in FCPA penalties assessed in 2020.
16
See GIBSON, DUNN & CRUTCHER LLP, 2019 YEAR-END FCPA UPDATE 1 (2020) [hereinafter GIBSON,
DUNN & CRUTCHER 2019 YEAR-END FCPA UPDATE], https://www.gibsondunn.com/wp-content/uploads/2020/
01/2019-year-end-fcpa-update.pdf; GIBSON, DUNN, & CRUTCHER LLP, 2020 YEAR-END FCPA UPDATE 1 (2021),
https://www.gibsondunn.com/wp-content/uploads/2021/01/2020-year-end-fcpa-update.pdf.
In recent
years, enforcement has been more moderate, with only fifteen enforcement actions
in 2021, twenty-five in 2022, and twenty-six in 2023.
17
GIBSON, DUNN, & CRUTCHER LLP, 2021 YEAR-END FCPA UPDATE 1 (2022) [hereinafter GIBSON, DUNN
& CRUTCHER 2021 YEAR-END FCPA UPDATE], https://www.gibsondunn.com/wp-content/uploads/2022/01/
2021-year-end-fcpa-update.pdf; GIBSON, DUNN & CRUTCHER 2023 YEAR-END FCPA UPDATE 2 (2023), https://
www.gibsondunn.com/2023-year-end-fcpa-update/?pdf=display.
This significant decline is
likely due to the changeover in presidential administrations and the lingering
impacts of the COVID-19 pandemic. While total corporate sanctions in 2022 more
7. 15 U.S.C. at § 78m(a)–(b).
8. Id. §§ 78dd-1(a), 78dd-2(a), 78dd-3(a). See infra Section III.A for discussion of the anti-bribery provisions.
9. Provisions apply to “issuers,” “domestic concerns,” and “persons other than issuers or domestic concerns.”
15 U.S.C. §§ 78dd-1(a), 78dd-2(a), 78dd-3(a). See infra Section III.A.1 for a discussion of parties subject to the
anti-bribery provisions.
10. FCPA RESOURCE GUIDE, supra note 3, at 3–4.
11. See id.
12. Eugene R. Erbstoesser, John H. Sturc & John W.F. Chesley, The FCPA and Analogous Foreign Anti-
Bribery Laws—Overview, Recent Developments and Acquisition Due Diligence, 2 CAP. MKTS. L.J. 381, 386
(2007).
13.
14.
15.
16.
17.
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