Why The Foreign Corrupt Practices Act is Hurting Our Businesses and Needs to be Reformed

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As seen in the May 13th issue of The State Journal.

The Foreign Corrupt Practices Act of 1977 (FCPA) was passed in response to federal investigations of American companies that collectively were making millions of dollars in bribes to various foreign government officials. As a result, the FCPA prohibits companies and individuals from offering or making payments to any foreign official with the purpose of inducing the recipient to misuse his official position by directing business to or maintaining business with the payor.

The FCPA’s purpose and goals remain as true and necessary today as they were over 30 years ago when they were first enacted into law. Federal law needs to prevent and prohibit unethical bribes to foreign officials. What has changed in the past 30 years, however, is the federal government’s enforcement of the law. In the past few years, the Department of Justice (DOJ) has increased dramatically the number of investigations and enforcement actions under the FCPA, creating what DOJ calls “a new era of FCPA enforcement.” Such enforcement would be rational if bribery activity was on the rise. Instead, the dramatic increase in FCPA enforcement is due to DOJ’s newly found broad interpretation of the law beyond the FCPA’s original intentions. With few judicial decisions and many vague areas of the law, there are little to no reins to limit the agency’s investigations on actions it deems to be in violation of the FCPA.

The real effect of DOJ’s aggressive enforcement is that it is stifling American companies from doing business abroad and here at home. Companies themselves have to bear the burden of conducting extensive internal investigations if faced with FCPA charges. Many businesses would rather end operations with foreign countries than risk expansive DOJ investigations and spend resources to fight FCPA charges.

Please see full article below for more information.

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Published In: Administrative Agency Updates, General Business Updates, Criminal Law Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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