Foreign Corrupt Practices Act



Table of Contents

Abstract1

Rationale for the Act2

What does the Act prohibit?2

Impact of Foreign Corrupt Practices Acton businesses3

Penalties for Violating the Act4

Examples of Penalties4

Impact on U.S. Commerce5

Who enforces the Act?5

Conclusion5

References7

Abstract

In the 1970s a report of investigation by U.S. Securities and Exchange Commission investigations found that, over 400 Firms from United States of America admittedly involved in illegal or at least questionable practices in excess of $300million payments to foreign government officials, political agents and politicians. President Jimmy Carter signed the Act on 19th December, 1977. The Act was amended by the International Anti-Bribery Act in the year 1998. Three types of entities, individuals, Domestic concerns and foreign nationals and businesses are covered in the Act and are prevented from making payments illegal in the act. The Securities and Exchange Commission enforces the Accounting Provisions, while the Department of Justice enforces the Anti-bribery provisions. The foreign officials include individuals working for the government institute, or international organizations like United Nations. The bribe includes cash and non-cash items. The short run effect of such acts might be negative but in the long run it will serve as a trust builder and profitable growth of businesses in legitimized way. The law is in action and plenty of businesses are charged of violations of FCPA. These penalties and imprisonment set example for other firms that justice can bring these companies into court rooms of America if not the foreign governments.

Foreign Corrupt Practices Act

Rationale for the Act

It is not a new practice of bribing the officials in monetary and other ways as to gain their support for profitable operations of businesses. These practices have been often observed by companies outside their home country. The fact is that, underdeveloped or developing nations have weak political institution, due to which these matters of bribe are often a common practice. In the 1970s a report of investigation by U.S. Securities and Exchange Commission investigations found that, over 400 Firms from United States of America admittedly involved in illegal or at least questionable practices in excess of $300million payments to foreign government officials, political agents and politicians. A Particular example can be taken of Lockheed Bribery, in this case the aerospace company Lockheed was involved in the bribe payments to foreign officials in return for favoring the product of their company. These reported findings opened the eyes of law makers in United States and after some years, finally President Jimmy Carter signed the Act on 19th December, 1977. The Act was amended by the International Anti-Bribery Act in the year 1998. As a result of the anti-bribery conventions of the Organization for Economic Co-operation and Development, the law was amended.

What does the Act prohibit?

Three types of entities, individuals, Domestic concerns and foreign nationals and businesses are covered in the Act and are prevented from making payments illegal in the act (worldcompliance.com 2012). The act includes Individuals and Corporations of US or Foreign corporations having a class of security registered. It is unlawful for a US ...