The Foreign Corrupt Practices Act (FPCA) has been law since 1977. The idea behind this act is to make it unlawful for certain persons or entities associated with the US to pay foreign governments in order to obtain or retain business.
Essentially, the government designed FPCA to prevent individuals that have a specific kind of connection with the United States from bribing foreign government officials as a means of influencing foreign governments. According to the United States Department of Justice, specifically it prohibits using the mail or any means of interstate commerce in a corrupt fashion to influence foreign officials.
Who does the FPCA apply to?
The FPCA will apply to any person or entity that has a specific kind of connection with the United States and is actively involved in corrupt practices in foreign countries. The “persons or entities” covered by the FPCA may include US-based businesses, American citizens, residents, or foreign corporations trading in the US. It is not necessary for the person or entity targeted by the FPCA to have been in the US when they committed the corrupt acts.
Why does the FPCA exist?
There were a number of investigations that the US Securities and Exchange Commission conducted in the 1970s that showed nearly 500 companies admitting that they had paid millions of dollars in bribes to foreign government officials, political parties, or politicians. A famous example was the Lockheed bribery scandal, where the company paid foreign officials to favor their aerospace products.
As a result, the Carter Administration put the FPCA into place in order to help restore the average American’s faith in the integrity of US business practices.