The Foreign Corrupt Practices Act: Risk-Management and Compliance Strategies For High-Tech Companies

October 16, 2009

Just past its 30th birthday, the Foreign Corrupt Practices Act of 1977 (the FCPA or the Act) today poses the greatest liability risks ever for U.S. firms and other covered entities pursuing business opportunities abroad. Chiefly, this risk arises due to the increased risk of prosecution by the U.S. government, the government’s increased appetite for large fines, and an increased risk of multiple prosecutions due to other countries having adopted FCPA-equivalent laws.

These changes are ones of emphasis and enforcement rather than a wholesale change in how the FCPA operates. The Act has changed little in its basic parameters over the years. Congress unanimously passed the statute in 1977 following an SEC report disclosing that more than 400 U.S. companies, including 117 of the Fortune 500 companies, made “questionable payments” to foreign officials. The FCPA, as enacted, criminalized the making of “corrupt” payments to foreign government and political officials and adopted rigorous recordkeeping requirements for public companies and their overseas subsidiaries.

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