The Foreign Corrupt Practices Act (FCPA) is a US law that prohibits US entities from making payments to foreign officials to gain business advantages. Violators can face criminal and civil charges, fines, and imprisonment. The law applies to any public official, regardless of rank or position, and even covers foreign entities attempting bribery on US soil. Affirmative defense may be used, but the burden of proof lies with the defendant.
The Foreign Corrupt Practices Act, or FCPA, refers to a set of international anti-corruption laws. This legislation aims to prevent United States (US) entities or affiliates of US entities from making payments to foreign officials intended to encourage those officials to abuse their authority and positions for the sake of business deals. Violating these laws is a federal crime and can lead to serious consequences.
By US government standards, bribery results in unfair advantages. The need for the Foreign Corrupt Practices Act arose from investigations in the 1970s which revealed that many US companies made questionable or illegal payments to foreign entities. The FCPA was, therefore, a means to prevent businesses from continuing to deviate from American ideals and from damaging the credibility and integrity of the American business system.
The Foreign Corrupt Practices Act prohibits the practice of paying foreign officials to obtain or retain business. It should be noted that this legislation affects payments made to any public official, including members of public office and political candidates. The position or rank of the people to whom payments may be made is irrelevant.
Violations are not limited to direct actions. Conspiracy to bribe foreign officials and using a third party to bribe foreign officials are both outlawed. This applies even if the individual committing the acts operates wholly outside the United States. Furthermore, the bribery must not be successful for a breach to occur.
The US Department of Justice states that “US companies wishing to do business in foreign markets must be familiar with the FCPA.” This includes any US citizen and resident who engages in foreign affairs. The law also covers foreign entities that attempt to engage in such bribery while on U.S. soil.
Violators of the Foreign Corrupt Practices Act can be individuals, companies and even shareholders acting on behalf of a company. Violations can have a variety of consequences. Businesses and individuals can be prosecuted through criminal and civil proceedings.
Heavy fines are often ordered for companies found guilty of criminal charges. Fines and imprisonment can be ordered for people found guilty. When fines are ordered for individuals, these cannot be paid by the employer or principal.
The Securities Exchange Commission (SEC) can bring civil charges against companies or individuals. This could result in further fines for the offenders. The Foreign Corrupt Practices Act also leaves room for action by other parties who have grievances. These could include state or local governments whose laws have been violated or competitors who have suffered losses.
The defendant may attempt to prevent conviction by resorting to an affirmative defense. In many cases, this is done by arguing that the action for which he is accused is lawful in the foreign country in which it was conducted. It should be noted, however, that the burden of proof lies with the defendant in such cases.
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