The Foreign Corrupt Practices Act (FCPA) of 1977 is a powerful tool used by the US government to fight international corporate corruption. Enforced jointly by the DOJ and the SEC, the statute applies to US issuers, domestic concerns, and foreign entities operating within US territory.
The Two Pillars of the FCPA
                     +---------------------------------+

                     |    FCPA Enforcement Pillars     |
                     +---------------------------------+
                                      |
         +----------------------------+----------------------------+

         |                                                         |
+--------------------------------+                        +--------------------------------+

|    Anti-Bribery Provisions     |                        |     Accounting Provisions      |
| - Bans payments to officials   |                        | - Mandates accurate record keeping|
| - Prohibits corrupt intent     |                        | - Requires internal audit controls|
+--------------------------------+                        +--------------------------------+

1. Anti-Bribery Provisions
These provisions prohibit giving, offering, or authorizing the payment of money or anything of value to a foreign government official to corruptly influence an official act, secure an improper business advantage, or retain business.
  • The Corrupt Intent Requirement: The payment must be intended to induce the official to misuse their public position. The actual outcome of the bribe is irrelevant; authorizing the payment completes the offense.

2. Accounting Provisions
These provisions apply to publicly traded companies (issuers) and require them to maintain accurate books, records, and internal accounting controls:
  • Books and Records Mandates: Firms must record all transactions accurately and in reasonable detail. This prevents employees from hiding bribes as “consulting fees,” “marketing costs,” or “agent commissions.”
  • Internal Control Frameworks: Companies must design internal financial systems that ensure transactions are executed only with management authorization, preventing the creation of unmonitored slush funds.
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