Forty years ago, the United States passed the Foreign Corrupt Practices Act (FCPA) in the aftermath of news and disclosures of questionable foreign corporate payments to a variety of recipients.
People focused on payments made by, among others, Lockheed Aircraft Corporation, Gulf Corporation, United Brands Company, Northrop Corporation, Ashland Oil, and Exxon Corporation. Each of these instances involved allegations or admissions of corporate payments directly or indirectly to traditional foreign government officials or foreign political parties in connection with a business purpose.
The United States passed the FCPA to address this business conduct for two main reasons: (1) to even the business playing field and not allow some corporate citizens to “cheat” to gain business unethically; and (2) to stop the flow of money to corrupt foreign officials which undermines the economy and social structure of that foreign country.
Bribery Isn’t a Relic of the Past
According to a global survey conducted in 2017 by a global organization, 1 in 4 people surveyed said they had paid a bribe in the last 12 months to utilize a public service.
Bribery and corruption impacts societies in a multitude of ways. Politically, corruption is a major obstacle to democracy and the rule of law. In a democratic system, economically, corruption depletes national wealth. Corrupt politicians invest scarce public resources in projects that will line their pockets rather than benefit communities.
Corruption also hinders the development of fair market structures and distorts competition, which in turn deters investment. Bribery and corruption also corrode the social fabric of society. The public becomes distrustful and apathetic, which allows corrupt politicians to flourish. Environmental problems are another consequence of corrupt systems. The lack of, or non-enforcement of, environmental regulations and legislation means that precious natural resources are carelessly exploited, and entire ecological systems are damaged.
Global Responses to Combat Corrupt Practices
Bribery and corruption cost the world economy more than 1 trillion U.S. dollars a year. They distort markets, impact emerging economies, and cost companies millions in fines, penalties, and investigation costs every year.
As a result, a number of countries have joined the United States and have passed their own versions of anti-bribery and corruption laws, including the United Kingdom, Germany, Brazil, China, Russia, and others, and all of those laws impact the global enterprise.
Anti-bribery and corruption laws, including the FCPA, cover a broad range of business conduct (marketing, business development, sales, and others) with impacts all over the organization when conducting business in foreign markets. From facilitation payments to gifts to books and records, the FCPA and other global anti-bribery laws impact how every global enterprise conducts business.
FCPA and Global Anti-Bribery Resources
Learn more about how to prevent corrupt practices by previewing our FCPA course and with these FCPA resources:
- [Checklist] FCPA Risk Checklist. FCPA compliance can be best achieved within your organization by making sure everyone understands areas of risk and actively works to minimize it through effective internal controls. This checklist can help you conduct a risk assessment tailored to your organization.
- [Checklist] Gifts & Giving Tips. The practice of giving business gifts is an accepted part of creating and maintaining business relationships, but it’s not without its complications. If you’re presented with a questionable gift related decision, review this checklist.
- [Video] The Simple Bribery Mistakes People Make. Professor Mike Koehler discusses how your business organization can best understand risk to reduce scrutiny in this new era of government enforcement.
- [Template] Anti-Bribery Policy Template. This editable policy template provides a brief anti-bribery policy overview, followed by common questions about anti-bribery laws.