The United States Code (15 USC §78dd-1 et seq.) contains the Foreign Corrupt Practices Act (“FCPA”), which was enacted as an amendment to the Securities Exchange Act of 1934 (“SEC”). The rules of the act are divided into two components.
The first purpose of the FCPA is to “[prohibit] corrupt payments to foreign officials for the purpose of obtaining or keeping business.” In this description, the term, “foreign official” has a fairly broad interpretation. Additionally, any payment that is completed through an intermediary can also be interpreted as a violation of the FCPA, but only if the payer is aware that the funds are to be utilized for the purpose of persuading a government official.
Secondly, the FCPA has an accounting provision that is defined in 15 USC § 78m and is within the purview of the SEC’s oversight responsibilities. This accounting provision requires that corporations maintain complete and accurate records for all transactions. Although it is illegal to pay foreign officials in order to obtain or keep business, small payments that are “necessary to achieve ministerial action” are permitted as long as the payments do not confer special privileges.
In terms of enforcement, the Department of Justice has the authority for enforcement of criminal penalties associated with violations of the FCPA and the SEC enforces civil penalties.
While the FCPA cannot support a private cause of action, a violation of the act is often part of a private lawsuit brought under other laws such as the Racketeer Influenced and Corrupt Organizations (“RICO”) Act.
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