Understanding the Foreign Corrupt Practices Act

| Mar 25, 2020 | Business Litigation |

Most business owners in Michigan understand and comply with federal anti-bribery and anti-corruption laws. These regulations help protect businesses from unfair competition with other companies. 

One such law, known as the Foreign Corrupt Practices Act, protects U.S. businesses and individuals from corrupt manipulation of foreign trade markets. 

The Foreign Corrupt Practices Act 

According to the U.S. Department of Justice, The FCPA came into effect in 1977 to prohibit businesses and corporate entities from supplying bribe payments and other incentives to foreign officials. Firms or corporations who try to bribe an official to use their power to promote and secure business deals violate the FCPA. Companies cannot persuade these officeholders in order to gain an edge over the competition in foreign markets. The FCPA also includes the conduct of international entities seeking to bribe or coerce companies within U.S. territories. 

Enforcement and penalties 

Both the U.S. Securities and Exchange Commission and the U.S. Department of Justice carry out investigations and enforcement of the FCPA. Businesses who violate the terms of the FCPA face significant civil and criminal penalties. Per the SEC, nearly anyone associated with the company can violate the FCPA. The SEC will bring civil actions against business directors, employees, shareholders and other agents who act corruptly on behalf of the business entity. 

Furthermore, those who violate the policies within the FCPA may have to pay back or return any benefits they received as a result of the violations. They may also incur fines and other penalties in consequence. These violators could also be subject to independent oversight of business practices in the future.