Foreign Corrupt Practices Act Essay

Foreign Corrupt Practices Act

Foreign Corrupt Practices Act

The FCPA or Foreign Corrupt Practices Act is a law established since the year 1977 to avoid and or stop the different U.S. companies from bribing the foreign officials in order for their businesses to be maintained and to be allowed (LLP, 2007).

For a lot of years that had passed, it is said that he only state which executes the law to antibribery in the business industry is the United States. In this article I will discuss how critics for the FCPA arise which caused the other countries to execute the law to prohibit bribery in their own state (Urofsky, Razzano, & Cadwalader, 2004).

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For the next 20 years since the law was enacted by the US, there had been no other country that followed in executing such law until the year of late 1990’s when the US focused on imposing the act to the international business world (Urofsky et al., 2004).

The other countries then enforced such same law parallel and somehow similar to the FPCA act (Urofsky et al., 2004).

In this article, I will discuss about the facts regarding the FCPA and also the controversies that had been an issue through the years that it was established.

I will also explain how the FCPA became an effective and or ineffective law.

FCPA Facts

            Different firms in the United States who wanted to establish their own businesses in foreign markets must be informative about the role of FCPA (BISNIS, 2007).

            FCPA is the one that forbids all American companies to bribe any of the foreign officials in order to maintain and or obtain their businesses (BISNIS, 2007).

There had been an issue in the mid-1970’s which is stating that there were 400 U S companies who have paid an illegal remittance to the different foreign officials and politicians. Regarding this stated revelation, under the SEC’s investigation, they also stated that the bribery cost to about 300 US dollars (BISNIS, 2007).

            The congress then decided to enact the FCPA in order to prohibit the abuse of foreign officials regarding their act of bribery and bring forth the restoration to other business holder’s confidence in American industry’s business system (BISNIS, 2007).

            It is explained under the anti-bribery provision of the FCPA that it is against the law to bribe a certain law official in order to obtain a business and or maintain your already established business (BISNIS, 2007).

Antibribery provisions – this provision is said to be both asserted to those who issue the registered security and those who submits requirements to the SEC or those who issues (BISNIS, 2007).
The Antibribery provision under FCPA is said to be extended into two types of behavior which are stated as mainly prohibiting direct bribes and secondly is explaining the consideration of which states that it is prohibited for intermediaries to pay bribes to officials and any domestic concerns (BISNIS, 2007).
Elements of an Offense

·         Who – the FCPA is asserted to everyone in an individual firm, or any agent from a certain firm, so as to the officers and stockholders who acts or represents for a certain firm. Certain individuals or firms may be given penalties when they intended to help or involve their selves in the said prohibited activity (BISNIS, 2007)

·         Corrupt Intent – the certain individual who is said to accept or do the bribing is said to have an intension of corrupting and over uses his power due to allowing a certain individual to obtain or maintain his/her business (BISNIS, 2007).

·         Payment – it is explained in this element that a certain individual is forbidden to pay or promise anything valuable to a certain official (BISNIS, 2007).

·         Recipient – the prohibition of bribery covers only those who are foreign officers. Foreign officers are those who are officials in the foreign government, or those are officials from state-property businesses (BISNIS, 2007).

·         Business Purpose test – it is important to notice or see that a certain individual’s obtaining of his/her business is not related to any foreign government help (BISNIS, 2007).

This is an example case that caused controversy to the effectiveness of the FCPA act.

Enron Accused of an Alleged Corruption Abroad

            The federal prosecutors already made their investigation regarding to the issue about the Enron Corporation. The corporation is believed to have paid the government officials for them in order to attain contracts on its really successful operations out of the country (WILKE, 2002).

The Enron task force examined whether there was indeed made a criminal or illegal violation regarding the FCPA act; they have been studying the corporation’s liability in winning through the years to power, foreign pipelines, and other aspects (WILKE, 2002).

It is stated that in certain countries, the Enron Corporation has gathered some project which were awarded to them without competitions. They were accused that the assets that they had obtained were acquired through low market-value. These accusation were implied by the World Bank and also the by the others of government favoritisms (WILKE, 2002).

Despite all these allegations and accusations to the Enron, they still managed to plead not guilty for ever paying illegal payments and reasoned out that they know that there is a law which forbids and prohibits offering any valuable payments as to obey the law of anticorruption policy (WILKE, 2002).

To defend them, the Huston Company said that the accusations imposed were caused by rivals in the industry or by certain local political opponents. In addition to deny all the allegations, the spokesperson of the corporation said that it is not unusual for any business or business holders to undergo to this kind of downfalls specially in this kind of world which is undergoing in an unending development (WILKE, 2002).

Due to the Enron’s said act of violation, they could be drawn into stiff penalties according to the FPCA. Regarding this case, Rebecca Mark as the former senior executive of the Enron establishment might be charged also because it is said that she helped the Enron Corporation to build its international operations (WILKE, 2002).

Due to this additional accusation for the former employee of the corporation, a spokeswoman said that the former executive strictly obeyed the FPCA during her term (WILKE, 2002).

The Enron’s business decreased its sale on its trading performance and other said assets, hence the corporation managed to continue the operation in many of its pipelines (WILKE, 2002).

The Enron’s international operations consider some of the corporation’s valuable assets and were not included in their stated bankruptcy filing (WILKE, 2002).

            In this kind of case, there is one obstacle which prosecutors find difficult to overcome, and it is explained that foreign illegal acceptance of payment known as bribery is really a tough case to win because they will need to approach some foreign individuals who acts as the witnesses and who held all the documents needed in order to go with the case justly and evident reliably (WILKE, 2002).

            On my opinion, this is one of the evidences claiming that no matter how strict the law may be executed, I can say that the law is not as effective as everyone thinks of it.  It is explained that the act had been too controversial ever since it was enforced.

            The FCPA was also criticized and told that it was ineffective. The American businesses community was imposing that the FCPA will just put the US enterprise into a risk, a disadvantage for the entrepreneurial competition outside the country (GLOBALSECURITY.ORG, 2005).

Despite all of this negative feed backs, the FCPA turned to be the main model which promotes the anticorruption act and also made better the business climate in the world of continuous development (GLOBALSECURITY.ORG, 2005).


            Opposing to the main goal of the FCPA, many of the American businessman were bitterly against the act. It is explained that the FCPA caused the business industry to face the opposite results which turned the industry down in terms of the foreign business competition.

            In addition to this fact statement, the Americans were the only person who are barred or prohibited from bribery where as the other countries were not. As the negative outcome for the act, big assets and contract were given to other countries that are willing to be involved in gaining by unscrupulous means (GLOBALSECURITY.ORG, 2005).

            The FCPA is also criticized as a not effective law or act. American businessman said that FCPA indeed forbids vulgar bribery hence there are more events which bribery is done in a sophisticated or innocent way (GLOBALSECURITY.ORG, 2005).

In example to this critic is when a certain establishment pays or contributes money to charitable means, even how good the appearance may be in doing such act, they cant hide the fact that it implies the same purpose of bribing and also imposes the aim of corrupt appeal for business.

Some critics say that all the industry of foreign related businesses should be subjected to the FCPA act to avoid the unfair competitive advantage of a certain country to the competent side (GLOBALSECURITY.ORG, 2005).

According to the research study of Florence Geo-JaJa and Sharon Lee, even if the FCPA was asserted to the US foreign business, still the American products which were exported tend to be continuous in being chosen or in favor of (Macleans A. Geo-JaJa, 1999).

It is also stated in their study’s conclusion that America still stands out in the foreign business world even without committing the violation of bribery. They perform in a good competitive level and they could survive even with the strictly imposed FCPA act (Macleans A. Geo-JaJa, 1999).


On my own opinion, even if the FCPA is effective or ineffective, the US business industry can still survive through its competitiveness to other country.

Based on all the facts I’ve red about the enacted FCPA, it turned out to be ineffective and gained a lot of negative feedbacks from the American businessmen where in accordance I believe that they are right.

I believe that indeed the FCPA is ineffective, because no matter if every country enforce this kind of law; individuals and businessmen can not still deny the fact that there are still those who want to offer bribes and accept bribes.

In explanation to my statement, no matter how strict people are to enforce a law, there are some who does not comply with it hence they are willing to do illegal things for their own advantages.


            In order to create a fair and just competition in the foreign business industry, the FCPA should focus on expanding the law to all over the world; to the countries which are involved in foreign business. This is not only to enforce it but also to implement strong disciplinary actions to those who violate the act.

            They should also impose a system in a certain business or corporation that allows even lower employees to report any suspected act of violation made by higher officers.

The FCPA should create a system in which the individual who would report will not have a second thought because of his/her fear.

            FCPA can also impose collective procedures which will make sure that the employees hired in a certain business establishment are honorable individuals that won’t do such violation in accordance to the FCPA act.

            Lastly, the FCPA should also see to it that the law would not be exaggerated as to oppress the businessmen’s right to their businesses and out-of-the-country transactions.


            In this article, I have explained through my discussion about my stand in the said FCPA act which I directly opposed at.

            There have been a lot of critics made for the established act and then and there a lot of evidence was subjected to those critics. On my discussion I said that I believe that the FCPA was indeed ineffective, through my discussion I therefore conclude that on the past years that the act was enforced, it is indeed ineffective thus it placed the US business industry into the stake of disadvantages hence the act would still be in an effective use if and only if it will not be exaggerated.

            Therefore as an addition for my thesis, the act needed small revisions as to where it should focus and as to what more effective rules could it imply for the law to be more effective. An example of these additional focuses were written in my recommendation

BISNIS. (2007). Foreign Corrupt Practices Act Antibribery Provisions [Electronic Version] from

GLOBALSECURITY.ORG. (2005). CRS Report to Congress [Electronic Version] from

LLP, W. R. (2007). FCPA Handbook [Electronic Version] from


Urofsky, P., Razzano, C. L., & Cadwalader, W., Taft LLP. (2004). Title 15. Commerce & Trade

Chapter 2B Securities Exchanges [Electronic Version] from

WILKE, J. R. (2002). Enron Criminal Probe Focuses On Alleged Corruption Abroad

 [Electronic Version] from