Executive Summary

In 1977, the United States prohibited bribery of foreign officials by passing the Foreign Corrupt Practices Act ("FCPA"). The FCPA is comprised of two components: antibribery provisions and accounting provisions. The antibribery provisions prohibit U.S. companies and persons from bribing foreign government officials to obtain or retain business. A bribe is any payment of money, any gift (or the promise of a payment or gift), or anything of value made with corrupt intent to either influence a foreign government official to act (or fail to act) in violation of his lawful duty, or to secure any improper advantage. In the U.S. government's view, "any improper advantage" includes giving things of value to purchase goodwill, even if express action or inaction by the government official is not sought. "Foreign official" is broadly construed and covers elected officials, consultants with government positions, employees of government-owned companies, officials in political parties, or anyone acting on behalf of a public international organization (such as the United Nations). Because the FCPA prohibits both direct and indirect payments, U.S. companies are prosecuted for bribes offered or paid through their foreign subsidiaries, business partners, or agents.

The FCPA's record-keeping provisions require U.S. issuers (publicly held companies) to "make and keep books, records and accounts, which in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuers." A company is liable for mischaracterizing or failing to record a transaction on a company's books, or for failing to maintain proper accounting controls that prevent a mischaracterization or omission. Frequently, when prosecutors cannot prove "corrupt intent" to establish bribery, the transaction at issue was nevertheless inaccurately entered in a company's books, allowing an alternate means of prosecution. . . .

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