CJAC: Civil Justice Association of California

The Foreign Corrupt Practices Act: Time for Reform

By Todd Roberson on 08/31/2011 @ 11:55 PM

Tags: Legal Climate, Legal Reform

In 1977, the Foreign Corrupt Practices Act (FCPA) was approved by Congress and signed into law to prevent companies from bribing foreign officials to receive new or continuing business from those officials' countries- a noble enough goal. However, over time, the vagueness of the law and a broad interpretation by the U.S. Department of Justice, which enforces FCPA and pursues damages from violators, has made American businesses that operate in other countries vulnerable to charges that go beyond the intent of the original FCPA. For instance, a company can be held liable for the actions of a rogue employee or subsidiary. It also unclear who exactly qualifies as a "foreign official."

Not only is this costly for the businesses that have to deal with these charges, it also leaves all multinational businesses in a fearful spot.

We'd encourage you to take a look at two recent articles that highlight the problem. The first, Congress, Get Out Your Pencils: FCPA Rules Are Ripe for Revision, was written by attorney D. Michael Crites for the National Law Review and offers four fixes to FCPA. The second is a Reuters article that explains how this year companies are fighting back against FCPA charges and going to trial, rather than settling which had been the trend. And as Reuters reports, of the two FCPA trials there have been so far this year, "neither has cast the government in a flattering light."

Congress has been receiving quite a bit of feedback of late from businesses hoping for a legislative fix in the final months of this year's session. Let's hope it happens.

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