The Corruption Law That Scares the Bejesus Out of Corporate America

[xchrom]

http://www.theatlantic.com/business/archive/2012/04/the-corruption-law-that-scares-the-bejesus-out-of-corporate-america/256314/

Up until this past weekend, there was a very good chance that the average New York Times business page reader had never heard of the Foreign Corrupt Practices Act. It's the sort of law that the public ordinarily doesn't have much reason to think about, even as it keeps corporate lawyers and c-suite executives tossing in their sleep. But thanks to the the paper's damning investigation into Walmart's cover-up of bribery at its Mexican subsidiary, this low-key statute is suddenly getting its turn in the spotlight.

The statute, generally referred to as the FCPA, was passed in 1977 and bans individuals and companies from bribing foreign government officials to win business or influence their decision making. Those who run afoul of the law can face large fines or prison time. For decades after it was enacted, it was barely used. But in the last five years, it has evolved from an obscure vestige of the post-Watergate era into into one of the most talked about and feared laws in America's board rooms.

Just ask Walmart.

CHILD OF THE WATERGATE SCANDAL

There was a time when American businesses didn't fret much about foreign bribery, much less what federal prosecutors might do about it. Rather, it was considered an ugly but necessary aspect of doing business in the graft-plagued developing world. That changed in the wake of Watergate.

The path from Nixon's dirty tricks to the problem of foreign corruption was a bit roundabout, to say the least. At the tail end of the Watergate congressional hearings, a group of business executives testified to making illicit payments to the president's re-election campaign. Their admission perked the interest of Stanley Sporkin, the head of the Securities and Exchange Commission's enforcement division, who wondered how those contributions would have been accounted for on the companies' books. He began an investigation, which eventually revealed that the same slush funds used to funnel money to political campaigns at home were also used to pay bribes abroad. The federal inquiry expanded, and more than 400 corporations eventually confessed to collectively making more than $300 million worth of corrupt payments overseas.

[MrYikes]

1. Yes

The penalty for this type of bribery is two times the profit derived. For wally that is several billion.

[tech3149]

2. It's funny how so much of the downfall of the nation

can be traced back to Nixon and Watergate.

[oldhippydude]

3. actually

it really goes back t the gilded age, and before...post watergate we had a number of reforms, that Carter help push through.. only to be gutted by RWR...

a lot of that stuff came out of the Church committee, post watergate

[FreeJoe]

4. My experience

I work for a company that does business in a large number of foreign countries, often developing countries. We get told repeatedly about the FCPA and how critical it is that we follow it. Crossing the FCPA is one of the few sins here for which their is no chance that anyone will save you. FCPA and not engaging in insider trading are the two things that I think we are lectured on the most.