The Foreign Corrupt Practices Act is a United States law that was passed in 1977. It makes it an offence for US companies and individuals to bribe foreign officials to try and gain an advantage in business.
The FCPA was introduced to target corruption and bribery around the world. It was passed at a time when bribing foreign officials in order to win contracts or to have legal matters resolved quickly and favourably was an activity that many companies were involved in.
There are two main parts to the FCPA:
The United States’ Securities and Exchange Commission (SEC) and Department of Justice (DOJ) are both responsible for enforcing the FCPA. They can prosecute those who break the law by violating – also known as breaching – the FCPA. But they also have other options if there have been violations of the Act.
It is extremely rare for such cases to go to trial. Most lead to some form of agreement or the DOJ stating – in what is called a declination letter - that it will not prosecute if the corporation voluntarily reports the possible FCPA violations to the government, makes changes to prevent it happening again and pays back (also known as disgorges) any gains it made as a result of the bribery.
But any settlement of FCPA-related allegations cannot be viewed as a painless way of avoiding prosecution. There have been a number of large, multi-billion dollar settlements concluded.
To date, there have been five FCPA settlements that have involved a billion dollars or more being paid:
The FCPA applies to both US publicly-traded companies (those that are listed on a stock exchange) and privately-held companies. It also applies to non-US individuals and companies that violate the Act while they are in the US. A company is responsible for any violations of the Act by its staff, directors and anyone else acting on its behalf.
The list of foreign officials that the FCPA covers includes:
The FCPA is important because it covers the behaviour of US companies anywhere in the world and carries severe penalties.
Any company breaching the anti-bribery provisions of the FCPA can be fined up to $2 million for each offence. Individuals - including officers, directors, stockholders and agents of companies - can be fined up to $250,000 and imprisoned for up to five years. For each violation of the accounting provisions of the Act, companies can be fined up to $25 million. Individuals can be fined up to $5 million and imprisoned for up to 20 years.
Any breach of the Act may also lead to a company having to pay large amounts in legal costs, suffering damage to its reputation and / or being excluded from bidding for future government contracts in one or more countries. There is also the risk of legal action being brought by the company’s unhappy shareholders or by other firms who did not gain the contracts that the company gained through bribery.
While the FCPA covers the use of bribery to ensure a country or organisation buys goods and services from those offering the bribe, it also covers:
Complying with the FCPA involves a company (or an individual) making sure they have taken all reasonable steps to minimise the risk of them carrying out any activity that is a breach of the Act. The US government has published a list of “red flags’’ – situations where those in business should be aware of the risk of bribery.
These red flags are:
If an offence has been committed, the following factors are likely to affect the penalty (or penalties) imposed:
Both the FCPA and the UK’s Bribery Act were devised to prevent bribery and corruption. But there are differences between them:
Until the Bribery Act came into effect, the FCPA was viewed as the most far-reaching, conclusive anti-bribery legislation in the world. But it is now the Bribery Act that is generally acknowledged as being the most comprehensive piece of legislation of its type.
The rest of Europe does now appear to be catching up with the US and UK when it comes to bribery legislation. Countries such as China and UAE have also developed their own approaches to bribery.
Anyone who is being investigated – or thinks they are about to be – regarding FCPA-related matters needs to respond promptly and seek the best available advice and representation.
At any given time, Rahman Ravelli is advising clients in investigations that involve both the FCPA and the Bribery Act. We have an internationally-recognised expertise in compiling and co-ordinating teams in the US and UK.
Those we represent in such cases benefit fully from our experience, our in-depth knowledge of the legislation and our ability to devise a “joined-up’’ strategic approach to all elements of such an investigation.
The Foreign Corrupt Practices Act (FCPA) is a United States federal statute enacted in 1977. It has two main provisions: the anti-bribery provisions, which prohibit the payment of bribes to foreign government officials in order to obtain or retain business; and the accounting provisions, which require companies subject to US securities laws to maintain accurate books and records and a system of adequate internal accounting controls. The FCPA is enforced by the US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).
The FCPA's anti-bribery provisions apply to three categories of persons: US persons and businesses (wherever they operate in the world); companies listed on US stock exchanges or required to file reports with the SEC; and foreign persons and companies that cause an act in furtherance of a bribe to be done within the territory of the United States. The accounting provisions apply to 'issuers' — companies with securities listed on US markets. Given the global reach of US capital markets, many UK and European businesses are subject to the FCPA.
The FCPA prohibits providing, offering, or authorising anything of value to a foreign official, a foreign political party, or a candidate for foreign political office, with the intent to influence the official's actions or secure an improper business advantage. 'Foreign official' is interpreted broadly by US authorities to include employees of state-owned enterprises, which has significant implications for businesses operating in sectors such as energy, defence, healthcare, and telecommunications where state-owned entities are common counterparties.
FCPA penalties are substantial. For companies, criminal fines can reach twice the gross gain or loss resulting from the misconduct, with no statutory cap under the Alternative Fines Act. Civil penalties are also available to the SEC. Individual employees and executives can face criminal fines of up to $250,000 per violation and imprisonment of up to five years. In practice, US authorities have imposed billions of dollars in combined penalties in major FCPA resolutions, with a number of individual cases exceeding $1 billion.
Yes. US authorities have aggressively pursued non-US companies for FCPA violations where there is any US nexus — including use of US dollars in transactions, use of US-based banks or email servers, or the involvement of a US person. Many of the largest FCPA settlements have involved non-US companies, including major UK, European, and Asian multinationals. UK businesses operating internationally should therefore conduct regular FCPA risk assessments and maintain robust anti-corruption compliance programmes.
The US FCPA and the UK Bribery Act 2010 are the two most significant anti-corruption statutes globally, and they often overlap. Both may apply to the same underlying conduct, and the DOJ and SFO have a well-established tradition of cooperation and joint investigation in major corruption cases. Companies facing FCPA scrutiny in the US frequently face parallel or subsequent SFO investigations in the UK. A coordinated legal response across both jurisdictions, with closely aligned legal teams, is essential to managing simultaneous proceedings.
The accounting provisions of the FCPA require covered companies to keep accurate books and records that fairly reflect the company's transactions, and to maintain a system of internal accounting controls sufficient to prevent and detect violations. These provisions are significant because they can be violated even where no bribe is actually paid — for example, where payments are recorded inaccurately or controls are inadequate. Importantly, the SEC enforces the accounting provisions on a civil basis, meaning the standard of proof is lower than for criminal anti-bribery cases.
The FCPA's extraterritorial reach means that UK companies operating internationally face real exposure to US federal prosecution even for conduct with limited US connections. FCPA investigations are lengthy and expensive, and the consequences of mishandling the response — including failing to make timely voluntary disclosure or providing inconsistent accounts to US and UK authorities — can be severe. Specialists in FCPA defence understand the DOJ and SEC's expectations, can manage the complex interplay with UK proceedings, and provide practical, informed advice at every stage.