Foreign Corrupt Practices Act

Summary of Foreign Corrupt Practices Act

A Federal law, adopted in 1977, that forbids any U.S. company, its officers, employees, directors, agents, or major stockholders to make payments to any foreign official, candidate for office, or political party as an inducement to obtain, retain, or expand business. Violation of the act authorizes fines up to one million dollars on corporate violators, as well as fines up to ten thousand dollars and/or five years in prison for individual violators. The act has been criticized for restricting opportunities for American firms to compete in countries where payments to officials are part of doing business, and such payments are made routinely by foreign competitors. Some modification of the act is anticipated.

(Main Author: William J. Miller)