Originally from:
The Practice of International Litigation - 2nd Edition - Looseleaf
The Practice of International Litigation - 2nd Edition - Electronic
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Private Claims Under the Foreign Corrupt Practices Act
Lawrence W. Newman and Michael Burrows
Among the few federal statutes governing the conduct of U.S.
businesses abroad is the Foreign Corrupt Practices Act (“FCPA”).
Because extraterritorial acts which violate the FCPA can cause damage to
individuals and businesses in the United States, the issue of whether a
private right of action exists under the FCPA is significant. A recent case in
the United States District Court for the Southern District of New York is
one of a small number of cases that have examined this point.
During the mid-1970’s the investigations conducted by the Office of the
Watergate Special Prosecutor revealed a widespread practice by U.S.
companies of secretly using corporate funds to make illicit domestic
political contributions or bribing foreign officials to obtain business
abroad. From this discovery came increased concern that the bribery of
foreign officials and related scandals would impact negatively upon United
States foreign policy and reduce the credibility of U.S. corporations in the
world marketplace.
Consequently, in December 1977 Congress enacted the FCPA, making
it a crime for U.S. businesses, their officers, director’s, employees, agents or
stockholders to bribe, directly or indirectly, foreign officials for the purpose
of obtaining, retaining or directing business. The FCPA also imposed
upon U.S. businesses that issue securities registered with the Securities and
Exchange Commission certain record-keeping requirements and internal
accounting controls designed to prevent undisclosed payoffs.
In 1988 Congress amended the FCPA to make clearer the scope of the
statute's prohibitions, thereby preventing unnecessary loss of national
competitiveness, to provide guidance to corporations and their employees
regarding compliance and to increase penalties for violations.
Under the FCPA U.S. corporations can be fined a maximum of
$2,000,000 for violations of the anti-bribery provisions. Individuals such
as officers, directors, employees or stockholders of U.S. corporations can
be fined up to $100,000 or imprisoned for not more than five years, or
both, for FCPA violations. Civil penalties of $10,000 per violation can
also be imposed on corporations and individuals.
Lawrence W. Newman has been a partner in the New York office of Baker & McKenzie since 1971, when, together with the late Professor Henry deVries, he founded the litigation department in that office. He is the author/editor of 4 works on international litigation/arbitration.
Michael Burrows, Formerly, Of Counsel, Baker & McKenzie, New York.
