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The Foreign Corrupt Practices Act; part one

The United States has enacted federal laws to regulate certain international trade actions. Companies in California and elsewhere in the country may find themselves under investigation if they do not take care to become familiar with the ways these laws may intersect with their international business transactions.

According to the U.S. Securities and Exchange Commission, since 1977, the U.S. Department of Justice and the SEC have been enforcing the Foreign Corrupt Practices Act to prevent U.S. companies from bribing foreign officials in order to gain business.

The anti-bribery provisions

The American Bar Association explains that this component of the law is designed to keep companies from seeking to obtain or retain international business by bribing foreign officials. Bribery includes the following:

  • Payment of money
  • An offer or promise of money
  • Authorization of payment
  • An offer or promise something of value, such as a lavish gift, or the payment of travel expenses
  • The provision of something of value

The conduct in question does not have to take place from the United States. The jurisdiction over U.S. companies extends to any foreign bribery scheme that occurs in the U.S. through any method of interstate communication, or schemes that occur outside the U.S. through methods other than interstate commerce.

The accounting provisions

The FCPA also addresses how issuers must keep their books and records. A bookkeeping system must reflect the issuer's dispositions of assets and transactions with accuracy and transparency. Issuers must also set up internal controls so that a firm's management has full control of and responsibility for the company's assets. The accounting component of the FCPA applies to issuers, but not to private companies.

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