The Foreign Corrupt Practices Act of 1977 (FCPA) (, et seq.) is a United States federal law that prohibits U.S. citizens and entities from bribing foreign government officials to benefit their business interests.
The anti-bribery provisions of the FCPA have applied to all U.S. persons and certain foreign issuers of securities. Following amendments made in 1998, the Act also applies to foreign firms and persons who, either directly or through intermediaries, help facilitate or carry out corrupt payments in U.S. territory.
Pursuant to its anti-bribery purpose, the FCPA amends the Securities Exchange Act of 1934 to require all companies with securities listed in the U.S. to meet certain accounting provisions, such as ensuring accurate and transparent financial records and maintaining internal accounting controls.
The FCPA is jointly enforced by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), which apply criminal and civil penalties respectively.
Since its passage, the FCPA has been subject to controversy and criticism, namely whether its enforcement discourages U.S. companies from investing abroad. The Act was subsequently amended in 1988 to raise the standard of proof for a finding of bribery. In a 2025 survey of economists, there was overwhelming agreement among economists that ending enforcement of the act would increase global levels of bribery and corruption and none of the surveyed economists held that it would increase the long-term profits and competitiveness of US businesses.
On February 10, 2025, President Trump paused enforcement of the FCPA, leading to a boost in the stock value of companies historically linked to corrupt practices. The pause was lifted in a June 2025 memorandum under new guidelines.
Provisions and scope The core aim of the FCPA is to prohibit companies and their individual officers from influencing foreign officials with any personal payments or rewards. FCPA applies to any person who has a certain degree of connection to the United States and engages in corrupt practices abroad, as well as to U.S. businesses, foreign corporations trading securities in the U.S., American nationals, citizens, and residents acting in furtherance of a foreign corrupt practice, whether or not they are physically present in the U.S. This is considered the nationality principle of the Act. Any individuals involved in these activities may face prison time. In the 1992 case US v. Liebo, the DOJ filed a case against the vice president in charge of the Aerospace division of Napco International Inc. for violations in accordance with the FCPA. After pleading guilty, Liebo was sentenced to a term of 18 months for the offense violating FCPA's anti-bribery provisions.
The FCPA also extends to foreign companies and individuals who engage in corrupt practices while in the United States, even if the actual bribery occurs outside the country. This extraterritorial reach is based on the principle of territorial jurisdiction. For example, in 2013, French oil and gas company Total S.A. agreed to pay a $245.2 million penalty to settle FCPA charges related to bribes paid to an Iranian official to obtain oil and gas concessions. Although the bribery scheme occurred entirely outside the United States, the SEC and DOJ asserted jurisdiction because Total had registered securities with the SEC and made corrupt payments through U.S. banks.
In the case of foreign natural and legal persons, the Act covers their deeds if they are in the U.S. at the time of the corrupt conduct. This is considered the protective principle of the Act. Moreover, the FCPA governs not only direct payments to foreign officials, candidates, and parties, but payments made to any other recipient in furtherance of influencing a foreign official, candidate, or party. These payments are not restricted to monetary forms and may include anything of value. This is considered the territoriality principle of the act.
The FCPA's prohibition on bribes extends beyond simple monetary payments. The act defines bribes as "anything of value," which encompasses a wide range of tangible and intangible benefits. This can include gifts, travel expenses, entertainment, job/internship offers, scholarships, and charitable donations. For example, in 2012, Eli Lilly and Company, a U.S. pharmaceutical firm, settled an FCPA case involving improper payments made through its subsidiaries to foreign officials in Russia, Brazil, China, and Poland. The bribes included gifts, travel, and entertainment expenses, such as spa treatments, jewelry, and a trip to the 2006 World Cup. Lilly agreed to pay disgorgement of $13,955,196, prejudgment interest of $6,743,538, and a penalty of $8.7 million for a total payment of $29,398,734.
The FCPA is subject to ongoing scholarly and congressional debate regarding its effects on international commerce. Scholars have found that its enforcement discourages U.S. firms from investing in foreign markets. This coincides with the well established observation that companies engaging in mergers and acquisitions in emerging markets face a uniquely increased level of regulatory and corruption risk.
Persons subject to the FCPA
Issuers The term "issuer" is used to describe any U.S. or foreign corporation that has a class of securities registered, or that is required to file reports under the Securities and Exchange Act of 1934 (15 U.S.C. § 78dd-1)
Domestic concerns Refers to any individual who is a citizen, national, or resident of the U.S. and any business entity organized under the laws of the U.S. or one of its states, or having its principal place of business in the U.S. (15 U.S.C. § 78dd-2)
Any legal person Covers both enterprises and individuals (15 U.S.C. § 78dd-3)
History In 1975 and 1976, American public life was shaken by dozens of scandals involving bribery of foreign officials by prominent American companies. These disclosures, driven by Securities and Exchange Commission (SEC) enforcement actions and high-profile public hearings by the Church Subcommittee on Multinational Corporations, made headlines for months causing serious problems for foreign leaders important to the United States. Some of the most sensational disclosures involved corrupt payments by Northrop, Lockheed, United Brands, Gulf Oil, and Mobil in Saudi Arabia, Japan, Honduras, Korea, Italy, and the Netherlands. The headlines were punctuated by suicides of corporate executives and foreign officials. One CEO jumped out a window. A European dignitary stepped in front of a streetcar.Feldman, M. B., The Association for Diplomatic Studies and Training Foreign Affairs Oral History Project: Mark B. Feldman , interviewed by Robin Matthewman, p. 97, initial interview date 28 April 28, 2021, accessed 3 July 2022
Investigations by the SEC in the mid-1970s revealed that over 400 U.S. companies admitted making questionable or illegal payments in excess of $300 million to foreign government officials, politicians, and political parties. The abuses ran the gamut from bribery of high foreign officials to secure some type of favorable action by a foreign government, to so-called facilitating payments that were made to ensure that government functionaries discharged certain ministerial or clerical duties. If the official has no choice but to bribe, and bribery is legal in the country, bribing is seen as necessary for "greasing the wheels", i.e. facilitating the conduct of business. Among the major examples of such practices were the Lockheed bribery scandals, in which officials of aerospace company Lockheed paid foreign officials in several countries to favor their company's products,Rich, Ben R. and Janos, Leo. Skunk Works: A Personal Memoir of My Years at Lockheed. New York: Little Brown & Co., 1994, . and the Bananagate scandal, in which Chiquita Brands bribed the president of Honduras for more favorable government policies.
While primarily a domestic scandal, Watergate also had international implications. Investigations revealed that slush funds used for political espionage against the Democrats were also used for bribing foreign officials. This linkage highlighted the pervasive nature of corruption in U.S. businesses and politics. These scandals notably involved substantial bribes paid to foreign officials to secure business advantages overseas, profoundly damaging the reputation of American businesses and, by extension, the U.S. government. This period highlighted a serious need for legislative action to address these corrupt practices. Investigations revealed that President Richard Nixon's reelection campaign, and other corporate entities, utilized funds for illicit purposes, including international bribery. This series of events not only led to President Nixon's resignation but also propelled a national and legislative push towards greater transparency and ethics in both domestic and international business dealings.
In response to these high-profile revelations, Congress enacted the FCPA to bring a halt to the bribery of foreign officials and to restore public confidence in the integrity of the American business system. The Act was signed into law by President Jimmy Carter on December 19, 1977. The enactment of the FCPA was a pivotal moment in U.S. legal history, as it marked the first significant effort to legally prohibit the bribery of foreign officials. It set a standard for moral leadership and integrity in international commerce, underscoring the importance of honest business practices in fostering stable and fair global markets. The first criminal enforcement action under the Act was against Finbar Kenny. Kenny had advanced Sir Albert Henry, Prime Minister of the Cook Islands, $337,000 from postage stamp revenue for Henry's re-election campaign. In 1979, Kenny became the first American to plead guilty of violating the FCPA and was fined $50,000.
Amendments The Act was first amended by the Omnibus Trade and Competitiveness Act of 1988, where Title V is known as the "Foreign Corrupt Practices Act Amendments of 1988". It introduced a "knowing" standard in order to find violations of the Act, encompassing "conscious disregard" and "willful blindness." Other amendments were for "bona fide", "reasonable" and lawful gifts under the laws of the foreign country. This meant that individuals and companies could be held liable for corrupt practices if they purposefully ignored the facts or circumstances that would lead a reasonable person to conclude that bribery was likely to occur. The amendments clarified that certain types of payments or gifts that are bona fide, reasonable, and lawful under the laws of the foreign country do not constitute an offense under the FCPA. This was important for U.S. businesses engaging in international operations where cultural norms often include gift-giving as a part of business etiquette.
The second amendment to the FCPA, known as the International Anti-Bribery Act of 1998, was a significant development aimed at enhancing the United States' commitment to combating global corruption. This amendment was designed to implement the provisions of the OECD Anti-Bribery Convention, which sought to create a unified international approach to fighting bribery of foreign public officials in international business transactions. One of the primary changes introduced by the 1998 amendment was the extension of the FCPA's jurisdiction to include certain foreign persons and entities. This meant that not only U.S. citizens and companies but also certain non-U.S. persons and companies acting in furtherance of a corrupt payment while in U.S. territory could be held accountable under the FCPA. This included making it a criminal offense to bribe foreign public officials to obtain or retain business or any improper advantage in the conduct of international business. The 1998 amendments increased the penalties for violations and strengthened enforcement measures.