Solicitation, Extortion, and the FCPA
Joseph W. Yockey
University of Iowa College of Law
July 27, 2011
Notre Dame Law Review, Vol. 87, p. 781, 2011
U Iowa Legal Studies Research Paper No. 11-30
The U.S. Foreign Corrupt Practices Act (FCPA) prohibits firms from paying bribes to foreign officials to obtain or retain business. It is one of the most significant and feared statutes for companies operating abroad. FCPA enforcement has never been higher and nine-figure monetary penalties are not uncommon. This makes the implementation of robust FCPA compliance programs of paramount importance. Unfortunately, regardless of whether they have compliance measures in place, many firms report that they face bribe requests and extortionate threats from foreign public officials on a daily basis. The implications of these demand-side pressures have gone largely unexplored in the FCPA context. This Article helps fill that gap. First, I describe the nature and frequency of bribe solicitation and extortion to illustrate the scope of the problem and the costs it imposes on firms and other market participants. I then argue that current FCPA enforcement policy in cases of solicitation and extortion raises several unique corporate governance and compliance challenges, and ultimately poses a risk of overdeterrence. Though these concerns can be partially addressed through enhanced statutory guidance, I conclude by urging regulators to shift some of their focus from bribe-paying firms in order to directly target bribe-seeking public officials. Confronting the market for bribe demands in this way will help reduce corruption in general while also allowing employees and agents to spend less time worrying about how to respond to bribe requests and more time on legitimate, value-enhancing transactions.
Number of Pages in PDF File: 47
Keywords: Foreign Corrupt Practices Act, FCPA, Corporate Governance, Compliance, Bribery, Extortion
JEL Classification: K22, K14, K33, K42, L21Accepted Paper Series
Date posted: July 28, 2011 ; Last revised: February 29, 2012
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