The Foreign Corrupt Practices Act & Corporate Philanthropy: Rethinking the Regulations

Abstract:     
American companies bring US innovation and capital to all corners of the globe. The US corporate presence abroad is seen not only in oil rigs and factories, but also in corporate development projects and humanitarian relief efforts.

When the 2010 earthquake hit Port-au-Prince, Haiti, US companies donated over $146.8 million to the relief effort. Despite this impressive display of global engagement, commentators suggested that the US anti-corruption laws had discouraged corporations from greater involvement. Even with the laws in force, however, reports of corruption in the relief effort soon surfaced, derailing Haiti’s recovery. Foreign aid that feeds corruption will never achieve sustainable growth, but development efforts will similarly fail if US anti-corruption laws discourage corporate philanthropy.
This Comment analyzes the application of the Foreign Corrupt Practices Act (“FCPA”) to international corporate charity. It shows how the FCPA’s ambiguous nature has the unfortunate effect of being both over- and under-inclusive, discouraging bona fide charity while at the same time failing to capture corrupt donations.

This Comment proposes a modification to FCPA enforcement: creating a Safe Harbor Option. This will offer businesses the opportunity to “buy” a rebuttable presumption of legitimacy for their charitable donations by publically disclosing the payments, projects, and recipients of their philanthropy. Granting a presumption of legitimacy to disclosed donations will ameliorate many of the over-inclusive aspects of the FCPA. The increased disclosure will allow the public to monitor corporate charity and question suspicious gifts, ameliorating the under-inclusive aspects of FCPA enforcement.

A greater emphasis on disclosure-based anti-corruption law will encourage robust and honest corporate philanthropy that will support long-lasting and sustainable development around the world.

Number of Pages in PDF File: 39

Keywords: FCPA, Foreign Corrupt Practices Act, Dodd-Frank Section 1504, disclosure, donation, charity, informational regulation, corruption, philanthropy, corporate social responsibility, bribery

Accepted Paper Series