Enthusiastic Enforcement, Informal Legislation: The Unruly Expansion of the Foreign Corrupt Practices Act
89 Pages Posted: 3 Sep 2010 Last revised: 8 Apr 2011
Date Written: September 2, 2010
The Foreign Corrupt Practices Act (FCPA) was enacted over 30 years ago to prohibit bribery of foreign officials by U.S. persons. In the last few years, the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) have brought dramatically more cases than was the norm for the FCPA’s first few decades, with dramatically increased penalties. At the same time, the substantive reach of the law has been extended. In short, the FCPA has been substantively rewritten – expanded – through the patterns of its recent enforcement. Expanding the reach of the FCPA can be understood as an agency response to complex developments in law, the global economy, and agency politics. Whatever the impetus, however, the transformation of the FCPA has been brought about by ad hoc enforcement actions, rather than legislation, judicial decision, or regulation. In the absence of formal process or reasoned articulation, the actual scope of the law is unclear. Consequently, businesses have little guidance in designing effective compliance programs, and may be more likely to violate the FCPA. Unruly enforcement is likely to inhibit, rather than promote, compliance. Therefore, the SEC and the DOJ should encourage compliance, and the establishment of effective compliance programs, by providing the business community with clear and general guidance on the scope of the FCPA. The article concludes with specific questions about the FCPA that the agencies should resolve.
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