A Political Economy Approach to Reforming the Foreign Corrupt Practices Act

68 Pages Posted: 20 Mar 2012 Last revised: 8 Apr 2013

See all articles by Matthew C. Turk

Matthew C. Turk

Indiana University - Kelley School of Business

Date Written: 2013


Prohibitions against transnational bribery suffer from a paradoxical problem of simultaneous over- and under-enforcement. On the “supply-side,” U.S. enforcement against bribery through the Foreign Corrupt Practices Act (FCPA) is increasingly over-aggressive, while enforcement by other developed economies is nearly non-existent. On the “demand-side,” governments of developing economies where bribes take place often have neither an interest in nor the capacity to rein in their corrupt officials.

In light of these shortcomings, this Article proposes reforming the FCPA as follows. First, the SEC should cease paying profits disgorged by corporate defendants into the U.S. Treasury. Second, disgorgements should instead be transferred to the Host country where bribery took place, conditional on the Host government’s cooperation with the FCPA investigation. And third, if cooperation is not forthcoming, disgorgement proceeds should be transferred to the Organisation for Economic Co-operation and Development (OECD) Working Group — an international organization designed to facilitate the enforcement of the OECD Convention on Combating Bribery. Reforming FCPA enforcement in this manner would re-allocate the proceeds from anti-bribery regulation on a global scale so as to properly align the incentives of the parties involved and provide greater access to the information required for effective enforcement.

Suggested Citation

Turk, Matthew C., A Political Economy Approach to Reforming the Foreign Corrupt Practices Act (2013). Northwestern Journal of International Law & Business, Vol. 33, p. 325, 2013, Available at SSRN: https://ssrn.com/abstract=2025697 or http://dx.doi.org/10.2139/ssrn.2025697

Matthew C. Turk (Contact Author)

Indiana University - Kelley School of Business ( email )

1309 E. 10th Street
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Bloomington, IA 47405
United States

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