38 Journal of Corporation Law 325, 2013
57 Pages Posted: 18 Jan 2013 Last revised: 30 Jan 2013
Date Written: January 16, 2013
The recent rise in enforcement under the U.S. Foreign Corrupt Practices Act (FCPA) has led to a vigorous debate about the need for reform. Critics say the statute is overenforced and harms shareholders. Regulators disagree and argue in favor of the status quo. This Article examines both sides of the FCPA reform debate and finds them wanting on several levels. First, a variety of factors suggest that critics’ fears of overenforcement are often exaggerated. That said, proponents of existing enforcement efforts who believe that nothing needs to change are also mistaken. Instead of overenforcement, there is a risk that the FCPA is being underenforced. Instead of encouraging firms to develop anticipatory and sustainable compliance programs, current enforcement policy incentivizes a focus on static programs that are incapable of addressing the dynamic risk of corruption. Finally, the present regulatory model fails to adequately address how gaps in international anti-corruption enforcement pose unique compliance challenges on the domestic front.
This Article seeks win-win solutions to these problems by recommending a shift of focus toward regulatory strategies designed around principles of collaboration and experimentation that fall within the category of “new governance.” Through a governance-based approach to regulation, firms are expected to better institutionalize context-specific compliance tools developed in consultation with the state and other actors. This approach — when ongoing and initiated outside the context of a specific enforcement action — ought to produce more effective and efficient self-regulation and fewer instances of bribery. The public−private learning process envisioned by new governance should also enhance the United States’ efforts to promote international anti-corruption norms and help level the playing field for American firms.
Keywords: Foreign Corrupt Practices Act, FCPA, Corporate Governance, Compliance, Bribery, New Governance, Securities Regulation
Suggested Citation: Suggested Citation
Yockey, Joseph W., Choosing Governance in the FCPA Reform Debate (January 16, 2013). 38 Journal of Corporation Law 325, 2013; U Iowa Legal Studies Research Paper No. 13-8. Available at SSRN: https://ssrn.com/abstract=2202277