Ironic Corruption: Campaign Donations and FCPA Enforcement

Abstract

Ironically, politicians may be trading favors for campaign contributions with respect to the enforcement of the Foreign Corrupt Practices Act (“FCPA”), a foreign bribery law. Is there corruption in the enforcement of the U.S. government’s far reaching foreign corruption statute? The evidence suggests there may be. New research shows a spike in campaign donations by companies who are indicted for violations of the FCPA. The FCPA is a U.S. law that prohibits U.S. companies, companies listed on a U.S. stock exchange, and certain other covered entities and persons from bribing foreign government officials in order to solicit or retain business. The FCPA is widely viewed as an aggressive U.S. law which attempts to regulate corruption occurring abroad. Yet, it is possible that the decision as to which companies to prosecute for FCPA violations could itself be subject to political rent seekers. My research shows that companies which donated to either the Republicans or Democrats received a 15% lower FCPA fine than the average company.

Keywords: FCPA, campaign donations, corruption