The Foreign Corrupt Practices Act Revisited: Laws to Improve Global Marketing Practice

Abstract

The post Watergate environment called for prohibition of bribes and gifts as a method of influencing business and government decisions in the U.S. and abroad. The Foreign Corrupt Practices Act (1977), was passed to better define appropriate ethical and legal behavior, limiting sales fees or bribes to low ranking government officials and mandated financial reporting of such fees. Non-compliance could result in $1 million corporate fines and $10,000 plus five years in jail for the individual. Despite fears of U.S. company non-competitiveness, U.S. exports to "bribe prone" countries increased more rapidly than "non-bribe prone" countries. A General Accounting Office Survey (1981) found little evidence of lost business. The issue of moral imperialism, forcing U.S. standards on others, remains unresolved, with only Sweden passing similar legislation. The Omnibus Trade Act (1988) was passed to clarify several issues and allowed transaction (facilitating) bribes. Case law has also strengthened the legislation, allowing competitors to sue for lost business, if bribery swayed the contract. Enforcement responsibility has been extended to all companies.