Learn About Illicit Financial Flows
Key Terms

U.S. Department of Justice and Securities and Exchange Commission Release FCPA Guidance Manual

November 14, 2012

By EJ Fagan

EJ Fagan was New Media Coordinator for the FTC from 2011-2013. He is now Deputy Communications Director for Global Financial Integrity. You can follow him on Twitter @ejfagan.

flickr / John Linwood

Today, the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) released long-awaited guidance [PDF] on Foreign Corrupt Practices Act (FCPA) enforcement. The FCPA prohibits U.S. multinationals from bribing foreign officials in almost all cases. It is considered the keystone anti-bribery law in the world, and has been vigorously enforced over the past decade by the U.S. Department of Justice, after a spotty record of enforcement since its 1977 passage.

The guidance, which is really a handbook for anyone concerned about FCPA compliance, lays out detailed criteria of what DOJ is looking for companies to do and not do. The full document can be downloaded here. Joe Palazzolo at the Wall Street Journal summarizes the document:

But let’s cut to the chase. Broadly, the guidance recites positions long held by the government and avoids the firm policy pronouncements sought by the U.S. Chamber of Commerce and other critics of the law.

You’ll find some meat in the “gifts, travel and entertainment” section (page 15). There, the agencies suggest –note: they do not promise — that paying for a foreign official’s cab fare or buying him or her a cup of coffee wouldn’t alone trigger an FCPA investigation.

Of course, we already knew that. DOJ isn’t interested in prosecuting companies who buy a foreign official a cup of coffee while having a routine meeting with a foreign official. But at least now that is officially written down, so anti-FCPA groups will not be able to use it as an excuse to oppose the law. The purpose of the FCPA is to prevent U.S. companies from going out and using public bribes as a competitive advantage in doing business abroad, instead of following the rules and selling a better product than their competition. This was always the case, but the guidance makes it more clear.

A coalition of civil society groups, including Task Force members Global Financial Integrity and Global Witness, released a statement today welcoming the guidance:

The organizations are particularly pleased with the DOJ and SEC’s inclusive, consultative process for drafting the guidance.  They held extensive meetings with interested organizations and investors, as well as major companies and industry groups, to discuss their concerns and expectations.  According to Sarah Pray, Senior Policy Analyst at the Open Society Foundations, “The guidance seems like a fair balance between business’s desire for clarity and civil society’s concern that the government avoid hamstringing its own ability to prosecute an offense as complex as international bribery.”

Recent high-profile corruption cases have brought to the forefront the importance of maintaining a robust FCPA. “Bribery takes many forms but is encouraged by a corporate culture of willful ignorance,” said Stefanie Ostfeld, Policy Advisor with Global Witness. “Details have been revealed about how Wal-Mart’s executives allegedly tried to insulate its top management from its subsidiaries’ daily decisions, which allowed it to consolidate its market share through corrupt payments in Mexico and elsewhere.”

Hopefully, this will address the concerns of the FCPA’s industry opponents, and they will stop trying to introduce legislation that would gut the law. I’m not holding my breath, though. We’ll keep you updating as the picture surrounding the guidance becomes more clear.

AttributionNoncommercialShare Alike Some rights reserved by John Linwood

Share

Disclaimer: Unless specifically stated to be the views of the Financial Transparency Coalition, the opinions expressed on this blog are solely the opinions of the individual blogger and are not necessarily those of the Financial Transparency Coalition.

Latest Press Releases

TED Prize Winner Charmian Gooch Announces Global Campaign to Abolish Anonymous Companies

Global Witness · March 19, 2014

Vancouver, Canada, March 18, 2014 –This year’s TED Prize winner – Charmian Gooch of Global Witness – has announced that she will use the prestigious million-dollar award “to make it impossible for criminals and corrupt dictators to hide behind anonymous companies.” The announcement was made live and online from the TED stage in Vancouver, with support from leading members of the business, political, law enforcement and campaigning community.

European Parliament Gives Overwhelming ‘yes’ Vote to End Secret Corporate Ownership

Financial Transparency Coalition · March 11, 2014

Joint NGO Media Reaction Financial Transparency Coalition – Eurodad – Global Witness – Transparency International EU Office – Oxfam Brussels, March 11, 2014 – Today, the European Parliament endorsed the creation of public registers of who really owns companies, trusts and other legal structures. This will make it much harder for criminals, tax evaders, corrupt politicians and other money launderers to hide their identity, and their illicitly-acquired assets, behind anonymous companies and trusts.

NGOs welcome MEPs’ vote for ground-breaking changes to fight money laundering

Financial Transparency Coalition · February 20, 2014

Joint NGO media reaction Financial Transparency Coalition – Eurodad - Global Witness - Oxfam A cross political party agreement in the European Parliament ...