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New Report: The world's policeman in FCPA enforcement

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The 35-year-old Foreign Corrupt Practices Act (FCPA) is well-intentioned legislation designed to root out bribery abroad by U.S. businesses, but in recent years, the Department of Justice (DOJ) has stretched the statute in an effort to become the world's policeman. A new Manhattan Institute report released today and authored by Paul Enzinna, chronicles how FCPA enforcement has exploded over the past decade thanks to expansive interpretations by the DOJ that are both unjustified by the statute and lacking in judicial oversight. The report makes a strong case for legislative reform in clarifying the statute's reach.

The DOJ has aggressively expanded the FCPA by:

(1) Interpreting the statute's jurisdiction to include foreign companies for foreign activities linked to the U.S. only by use of dollars in foreign transactions or the routing of foreign web-based communications through U.S.-based e-mail servers;

(2) Interpreting "foreign official" to include individuals employed by market enterprises with state ownership, including doctors and other health providers in countries with national medical systems;, and

(3) Interpreting the statute's prohibition on payments "to obtain or retain business" to include picayune payments which the plain language of the statute clearly exempts.

The broad sweep of liability under the DOJ's interpretation of the FCPA, along with the high costs associated with potential criminal conviction (including pressure on stock prices and impairment to obtaining credit) have ensnared many U.S. and foreign businesses and led them to enter into "deferred-prosecution agreements" (DPAs) or "non-prosecution agreements" (NPAs) with the DOJ--including hundreds of millions of dollars in fines and significant changes to business practice--rather than fight controversial FCPA cases in court. NPAs typically are not filed with a court., and DPAs may be, but generally receive little judicial oversight.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.