The Foreign Corrupt Practices Act of 1977 and its Effects on U.S. Corporations

Foreign Corrupt Practices Act
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Foreign Corrupt Practices Act
The United States Congress enacted the Foreign Corrupt Practices Act in 1977 in response to some widespread reports that U.S. companies were making illegal payments to foreign governments to bribe them for business favors. In the mid-1970s, such illegal payments became rampant to the extent that they captured the attention of Congress (Golick et al., 2018). It was established that more than 400 companies based in the United States made more than $300 million in such payments (Kohli, 2018). These payments were sent either to foreign governments, politicians, or other entities to obtain some favor when it comes to business transactions. At around the same time, it also became common for firms based in the United States to send bribes to foreign governments to secure contracts. The situation became so common that some corporations could even include these bribes as expenses while preparing their financial statements.
It is against the United Constitution and values to pay bribes. Therefore, although the practice of giving bribes was rampant, it was unethical. Consequently, in 1977, Congress enacted this Act to prohibit United States firms and businesses from paying bribes to foreign entities to obtain business favor (Koehler, 2018). The Act has several provisions. Among these provisions is the Anti-Bribery provisions. These are the ones that make it unlawful to provide bribes to foreign officials. These provisions aim to prevent corruption and also avoid abuse of power worldwide. The United States government does not advocate for corruption and therefore cannot suppor...