Summary:
This paper establishes novel evidence on the influence of politicians’ electoral incentives in shaping foreign trade. Using exogenous variation in the timing and geographic location of U.S. Congressional elections, we find that the probability of a Foreign Corrupt Practices Act (FCPA) enforcement action against foreign firms located in a given Senator’s state increases significantly pre-election, spiking over 200%, with no commensurate increase for equivalently global (but domestically-headquartered) firms in that same Senator’s state. Using hand-collected case-level data from the SEC and DOJ, we observe these cases to be weaker overall, along with being brought significantly more often pre-election when the foreign firms are in less important industries in the Senator’s state, and when they have a smaller overall US presence. This spike in foreign firm targeting is accompanied by a significantly larger spike in traditional and social media coverage (relative to US firms) coupled with sharply negative sentiment. Further these enforcement actions and media spikes are associated with electoral implications, leading to greater vote-shares and better poll results for Senators. Moreover, the FCPA enforcement actions have real impacts on firms: such as a 10% reduction in market value surrounding enforcement actions against foreign firms, along with a significant decrease in credit ratings.
Summary:
The Foreign Corrupt Practices Act (FCPA) has become a major focus for corporations, the Securities and Exchange Commission (SEC), and the Department of Justice (DOJ), as indicated by the dramatic increase in the number of FCPA enforcement actions and the level of civil and criminal penalties. Prior regulatory practice shows that the SEC and the DOJ struggle not only to evaluate the severity of a company's FCPA violation, but also to establish the penalty amount. Given the difficulty in assessing penalties, the severity of a company's FCPA violation at times appears mismatched with the size of the penalty. Leveraging signaling theory, this study predicts and finds that when a company's FCPA violation severity and the size of the penalty imposed are mismatched, investors experience ambiguity in assessing the company's future prospects and, in effect, are more likely to give the company the benefit of the doubt. In this case, investors' company risk assessments are dampened, and they show a higher willingness to maintain their investment in the company. However, when the severity of the company's FCPA violation and the penalty amount match, investors are less likely to experience ambiguity, which leads to higher company risk assessments and a lower willingness to maintain their investment in the company. In addition, the combination of a more severe FCPA violation and high penalty amount results in the highest risk assessment and lowest willingness to maintain the investment. These results provide ethical and practical considerations that regulatory bodies should weigh in evaluating sanctions.
Summary:
This article surveys the FCPA in international commercial arbitration, assessing the role that the FCPA has played in international commercial arbitration and suggesting ways to avoid potential FCPA-related issues from arising. It outlines the main characteristics of the FCPA, addresses the mechanisms through which parties have used the FCPA, both as a shield and as a sword against foreign corrupt practices in international commercial arbitration, and suggests how to avoid potential conflicts and issues from arising during arbitration.
Summary:
This article examines whether foreign corruption regulation reduces corruption and increases the local economic benefits of resource extraction. After a mid-2000s increase in enforcement of the US Foreign Corrupt Practices Act (FCPA), economic activity (measured by nighttime luminosity) increases by 14% (3%) in African communities within a 10- (25-) kilometer radius of resource extraction facilities whose owners are subject to the FCPA. Local perceptions of corruption decline by 8%. Consistent with changes in existing extraction firms’ business practices contributing to the increase in development, the association between resource production, instrumented by world commodity prices, and local economic activity increases by 40%.
Summary:
This article explains observed patterns of enactment and enforcement of foreign anti-corruption laws and generates predictions concerning the efficacy of such laws based on the extraterritorial operations of multi-national businesses. It also suggests a limitation on the spread of such laws into countries with few or no multinational corporations and, therefore, no realistic extraterritorial enforcement risk.
Summary:
This article examines the recent JPMorgan FCPA case and other recent "princeling" cases and declinations, analyzing the legal context of the very few litigated FCPA cases and recent corruption and insider trading cases for insight and guidance. It considers the current political environment and assesses its impact on FCPA enforcement and concludes with lessons for companies trying to aggressively pursue business while complying with the law.
Summary:
This article discusses the criticism of the FCPA that it puts U.S. firms at a competitive disadvantage and suggests several reasons why the adverse effects of FCPA enforcement on U.S. business may be considerably smaller than some FCPA critics suggest. It argues that significant numbers of U.S. firms may actually benefit from enforcement.
Summary:
This article argues that the Organisation for Economic Co-operation and Development ("OECD") Anti-Bribery Convention in 1997 owed its existence to the FCPA and, in turn, the FCPA owes much of its development and strength to the OECD Convention and that the enforcement of domestic laws may require international feedback mechanisms in a wide range of transnational commercial, financial, and environmental statutes.
Summary:
This Article addresses the shift in the interpretation of the breadth of the internal controls provisions of the FCPA by the Securities and Exchange Commission ("SEC") and the Department of Justice ("DOJ"), and discusses the vast theoretical ramifications of this potential overcriminalization and overenforcement.
Summary:
This article focuses on the Foreign Corrupt Practices Act ("FCPA"), its application in Latin America, and the Department of Justice’s ("DOJ") new one-year pilot program, announced on April 5, 2016, to encourage companies to self-report violations of FCPA and to cooperate with the DOJ’s Fraud Section. Using data from the newly launched Foreign Corrupt Practices Act Clearinghouse at Stanford Law School, we take a look at enforcement actions from the DOJ and the SEC involving Latin America for the period 2006-2016, showing that there are 54 cases involving FCPA violations in the region, mostly originating from Mexico (12), Argentina (10), Venezuela (8) and Brazil (8). The cases are distributed in 12 different countries in the region.
The article also discusses some corporate governance implications of how US enforcement agencies, led by the DOJ and the SEC, are stretching their enforcement powers to reach not only US individuals and companies, but also an increasingly wide set of foreign individuals and entities that could be held liable under US laws for improper payments of foreign officials.
Summary:
This article suggests that asset purchasers typically should not be held civilly liable for the pre-acquisition FCPA violations of sellers because the rule of decision for successor liability in FCPA cases is determined by state, not federal law, and the law of most states does not impose successor liability on arm’s-length asset purchasers. This conclusion is even stronger with respect to criminal FCPA liability because the remedial policy rationales which underlie expansive civil successor liability doctrines are not present in criminal law.
Summary:
This paper sets forth the emerging judicial standards for determining when employees of a state owned-enterprise amount to "foreign officials" under the FCPA.
Summary:
The authors hand-collect data on individual FCPA enforcement actions initiated by the U.S. Department of Justice and use them in a panel difference-in-difference estimator to provide the first systematic empirical evidence that anti-bribery enforcement is followed by a reduction in U.S. fixed capital investments in countries targeted by enforcement actions.
Summary:
Much is written about the Foreign Corrupt Practices Act. However, amid the clutter of enforcement agency rhetoric and resolution documents not subjected to any meaningful judicial scrutiny as well as the mountains of FCPA Inc. marketing material touting the next compliance risk, there are certain FCPA facts that are seldom discussed. Yet such facts, covering the entire span of the FCPA—from the statute’s enactment, to its statutory provisions, to FCPA enforcement, to FCPA reform, to the FCPA industry itself—occasionally bear repeating.
This article highlights ten seldom discussed FCPA facts that companies and their counsel need to know.
Summary:
This Article focuses on the difficult and strategic decision of whether a company should self-report to the government a potential FCPA violation. After reviewing the advantages and disadvantages of self-reporting, the Article concludes that the government needs to be more transparent and forthcoming regarding the potential benefits of doing so; it argues that the government must provide greater transparency regarding specific and calculable benefits that can be achieved through self-reporting and cooperation in the face of possible FCPA violations. The Article concludes that companies will be more likely to self-report such violations — and thereby assist in eradicating the scourge of transnational bribery worldwide — only if there is more certainty that the benefits achieved from self-reporting will outweigh the risks and costs involved.
Summary:
This article demonstrates how FCPA scrutiny and enforcement can impact a company's business operations and strategy in a variety of ways from: pre and post-enforcement action professional fees and expenses; to market capitalization; to cost of capital; to merger and acquisition activity; to impeding or distracting a company from achieving other business objectives; to private shareholder litigation; to offensive use of the FCPA by a competitor or adversary to achieve a business objective or to further advance a litigating position.
Summary:
This article suggests that transnational joint ventures can become high-risk undertakings because the factors that make them valuable gateways to new markets and opportunities frequently come with a myriad of anti-bribery compliance challenges. The article also provides a non-exhaustive list of risk-reduction strategies that joint ventures and their partners may use to minimize their FCPA exposure.
Summary:
This article will explore the factors that contribute to less-than-optimal transparency, consistency, and fairness in pre-trial bargaining under the Foreign Corrupt Practices Act. The article will conclude with recommendations to strengthen the current system and make it more fair.
Summary:
This article argues that the DOJ and SEC should provide additional clarification regarding FCPA enforcement in mergers and acquisitions or include a provision that grants safe harbor from successor liability for FCPA violations in certain transactions.
Summary:
This article identifies the key FCPA compliance issues and challenges arising in connection with import and export operations, and presents a series of warnings and recommendations to mitigate the compliance risks associated with those operations.
Summary:
This note analyzes recent developments surrounding the definition of 'foreign official' under the FCPA and proposes a bright-line test for assessing whether an entity qualifies as an 'instrumentality' of a foreign government, thereby rendering its employees foreign officials under the terms of the statute.
Summary:
This Article weaves together information and events scattered in the FCPA’s voluminous legislative record to tell the FCPA’s story through original voices of actual participants who shaped the law.
Disclaimer
The views expressed in these articles are those of the authors, and do not necessarily reflect the views of the FCPAC, Stanford University, Sullivan and Cromwell LLP, the authors’ employers, or organizations affiliated with the authors.