Foreign Corrupt Practices Act (FCPA)

What is the purpose of the Foreign Corrupt Practices Act (FCPA)?

• To control bribery and other forms of payment to foreign officials by American companies

• To regulate the financial disclosures of American publicly traded companies

• To enforce the Bank Secrecy Act and the Mail Fraud Act

• To prohibit political contributions by American companies

Answer explanation

The Foreign Corrupt Practices Act (FCPA) is primarily designed to control bribery and other forms of payment to foreign officials by American companies. This act is not about regulating financial disclosures, enforcing the Bank Secrecy Act and the Mail Fraud Act, or prohibiting political contributions. Its main purpose is to prevent corruption in international business transactions.

Which government agencies enforce the Foreign Corrupt Practices Act (FCPA)?

• U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC)

• Federal Bureau of Investigation (FBI) and the Internal Revenue Service (IRS)

• U.S. Department of State and the Federal Trade Commission (FTC)

• U.S. Department of Treasury and the Office of Foreign Assets Control (OFAC)

Answer explanation

The Foreign Corrupt Practices Act (FCPA) is enforced by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). These agencies are responsible for ensuring compliance with the FCPA, which prohibits bribery of foreign officials. The other options listed, such as the FBI, IRS, Department of State, FTC, Department of Treasury, and OFAC, do not have this specific enforcement responsibility.

What does the FCPA require corporations to disclose?

• All transactions conducted with foreign officials and politicians

• All financial records and accounting practices

• All marketing expenses and donations to foreign charities

• All political contributions and facilitation payments

Answer explanation

The Foreign Corrupt Practices Act (FCPA) requires corporations to disclose all transactions conducted with foreign officials and politicians. This is to ensure transparency and prevent corruption. The other options, such as disclosing all financial records and accounting practices, marketing expenses, and political contributions, are not specifically required by the FCPA.

What is the difference between illegal and legal behaviors under the FCPA?

• Illegal behaviors include bribes and record-keeping violations, while legal behaviors include grease payments and marketing expenses

• Illegal behaviors include political contributions and donations to foreign charities, while legal behaviors include facilitation payments and payments lawful under foreign laws

• Illegal behaviors include grease payments and marketing expenses, while legal behaviors include bribes and record-keeping violations

• Illegal behaviors include facilitation payments and payments lawful under foreign laws, while legal behaviors include political contributions and donations to foreign charities

Answer explanation

The question asks about the difference between illegal and legal behaviors under the FCPA. The correct answer is that illegal behaviors include bribes and record-keeping violations, while legal behaviors include grease payments and marketing expenses. This means that while bribes and record-keeping violations are considered illegal, grease payments and marketing expenses are not and are therefore legal under the FCPA.

What are facilitation payments under the FCPA?

• Payments that are acceptable (legal) provided they expedite or secure the performance of a routine governmental action

• Payments made to foreign officials to influence their decision to award new or continuing business

• Payments made by American companies to foreign charities for tax benefits

• Payments made by foreign officials to American companies for marketing purposes

Answer explanation

Facilitation payments under the FCPA are payments that are considered legal if they expedite or secure the performance of a routine governmental action. These payments are not made to influence foreign officials' decisions or for tax benefits or marketing purposes. They are specifically for speeding up routine governmental processes.

What are the consequences for corporations that violate the FCPA?

• Imprisonment

• Criminal and civil penalties

• Loss of business licenses

• Monetary fines

Answer explanation

The consequences for corporations that violate the FCPA include criminal and civil penalties. Imprisonment is not applicable to corporations, while loss of business licenses and monetary fines may be part of the penalties imposed. The correct choice highlights the primary consequences faced by corporations in violation of the FCPA.

Explain the jurisdiction of the FCPA and how it applies to international business transactions.

• The jurisdiction of the FCPA only applies to U.S. companies and individuals.

• The FCPA only applies to international business transactions involving bribery of U.S. officials.

• Foreign companies listed on U.S. stock exchanges are exempt from the jurisdiction of the FCPA.

• The jurisdiction of the FCPA extends to all U.S. companies, foreign companies listed on U.S. stock exchanges, and individuals who are citizens, residents, or acting on behalf of a U.S. entity. It applies to international business transactions that involve bribery of foreign officials to obtain or retain business.

Answer explanation

The correct answer is that the jurisdiction of the Foreign Corrupt Practices Act (FCPA) extends to all U.S. companies, foreign companies listed on U.S. stock exchanges, and individuals who are citizens, residents, or acting on behalf of a U.S. entity. This law applies to international business transactions that involve bribery of foreign officials to obtain or retain business. The other options are incorrect as they limit the scope of the FCPA.

What are the key provisions of the FCPA that corporations need to comply with?

• Prohibition of fraud, maintenance of accurate books and records, and implementation of effective internal controls.

• Prohibition of bribery, maintenance of accurate books and records, and implementation of effective internal controls.

• Prohibition of money laundering, maintenance of accurate books and records, and implementation of effective internal controls.

• Prohibition of insider trading, maintenance of accurate books and records, and implementation of effective internal controls.

Answer explanation

The question asks about the key provisions of the FCPA that corporations need to comply with. The correct answer is 'Prohibition of bribery, maintenance of accurate books and records, and implementation of effective internal controls.' This is because the FCPA primarily focuses on prohibiting bribery, ensuring accurate record-keeping, and mandating effective internal controls in corporations.

Discuss the role of whistleblowers in uncovering FCPA violations.

• Whistleblowers have no role in uncovering FCPA violations.

• Whistleblowers only play a minor role in uncovering FCPA violations.

• Whistleblowers are not effective in uncovering FCPA violations.

• Whistleblowers play a crucial role in uncovering FCPA violations.

Answer explanation

The question asks about the role of whistleblowers in uncovering FCPA violations. The correct answer is that whistleblowers play a crucial role in uncovering FCPA violations. This is because whistleblowers, being insiders, often have access to crucial information about illegal activities, including FCPA violations, that external investigators may not have. Therefore, their role is vital in exposing such violations.

How does the FCPA impact international trade and business relationships?

• The FCPA has no impact on international trade and business relationships.

• The FCPA encourages bribery of foreign officials and promotes unfair competition.

• The FCPA only applies to domestic trade and business relationships.

• The FCPA prohibits bribery of foreign officials and promotes fair competition.

Answer explanation

The Foreign Corrupt Practices Act (FCPA) significantly impacts international trade and business relationships by prohibiting bribery of foreign officials. This law promotes fair competition by ensuring that business decisions are made based on merit and not influenced by illicit payments. Therefore, the statement that the FCPA prohibits bribery of foreign officials and promotes fair competition is correct.