In the movie “Syriana,” a lawyer investigates irregular payments by a U.S. oil company to secure concessions in Kazakhstan. When the lawyer confronts Danny Dalton, one of the oil company’s directors, Dalton retorts: “Corruption? Corruption ain’t nothing more than government intrusion into market efficiencies in the form of regulation … We have laws against it precisely so we can get away with it. Corruption is our protection … Corruption is how we win.” Dalton’s appalling and cynical characterization of bribery and corruption is, unfortunately, not that far-fetched. It’s widely believed that a 2003 Justice Department investigation into payments made by oil companies to the president of Kazakhstan and other senior officials in connection with their purchase of an oil field were the movie’s inspiration.
In 1977, when the Foreign Corrupt Practices Act became law, many feared compliance with the FCPA would subject U.S. companies to a competitive disadvantage, particularly because many foreign companies weren’t subject to similar legal constraints. In the end, of course, not complying with the FCPA put companies at a competitive disadvantage. The foreign bribery provisions of the FCPA make it unlawful for any U.S. person, and certain foreign issuers, to make a corrupt payment to a foreign official for the purpose of obtaining or retaining business. Since 1998, these anti-bribery provisions also apply to foreign firms and persons that take any act in furtherance of such a corrupt payment while in the United States. (In the wake of the current criticism of the Sarbanes-Oxley Act, it’s easy to overlook the fact that the FCPA also required U.S. public companies to maintain appropriate internal controls, and to maintain books and records that accurately and fairly reflect the company’s transactions—requirements enacted over two decades prior to the passage of SOX).
