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• The Foreign Corrupt Practices Act of 1977,
("FCPA"), was enacted for the purpose of
making it unlawful for certain classes of persons
and entities to make payments(offers, promises,
and authorizations to make payments as well as
actual payments) to foreign government officials
to assist in obtaining or retaining business.
• The U.S. Foreign Corrupt Practices Act of 1977
("FCPA") generally prohibits
U.S. companies and citizens,
Foreign companies listed on a U.S. stock exchange,
Any person acting while in the United States,
From corruptly paying or offering to pay, directly or
indirectly, money or anything of value to a foreign
official to obtain or retain business.
What happens when the Act is
• It is important that U.S.
exporters dealing with foreign
government officials fully
understand the requirements
of this Act because violations
could result in a fine of up to:-
U.S. $2 million for
U.S. $1 million for
Imprisonment of up to 5 years, or
a combination of a fine and
What does the FCPA require?
Issuers must keep detailed records.
• The FCPA’s accounting provisions are designed
to prevent illegal conduct by publicly traded
companies by requiring them to keep records
that would reveal illegal payments.
• Issuers are required to keep records that
“accurately and fairly” reflect all of the issuer’s
transactions and assets and must be kept in
Bribery of Foreign Officials
• Issuers of securities, domestic concerns, and
others all fall under the FCPA’s anti-bribery
• All U.S. nationals and businesses, including their
foreign subsidiaries, are prohibited from bribery
anywhere in the world.
• Foreign nationals and businesses also fall under
the anti-bribery requirements when they are in
the United States or its territory.
FCPA Enforcement Actions:-
• For over two decade the FCPA was seldom enforced
but this has abruptly changed.
• Civil & Criminal Enforcement actions in connection
with alleged payments to foreign officials have
increased greatly in recent years.
• From 2003 to 2007, twenty securities and Exchange
Commission(SEC) enforcements actions and 23
Department of justice (DOJ) enforcements actions
were intimated under the FCPA.
• The largest fines levied against the companies
under the FCPA have been imposed in the last
• Titan corp. was fined $28.5 million in 2005 &
Baker Hughes Inc. was ordered to pay $44
millions in 2007.
Follower of the U.S.
• Following United States FCPA act, several other
countries enforced laws similar to the FCPA with
some changes according to there country.
• Countries like Australia, France, Germany, Italy,
Ireland and etc. investigated multiple violation of
the trans-national bribery laws.
• Till the year 2003, the UN convention was
formulated with 125 members (out of which 95
countries had ratified as if 2007).
Nestlé infant formula case
• Its an Swiss based company
• Infant formula for infants.
• Marketing techniques-40 % ($3bi.) market
• “If the mother develops a brand loyalty when her
child is new born, her loyalty is unlikely to
change over time ”.
• Strong revolt in developing countries boycotts
all products of Changed promotional practices -
1976 but still continued to sale free & low cost
• W.H.O- International Code of Marketing for
Breast Milk Substitute law in 1982
• Nestlé has voluntary agreed to supply as per the
request of hospital administration
• 3rd world block however continued to order
• In Sweden , Ireland , Britain boycott continued
as a result in Jan.1991 Nestlé stopped free & low
cost formula completely