The Foreign Corrupt Practices Act in a New Era

The Foreign Corrupt Practices Act in a New Era

Mike Koehler

The Foreign Corrupt Practices Act (FCPA) has emerged as a top concern for companies doing business in the global marketplace. This book is the first of its kind given its comprehensive and provocative coverage of the FCPA and its many related legal and policy issues.

Chapter 2: FCPA foundational knowledge

Mike Koehler

Subjects: law - academic, corporate law and governance, corruption and economic crime, criminal law and justice, regulation and governance


This book focuses on a particular statute, but it is important to understand from the beginning that other general legal principles as well as general DOJ and SEC enforcement policies and resolution vehicles impact FCPA enforcement. By highlighting such topics, this chapter provides general foundational knowledge to best enhance understanding and comprehension of the specific FCPA topics that follow. The first general legal principle is respondeat superior. Business organizations operating in the global marketplace act through employees and agents. Pursuant to respondeat superior, employee and agent conduct can expose a business organization to legal liability, both criminal and civil, even if the employee or agent conduct is contrary to the organization's pre-existing compliance policies. Understanding this key legal principle, as well as the realities of the global marketplace, inform how companies often become the subject of FCPA scrutiny and why not all companies that resolve FCPA enforcement action are 'bad' or 'unethical.' Indeed, this chapter introduces you to the term 'world's most ethical FCPA violators. ' Next, general DOJ and SEC enforcement policies are introduced and the 'carrots' and 'sticks' relevant to resolving a corporate FCPA enforcement action are highlighted. Mindful of these 'carrots' and 'sticks,' business organizations are often motivated to resolve DOJ or SEC enforcement actions for reasons of risk aversion, and not necessarily because the enforcement agency has a superior legal position.

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