When Carter signed the Foreign Corrupt Practices Act into law in late 1977, he noted in a statement that he’d stressed the need for tough legislation to prohibit corporate bribery during his presidential campaign. The FCPA, Carter said at the time, “provides that necessary sanction,” but he added that it wasn’t enough.
“These efforts, however, can only be successful in combating bribery and extortion if other countries and business itself take comparable action,” Carter said in the signing statement, which is part of the online archives of The American Presidency Project at UC Stanta Barbara.
Carter, who served as president for a single term ending in January 1981, died Sunday at the age of 100.
The FCPA bars bribery of foreign officials by Americans, or issuers of American stock, for business purposes. It also requires publicly traded companies to maintain accurate books and records and establish internal accounting controls to prevent the use of off-books vehicles to pay bribes.
The law came about in part because of foreign payoffs by US multinational corporations that were discovered in the mid-1970s by the Watergate special prosecutor, as well as in follow-up investigations conducted by the Securities and Exchange Commission and the Church Committee, according to a 2012 paper in the Ohio State Law Journal by Mike Koehler, a law professor who runs the FCPA Professor blog.
The Church Committee held hearings in 1975 about Gulf Oil, Northrup, Mobil Oil and Lockheed, each of which were the subject of allegations, or had already made admissions, regarding payments made to foreign officials, the Koehler paper said. Though not the subject of a hearing by the Church Committee, illicit payments made in Honduras by United Brands, in what became known as “Banana-gate,” were also of interest to lawmakers following the suicide of the company’s president, according to a 2020 post on the Library of Congress blog.
When Carter took office, his administration and Congressional leaders favored criminalizing foreign bribe payments, as opposed to a recommendation from a task force empaneled by his predecessor, President Gerald Ford, to merely require companies to disclose them, the Koehler paper said.
Carter and the lawmakers of the time argued that corruption undermines US national security, and they responded with legislation criminalizing bribery despite intensive lobbying by companies that benefited from bribing foreign officials, Jodi Vittori, a professor at Georgetown University who founded and co-moderates the Anti-Corruption Advocacy Network, said in an email to MLex.
In the nearly half-century since the FCPA became law in the US, corruption has been outlawed across much of the world, but enforcement is often spotty, observers say.
The law was not initially welcomed by US exporters because foreign companies could pay bribes to win business, but US companies could not, according to a July 1980 memo from top US officials to Carter later made public by the US State Department’s Office of the Historian. “Discouraging corruption in international business on the part of foreign firms requires a multilateral agreement,” the memo said.
The process of securing international agreements against corruption took decades.
The United Nations Convention Against Corruption was adopted by the UN General Assembly in October 2003, and it entered into force about two years later. As of Aug. 7, 2024, there were 191 states signed to the UN anti-corruption convention, according to the UNCAC Coalition, a global network of civil society organizations committed to promoting the agreement.
Amendments to the FCPA passed in 1988 had called for the US executive branch to negotiate with the Organization for Economic Co-operation and Development, or OECD, to establish rules against bribery binding in all member states. The OECD established a working group on bribery in 1994 and, three years later, it reached a convention on combating bribery of foreign public officials.
The OECD convention called for countries to make it a crime for their citizens or companies to bribe foreign public officials in the conduct of international business. Former President Bill Clinton signed legislation in November 1998 implementing the OECD anti-bribery convention into US law. The convention entered into force in February 1999.
In March this year, the anti-corruption group Transparency International said in a blog post commemorating the 25th anniversary of the OECD anti-bribery convention that anti-bribery enforcement was on the rise through the 2010s but had begun to wane amid flagging national commitments and the COVID pandemic.
Nevertheless, in recent years, the US has enforced the FCPA alongside its international partners, with companies reaching resolutions that settle corruption investigations simultaneously in multiple countries.
This month, the consulting firm McKinsey settled with authorities in the US and South Africa (see here). Also this year, commodities trading giant Gunvor pleaded guilty in the US when settling with authorities in Switzerland and Ecuador (see here).
Trump, in a 2012 interview on CNBC, called the FCPA a “horrible law” that “should be changed.” Early in his first term, Trump said in an Oval Office meeting that it was “just so unfair” that Americans can’t pay bribes to get business overseas, according to "A Very Stable Genius: Donald J. Trump's Testing of America," a 2020 book by Wasington Post reporters Philip Rucker and Carol Leonnig
Some observers, however, recently told MLex they believe the incoming Trump administration will continue longstanding FCPA enforcement trends, including the international cooperation (see here).
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