The Foreign Corrupt Practices Act (FCPA): A Hindrance For American Companies? – OpEd

The Foreign Corrupt Practices Act (FCPA) is a U.S. regulation that prohibits American companies from bribing foreign officials and enforces strict penalties for violations. Enacted in 1977, the law appears to promote ethical business practices in theory, but in practice, it places American companies at a significant competitive disadvantage.

This is because bribery has become a norm in many countries worldwide. No other country enforces FCPA-like regulations. From the European Union (EU) to China, from Russia to Canada, no government explicitly bans its companies from bribing foreign officials. In fact, the last decade has seen the highest number of corruption cases in the EU. In countries like Brazil and Mexico, corruption is so entrenched that even presidents have been openly implicated in bribery scandals. Two former Mexican presidents, caught in corruption scandals, fled the country and settled in Spain.

For American companies, this creates a serious competitive disadvantage.

A friend of mine experienced this firsthand while doing business with Pemex, Mexico’s state-owned oil company. Bribes were expected even for something as trivial as a technical document. If payment wasn’t made, an outdated document would be provided, with the excuse, “If you needed a new one, you should have found it yourself,” deliberately delaying operations. On one occasion, a ship with a daily rental fee of $60,000 went unpaid for two months under the pretext that its fire extinguishers were inadequate. When my friend sought clarification, Pemex officials claimed that his address and email had been “entered incorrectly.” However, the moment he pulled the ship from the job at the last minute, the same official—who had claimed the email was wrong—managed to call him directly, now desperate to make the payment.

Cases like this demonstrate that while FCPA may seem like an ethical regulation, it ultimately handicaps American companies in the global market. If other major economies implemented similar laws, we could talk about a level playing field in international trade. However, in its current form, FCPA does little more than tie the hands of U.S. firms, while their foreign competitors operate freely without restriction.