Fact Check: The Foreign Corrupt Practices Act penalizes necessary small payments to foreign officials.

Fact Check: "The Foreign Corrupt Practices Act penalizes necessary small payments to foreign officials."

What We Know

The Foreign Corrupt Practices Act (FCPA) was enacted in 1977 to prohibit U.S. persons and entities from making corrupt payments to foreign officials to obtain or retain business. The law specifically targets the willful use of any means of interstate commerce to offer, pay, or promise anything of value to a foreign official with the intent to influence their official actions or secure an improper advantage (source-1).

Importantly, the FCPA does not penalize all payments to foreign officials. The law includes a specific provision known as the "facilitating payments" exception, which allows for small payments made to expedite or secure the performance of a routine governmental action. These payments are often referred to as "grease payments" and are legal under the FCPA, provided they are not made with the intent to influence the official in their official capacity (source-4).

Analysis

The claim that the FCPA penalizes necessary small payments to foreign officials is misleading. While the FCPA does impose strict penalties for corrupt payments intended to influence foreign officials, it explicitly allows for certain small payments that are made to facilitate routine government actions. This is a critical distinction that undermines the claim.

The U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) provide guidance on the FCPA, clarifying that facilitating payments are permissible under the law. This guidance is supported by various legal interpretations and case law, indicating that such payments do not violate the FCPA as long as they are not intended to influence the foreign official's decision-making in a corrupt manner (source-6).

Furthermore, the FCPA's legislative history and enforcement actions demonstrate that the law is designed to target and penalize corrupt practices, not necessary small payments that are common in international business dealings (source-3).

Conclusion

Verdict: False
The claim that the Foreign Corrupt Practices Act penalizes necessary small payments to foreign officials is incorrect. The FCPA allows for certain small payments known as facilitating payments, which are legal under the act as long as they are not intended to influence the official's actions corruptly. Therefore, the assertion fails to accurately represent the provisions and intent of the FCPA.

Fact Check: The Foreign Corrupt Practices Act penalizes necessary small payments to foreign officials.