INTRODUCTION

The bribery of government officials is prohibited by many countries. In the United States, however, the prohibition extends to bribery of foreign government officials. Although the best-known U.S. prohibition of this activity is set forth in the Foreign Corrupt Practices Act of 1977, other U.S. statutes may also apply to a project financing.

These statutes, although enacted in the United States, are relevant to many project financings throughout the world because these statutes apply to companies organized in other countries with U.S. operations and to U.S. companies alike.

Many of the laws discussed in this chapter have no counterparts in other countries. Because of their reach, however, they must be generally understood in the project finance context.

FOREIGN CORRUPT PRACTICES ACT GENERALLY

The U.S. Foreign Corrupt Practices Act of 1977 (FCPA) is an attempt by the United States to outlaw bribery of foreign officials. The statute has two components. It makes corrupt payments to officials and agents of foreign governments by U.S. persons an illegal business practice, and it requires accounting practices to accurately reflect payments to foreign officials and agents.

The FCPA was amended in 1998 as a result of the ratification by the United States of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. It is ironic indeed that the United States was asked to strengthen the very law that stood for years as the only prohibition against foreign bribery.