Definition of the Day – O&G Corporate Compliance – Foreign Corrupt Practices Act (FCPA)

Posted on by Oil & Gas Admins International

The Foreign Corrupt Practices Act or FCPA was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.  The Act governs not only payments to foreign officials, candidates, and parties, but any other recipient if part of the bribe is ultimately attributable to a foreign official, candidate, or party.  ,A bribe includes anything of value, including cash or non-cash items.

The FCPA applies to any person who has a certain degree of connection to the United States and engages in foreign corrupt practices. The Act also applies to any act by U.S. businesses, foreign corporations trading securities in the United States, American nationals, citizens, and residents acting in furtherance of a foreign corrupt practice whether or not they are physically present in the United States.

Ensuring employees are aware of the FCPA is especially important in the global oil and energy industry as variances in gift giving and relations may differ from country to country exposing employees to FCPA violations.

Persons and entities subject to FCPA include:

  • Any U.S. or foreign corporation that has a class of securities registered, or that is required to file reports under the Securities and Exchange Act of 1934
  • Any individual who is a citizen, national, or resident of the United States and any corporation and other business entity organized under the laws of the United States or of any individual US State, or having its principal place of business in the United States

Oil & energy companies whose securities are listed in the United States must also meet FCPA accounting provisions.  These accounting provisions require corporations covered by the provisions to make and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting controls.

FCPA Exceptions

Payments to foreign officials may be legal under the FCPA if the payments are permitted under the written laws of the host country. Certain payments or reimbursements relating to product promotion may also be permitted under the FCPA.