Walmart’s Mexican bribery scandal is shining the spotlight on the Foreign Corrupt Practices Act, an obscure law that’s become a bane for some of the world’s largest corporations.
Up until this past weekend, there was a very good chance that the average New York Times business page reader had never heard of the Foreign Corrupt Practices Act. It’s the sort of law that the public ordinarily doesn’t have much reason to think about, even as it keeps corporate lawyers and c-suite executives tossing in their sleep. But thanks to the the paper’s damning investigation into Walmart’s cover-up of bribery at its Mexican subsidiary, this low-key statute is suddenly getting its turn in the spotlight.
The statute, generally referred to as the FCPA, was passed in 1977 and bans individuals and companies from bribing foreign government officials to win business or influence their decision making. Those who run afoul of the law can face large fines or prison time. For decades after it was enacted, it was barely used. But in the last five years, it has evolved from an obscure vestige of the post-Watergate era into into one of the most talked about and feared laws in America’s board rooms.
Just ask Walmart.
The Corruption Law that Scares the Bejesus Out of Corporate America,” The Atlantic, Apr 25, 2012
“Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle,” New York Times, Apr 21, 2012
“Wal-Mart Faces Risk in Mexican Bribe Probe,” Wall Street Journal, Apr 23, 2012
“Updated Walmart Statement in Response to Recent New York Times Article About Compliance with the U.S. Foreign Corrupt Practices Act,” PR Newswire Press Release, Apr 24, 2012
“Mexico Facing Cost of Bribe Ethos that Snared Wal-Mart,” Bloomberg Businessweek, Apr 25, 2012