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The alleged bribes paid by Salt Lake City boosters to members of the International Olympic Committee (“IOC”) in order to secure their support for the city’s 2002 Winter Games bid has drawn attention to the U.S. law prohibiting the bribery of foreign officials–the 1977 Federal Corrupt Practices Act (“FCPA” or “the Act”). According to news reports, federal prosecutors have examined whether the FCPA governs bribes paid to IOC officials, although IOC members are not technically “officials” of a foreign sovereign within the meaning of the FCPA. In his report on the scandal on behalf of the United States Olympics Committee, former Senator George Mitchell has recommended an amendment to the FCPA in order to reach the future conduct of IOC members and host city boosters.

Attention to the Act is timely for this and other reasons, in particular, its recent statutory expansion. Over the last several decades, American corporations have lost billions of dollars in foreign business deals where bribes (illegal for U.S. companies to make in order to obtain business abroad) played an instrumental role in the awarding of contracts to foreign competitors. In the late 1980s, Congress directed the executive branch to spearhead an international effort to level the economic playing field. On November 21, 1997, their efforts were rewarded when negotiators representing thirty-four countries (including the United States and most of the significant trading economies of the world) adopted the Convention on Combating Bribery of Foreign Officials in International Business Transactions (“Convention”). The Convention’s purpose is to “deter, prevent and combat the bribery of foreign public officials in connection with international business transactions” by providing criminal penalties for persons who bribe public officials. If a nation’s legal system “lacks the concept of corporate criminal liability, the nation must provide for equivalent non-criminal sanctions such as fines.” All participating countries agreed that the Convention would take effect on February 15, 1999.

In May 1998, President Clinton sent legislation to Congress that would bring the anti-bribery provisions of the Foreign Corrupt Practices Act (“FCPA”) into compliance with the Convention. The House and the Senate quickly recognized the importance of the legislation, known as the International Anti-Bribery and Fair Competition Act of 1998 (“Anti-Bribery Act”), and President Clinton signed the Anti-Bribery Act into law on November 11, 1998.

The FCPA continues to make it unlawful for a U.S. corporation or individual (or an intermediary acting on their behalf) to bribe a foreign government official in order to obtain or retain business. The Anti-Bribery Act amended the FCPA in the following important ways:

• The scope of the FCPA was expanded to prohibit payments intended to secure “any improper advantage.” Prior to the amendment, the FCPA criminalized payments made to influence deci-sions of a foreign official or induce the foreign official to do or omit an act he was lawfully obliged to do.

• The definition of “public official” was expanded to include representatives of public international organizations, such as the World Trade Organization and the International Committee of the Red Cross, but not, notably, the IOC.

• The extraterritorial reach of the FCPA was expanded to include prohibited conduct (i.e., making corrupt payments to foreign officials) by U.S. corporations or citizens that occurs entirely outside of the United States either directly by a corporation employee or by a foreign agent acting on their behalf.

• Civil and criminal penalties for U.S. citizens and foreign nationals who are employees or agents of a U.S. company are now in parity. Prior to the amendment, foreign nationals acting on behalf of U.S. corporations were not subject to criminal penalties. This amendment imposes criminal penalties on foreign nationals employed by or acting as agents of U.S. companies, as well as foreign nationals and companies that commit crimes in the U.S.

In addition to amending the existing law, the Anti-Bribery Act contains directives that will monitor Convention signatories. The Secretary of Commerce has been directed to submit an annual report to both houses of Congress that details, among other things, a current list of countries that have ratified the Convention along with an assessment of the enforcement measures taken by those countries. This report will also contain an explanation of the domestic laws enacted by each party to the Convention and a comparison of those laws with the Convention.

Companies with foreign operations or business should ensure that they are in compliance with the FCPA as amended by the Anti-Bribery Act. Due to the increasing severity of penalties for non-compliance with the FCPA, companies without a compliance program should consider implementing one. An ideal compliance program has internal and external controls designed to:

1. educate all employees as to what type of activity the FCPA prohibits,
2. identify potential situations where an FCPA issue may arise, and
3. address any FCPA issue before a statutory violation occurs.

Companies that have implemented a compliance program should undertake a review of that program to ensure compliance with the Anti-Bribery Act.