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Foreign Corrupt Practices Act (FCPA) of 1977

A law imposing criminal liability on corporate directors and officers for illegal payments made to foreign officials. For example, the minister of trade in Country A may demand an annual $50,000 payment from Corporation X in return for allowing the corporation to ship its products into Country A. Corporation X's payment of such monies would constitute a violation of FCPA and could subject Corporation X and its directors and officers to liability in the United States.

FCPA prosecutions have increased markedly in recent years. This, in part, resulted because the Sarbanes-Oxley Act (SOx) requires that senior executives scrutinize their company's internal controls, certify its financial statements, and report possible FCPA violations to the company's board of directors, its audit committee, or its chief legal officer.

One high-profile FCPA case in 2012 involved a former Wal-Mart executive who alleged that his firm paid millions of dollars to Mexican government officials in return for expediting the opening of new stores there. See also Sarbanes-Oxley Act.


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