The Foreign Corrupt Practices Act: A Minefield for US Companies in China

By Patrick M. Norton, Partner, O'Melveny & Myers, Beijing

The United States Foreign Corrupt Practices Act (FCPA) imposes severe civil and criminal penalties on US companies and individuals who bribe or offer to bribe foreign government officials to obtain business.¹ Compliance with the FCPA is challenging in many developing countries. It is especially challenging in China, where corruption is widespread and the government continues to own and manage many of the country's largest companies. Until recently, US law enforcement authorities gave little attention to these problems. Earlier this year, however, Lucent Technologies announced that it was terminating three of its senior executives in connection with an internal FCPA investigation of Lucent's business in China.² The Lucent announcement and disclosures of similar problems by other US companies have put FCPA problems in China in the spotlight for the first time.