In late April, The New York Times reported that Wal-Mart’s Mexican subsidiary paid millions of dollars in alleged bribes to Mexican officials to gain approval and other favorable treatment for new stores. Wal-Mart allegedly discovered the payments in 2005, but bottled up its internal investigation.

The payments are now the subject of U.S. Department of Justice and Securities and Exchange Commission investigations into potential violations of the Foreign Corrupt Practices Act – or FCPA – a federal law which outlaws bribes by U.S. companies and others to foreign officials to obtain or retain business. For its part, Wal-Mart announced that it is conducting an internal investigation, that it voluntarily disclosed certain matters to DOJ and the SEC in November. Wal-Mart admits that it may face U.S. and other charges, and that it is a defendant in numerous civil suits based on the alleged payoffs. Wal-Mart says that it “will not tolerate noncompliance with FCPA.”

Some critics of the FCPA say it puts U.S. companies at a disadvantage with their foreign rivals, and that banning bribery in some countries is unrealistic. The U.S. Chamber of Commerce has proposed substantially amending the act. But the U.S. government continues to state that prosecuting corruption under the FCPA and other laws is a top priority. And Congress has seemingly granted bounties to FCPA whistleblowers.

So given the potential criminal and civil penalties for FCPA violations (in one noted case, Siemens and subsidiaries agreed to pay a $450 million criminal fine and to disgorge $350 million in profits; several individuals have received jail sentences for FCPA violations), businesses should be aware of the act.

The FCPA

The FCPA makes it a crime for U.S. companies and citizens, or anyone acting in the U.S., with “corrupt” intent, to pay, offer to pay, or promise to pay anything of value to a “foreign official” for the purpose of obtaining or retaining business.