Prior to 1977, bribing foreign officials to obtain or keep business was not illegal and in some European countries bribes for business deals were allowed to be deducted from corporate taxes as part of doing business. But an unrelated Washington scandal in 1974 led to the United States becoming the first country in the world to make bribes for business deals a criminal offense. The 1977 Foreign Corrupt Practices Act (FCPA) was enacted as the result of the Watergate scandal. In August 1974, then U.S. president Richard Nixon resigned the presidency after his efforts to conceal his administration’s involvement in the burglarizing and the planting of listening devices in the headquarters of the Democratic National Committee at the Watergate complex were exposed. He remains the only U.S. president to resign from office today.
In the wake of the Watergate scandal investigations that found several alleged illegal political campaign contributions and American companies not reporting to their shareholders the millions of offshore payments made to foreign officials led Congress to act. Congressional hearings held in 1975 found alleged questionable payments made by Exxon, Gulf Oil, Lockheed, Mobil Oil and Northrup to foreign government officials or businesspeople for business contracts. Exxon and Mobil Oil made contributions to Italian political parties while Lockheed paid then-Japanese Prime Minister Kakuei Tanaka $1.8 million in bribes in return for Nippon Airways purchasing 21 Lockheed L-1011 aircraft.
Reeling from the accusations of post-Watergate moral decline, Congress moved to criminalize business practices common across the globe by enacting the FCPA prohibiting public companies, those listed in the stock exchanges, and their officials from paying or gifting items in return for access to business contracts in other nations. During the deliberations, then U.S. Representative Stephen Solarz (D-NY) stated at the House that “it is truly a sad commentary that the excuse put forward by most corporations is that other nations engage in bribery.”
After realizing that existing laws did not prohibit making bribe payments to foreign entities, Congress moved to enact such a law. But first Congress needed to define what bribery is. As Michael Butler, Vice President and General Counsel for Overseas Private Investment Corporation testified at the Senate that although generally everyone can agree that a large cash payment to government official was likely illegal, the problem remained whether “tips, commissions, consulting fees, campaign contributions, contributions for charitable projects favored by important foreign officials” would also be considered illegal. Opponents of the legislation argued that it put American businesses in an unfair competitive disadvantage for business practices that had “existed at least since the 1600s, when the British East India Company won duty-free treatment for its exports” by giving gifts to Mogul traders, wrote Milton Gwirtzman in a 1975 New York Times Magazine article. Gwirtzman added that the “traditional way of doing business” had become “food for scandal” because of “post-Watergate morality.”
Between 1975 and 1977, Congress debated 20 bills attacking the problem of bribery through different governmental bodies. After years of deliberations, the FCPA became law in 1977, a one-piece legislation that criminalized for the first time that bribery for business was illegal. When then-President Jimmy Carter signed the bill into law, he stated that he believed that “bribery is ethically repugnant and competitively unnecessary.”
The FCPA was the first legislation across the globe to criminalize a business practice that had been common for centuries. But the newly minted law was limited to a narrow range of payments that could be construed as bribery. As the Senate report states, the legislation was “deliberately” cast in “language narrowly” criminalizing payments used to influence business and not the “low-level facilitating payments sometimes called ‘grease payments’,” or mordida in México used to help move the process further along. In essence, the FCPA criminalizes a cash payment to a government official to conclude the purchase but not the smaller payments made to people, like a clerk, to move contracts forward or officials to expedite approvals. The law also limited what bribery covered when it limited it to foreign officials.
Although 46 countries now have laws against business owners bribing foreign officials for lucrative contracts, only one country actively enforces its anti-bribery laws – Switzerland, according to a 2022 European Union report. Canada and México are two of the 46 countries with anti-bribery laws in the books but do little to enforce it.
The United States was on the list of actively enforcing its law, but its enforcement of FCPA has dramatically declined in recent years. Only six FCPA actions were initiated by federal prosecutors in 2025, a decline of over 70% since 2006.
The Trump administration paused enforcement of FCPA through an executive order in February 2025 arguing that the law impeded America’s foreign policy objectives by limiting American companies from “routine business practices in other nations.”
The Securities Exchange Commission (SEC)’s FCPA website listing prosecutions has not been updated since 2024. The list shows that the SEC filed seven cases in 2024 according to its list of prosecutions. Nine cases were prosecuted the year before.
Between 1978 and 1997, the SEC prosecuted two companies in 1978 and prosecuted one company each year after that. In 2000 the SEC filed one case and five cases the following year. Generally, the SEC filed less cases annually until 2010 when it filed 15 cases. The most cases that the SEC prosecuted in a year was in 2016 when it filed 27 cases. Between 1978 and 2024, the SEC website shows 243 cases that the agency prosecuted.
The Notable FCPA Cases
The first two criminal cases under the FCPA were filed the following year after the law was enacted against Katy Industries and Page Airways. The SEC alleged in 1978 that Katy Industries obtained an Indonesian oil contract by making a $250,000 payment to an Indonesian official through a consultant. The company and several of its officials entered into a consent agreement where they agreed not to violate the FCPA in the future. A second SEC prosecution in 1978 was filed against Page Airways, Inc. The SEC prosecutors alleged that Paige Airways had paid $2.5 million in bribes to officials in Malaysia, Saudi Arabia and Uganda for lucrative aircraft sales to those countries. Citing “national interest” concerns the defendants agreed not to violate the FCPA again and the government closed the case.
The first FCPA conviction occurred in 1979, when Finbar B. Kenny and his company, Kenny International Corp. agreed to plead guilty to one count of violating the FCPA, according to the plea agreement filed in the case on August 2, 1979. The company settled the case by paying a fine of $50,000. Because Kenny was not in the U.S. at the time of the plea filing, he agreed to enter a guilty plea “in lieu of extradition” with New Zealand prosecutors. In return for the guilty plea made to New Zealand prosecutors and for helping them on a case of fraudulently diverting government funds for private gain, U.S. prosecutors agreed to drop the charges against Kenny. According to the court documents, Kenny paid $337,000 fraudulently to secure the outcome of the Cook Islands elections so that he could keep the island’s lucrative postage stamps contract.
Tesoro Petroleum Corporation
An interesting case involving the FCPA arose shortly after it became law. Before FCPA became law, Tesoro Petroleum Corporation was making “sensitive payments” that were “designed to influence officials of foreign governments,” according to the court records. Tesoro board members launched an investigation into the payments in 1977. The internal investigation determined that Tesoro had made payments that were questionable in six countries. The Tesoro board self-reported its finding to the SEC, who referred that matter to prosecutors after Tesoro had entered into a consent agreement with SEC agreeing not to make payments like these in the future.
Tesoro’s stock price dropped significantly after a failed takeover of Tesoro from Diamond Shamrock Corporation in 1980 where the government of Trinidad and Tobago intervened as majority shareholders in a Tesoro subsidiary. Disgruntled investors filed a lawsuit accusing the company of trying to go private, at their expense, to avoid, among other issues, the scrutiny of FCPA in its business activities. Although FCPA was not central to the civil lawsuit, it played a part of the legal arguments made by the investors for their financial losses.
Other notable FCPA cases include Brazilian-based holding company Odebrecht which agreed to pay $3.5 billion in penalties in 2016 to officials in Brazil, the U.S. and Switzerland to settle an FCPA case involving millions of dollars in bribes to officials across the globe.
Another case involved Mobile TeleSystems which pleaded guilty to paying $865 million in bribes to Uzbek officials in 2019. Airbus paid over $3.9 billion to settle cases in the U.S., France, and the UK regarding a global bribery scheme in 2020. Also in 2020, Glencore pleaded guilty to massive corruption charges spanning over a decade. In 2022, Honeywell International Inc. agreed to pay over $81 million for bribery schemes in Brazil and Algeria. There have been several cases involving México.
The México Cases
One of the first FCPA cases involving México was the 1982 criminal prosecution of International Harvester Company. This case involved Petróleos Mexicanos or PEMEX. According to the plea agreement that Harvester entered into with federal prosecutors on November 16, 1982, the company pleaded guilty to one count of violating FCPA.
The company conspired with three other companies and one of its subsidiaries, Solar Turbines, to pay PEMEX officials 4.5% to 5% for each contract awarded to the colluding companies. Between 1978 and 1979, the companies sold around $92.1 million in equipment to PEMEX and paid around $9.9 million in bribe money. Harvester would inflate the price of each contract by 4.5% to 5% to pay for the bribes.
Harvester paid a $10,000 fine plus $40,000 to reimburse the government to settle the case.
In November 2011, Walmart disclosed to the SEC that it had paid $24 million over some years to expedite permits and licenses as it expanded in México. On June 20, 2019, Walmart was charged with violations of the FCPA in Brazil, India and México by the SEC. It agreed to pay $282 million to settle the cases.
In 2014, Hewlett-Packard agreed to pay more than $108 million to settle an FCPA violation case for payments made to officials in three countries, including $1 million in “inflated commissions” made to PEMEX officials.
Key Energy Services, Inc. paid $5 million to settle its FCPA case in 2016 involving a $229,000 bribe to a PEMEX official and for providing other officials gifts worth $55,000.
The Two Recent PEMEX Cases
On April 1, 2026, Houston businessman Alfonso Wilson pleaded guilty in federal court for violating FCPA by paying a “substantial amount” of bribe money in 2021 for a contract with a PEMEX subsidiary valued at around $540 million. Wilson received over $400,000 in commissions for the contract according to the charging document filed on March 16, 2026. Wilson’s sentencing is scheduled for June 26.
Last year, on August 11, 2025, U.S. prosecutors announced that they charged two Mexican men for violating the FCPA by paying bribes to PEMEX. Both defendants are Mexican citizens living in Houston as permanent residents. Because the Trump administration had deprioritized FCPA prosecutions unless they involved drug cartels, in an initial press release about the case, government officials mentioned in passing that both defendants had connections to drug cartels.
It later removed the reference to the drug cartels leaving the rest of the press release intact.
The removal of the drug cartel connection suggests that it was added as part of the Trump administration’s focus on prosecuting FCPA cases involving connections to Mexican drug cartels. However, a recent development last Tuesday suggests that federal prosecutors were not prepared to prosecute the case suggesting that the language removal was because there was no evidence supporting the allegation.
Ramón Alexandro Rovirosa Martínez, a Mexican national living in Houston as a legal permanent resident was convicted on December 5, 2025, for violating the FCPA. Rovirosa Martínez’s application for U.S. citizenship was in jeopardy as he faced years in jail for the conviction. But the following month, the judge overseeing the case reversed his conviction finding that the prosecutors failed to provide translators at trial so that the defense could cross examine them. Prosecutors relied on phone messages, without providing witnesses, to make their case. The problem was that the translations from Spanish to English in the communications were missing important context according to the defense. Because the prosecutors failed to introduce into trial the original Spanish versions of the messages and could not provide expert translators for the messages, the judge exonerated Rovirosa Martínez on April 14.
Not only had the federal prosecutors failed to successfully try the case but they also attempted to tie the case to Mexican drug cartels seemingly to fit the White House’s demand that FCPA cases only be filed if they had a drug trafficking nexus.
Today, the FCPA remains controversial among business leaders and how it is applied remains uneven at best. Instead of making anti-bribery laws stronger, the American government is not pursuing enforcement unless it has a nexus to drug trafficking, and even then it is haphazard at best. Other countries have chosen to keep the centuries old practice of business courtship through cash payments and gifts intact by looking the other way when it happens, not withstanding the laws in the books. The question remains, when is a mordida a criminal offense or when is it just moving paper along? Even Americans are not as clear about the answer as their Mexican counterparts.
