by Jess Unger
The need for the Foreign Corrupt Practices Act remains alive and well. Companies and executives are still getting caught red-handed. The U.S. Chamber still wants the highly effective law weakened.
Since the landmark guilty plea and settlement in the Alcoa Worldwide Alumina (Alcoa) case in January, companies have paid another $196 million in penalties for violations of the Foreign Corrupt Practices Act (FCPA). In March, Marubeni Corporation pleaded guilty to bribing an Indonesian member of Parliament, among other foreign officials. In April, Hewlett-Packard subsidiaries in Russia, Poland and Mexico accepted responsibility for bribing former executives of state-owned companies and police department officials and for maintaining a multi-million dollar slush fund for various other corrupt payments in those countries. The Department of Justice (DOJ) has indicted several other individuals since the Alcoa case as well, including Wall Street broker-dealers and a former vice president of Bechtel Corporation.
Despite these recent successes in curbing egregiously corrupt behavior under the FCPA, the U.S. Chamber of Commerce wants to weaken the law. A few days before Halloween 2010, the Chamber released a report that dressed up the FCPA as a boogeyman that scared away business with its “increasingly aggressive” interpretation by enforcement agencies. The Chamber report demanded five amendments to the FCPA — nominally to provide guidance for businesses in complying with the law — that actually were designed to hamstring enforcement. Undeterred by the subsequent release of a 130-page guidance document by DOJ and the Securities and Exchange Commission (SEC) rejecting the Chamber’s demands, the Chamber still ranks FCPA “reform” among their lobbying priorities for 2014.
One of the Chamber’s proposed amendments calls for limited liability for corporations whose subsidiaries violate provisions of the FCPA — in other words, rewarding ignorance (or feigned ignorance) by parent companies. But loosening the rules for parent companies creates an incentive for more of the same corrupt acts described in the Hewlett-Packard subsidiaries’ admissions of misconduct just this April.
Public Citizen’s November 2013 report, “License to Bribe,” details all five amendments sought by the Chamber, and provides common-sense rebuttals to each proposal. The bottom line: corruption is demonstrably harmful to both business and democracy.
The FCPA is America’s most salient global anti-corruption tool. Since it was first enacted in 1977, countries and international organizations around the world have followed America’s lead and enacted similar global anti-corruption rules. Now that business is more global than ever before, it is no time to weaken the FCPA.
Jess Unger is a legal fellow with Public Citizen’s Congress Watch division