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Another call for Congress to hold firm on FCPA

Source: Thomson Reuters Foundation - Fri, 16 Sep 2011 11:07 AM
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Any views expressed in this article are those of the author and not of Thomson Reuters Foundation.

Almost a year after the U.S. Chamber of Commerce sullied the anti-corruption waters with its misleadingly-titled paper Restoring Balance: Proposed Amendments to the Foreign Corrupt Practice Act (FCPA), two university law professors opposed to any change in the law have countered with a paper of their own.  Busting Bribery: Sustaining the Global Momentum of the Foreign Corrupt Practices Act will be released in Washington on Friday.

Authored by Harvard professor David Kennedy and Danielsen of Northeastern University, Busting Bribery pulls no punches when it comes to revealing its opinions of the U.S. Chamber’s arguments.  If the changes proposed by the Chamber were to be implemented it would “set back decades of progress” on anti-corruption efforts according to Kennedy and Danielsen.  Moreover, the authors note that such legislative tinkering would “substantially undermine the possibility for successful enforcement of America’s anti-bribery commitments.”

To the idea that a company could be insulated from a charge of bribery if it had an anti-corruption program in place Kennedy and Danielsen note that this would merely allow corporations to implement “fig leaf” FCPA compliance programs in order to avoid criminal culpability.  Rather than leveling the playing field as the Chamber suggests, this provision could increase the incidents of bribery while reducing the likelihood of conviction.

Additionally, Busting Bribery takes the Chamber to task for its suggestion that corporations should be let off the hook if an employee of a subsidiary was found guilty of paying bribes.  This would be akin to a “head-in-the-sand management style of conscious disregard and deliberate ignorance” of activities of the subsidiary, the paper noted

It should not be surprising that the Chamber of Commerce chose to lash out at the FCPA last year given that just a few years earlier the Justice Department began to ramp up its enforcement of the law.  From five FCPA violation cases in 2004 to more than 70 in 2010, American corporations understood that the game had changed. No longer would the government permit business as usual.  They were now going after the big violators. 

To which the U.S. Chamber yelled ‘foul’ while making the claim that this was bad for U.S. business.  What the Chamber failed to note is that of all the penalties levied last year the top six were to non-U.S. firms.  So, while the Chamber would like Congress and the public to think that the FCPA is an impediment to U.S. job creation because it makes, as the argument goes, companies too timid to engage in the global marketplace the fact of the matter is that the Justice Department is actually an equal opportunity enforcer.  Or, as Kennedy and Danielsen note in their paper, the record on FCPA enforcement “helps to establish a level playing field whose terms are guided by the best compliance practices of American business.” 

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