U.S. Changing Key Law Could Mean "License to Bribe"
WASHINGTON, Sep 17 (IPS) - Changes to a key anti-bribery law that applies to international commerce, proposed by the U.S. Chamber of Commerce, could have disastrous consequences, hurting multinational firms, human rights, and the U.S.'s place of respect as an early adopter of the legislation, opponents to the changes argued here Friday.
According to a report published by the Open Society Foundation's (OSF) Open Society Policy Center, proposed changes to the Foreign Corrupt Practices Act (FCPA), corporate anti-bribery legislation passed in 1977, could create loopholes in the legislation so large as to make the FCPA largely useless.
Anti-corruption advocacy organisations including Global Financial Integrity, Transparency International, and the Project on Government Oversight have written letters in support of keeping the FCPA, which applies to U.S. businesses and any businesses trading on the U.S. Stock Exchange and makes it a crime to trade favours for business advantages in countries where multinational companies do business, in its current form.
They say changing the FCPA now could also reduce the strength of a law, in force for more than 30 years, which OSF says is good for governance, good for human rights, and good for democracy. OSF pointed out that corruption has been linked to higher infant and maternal mortality rates in the countries that rank high on corruption indexes.
In several high-profile FCPA cases in 2009, the multinationals Siemens, a German company, and Halliburton, a U.S. company, paid settlements of 800 million and 559 million dollars, respectively. Chevron, IBM, and Johnson and Johnson have also been charged under the FCPA.
In 2010, under the FCPA, the Department of Justice (DOJ) investigated whether Johnson and Johnson and a dozen other drug companies bribed doctors and other health officials in foreign countries to prescribe their drugs. Johnson and Johnson reached a settlement in the case for 70 million dollars.
Supporters of the changes argue that an increase in prosecutions on the part of the DOJ and the Securities and Exchange Commission (SEC), the enforcement bodies behind the law, prove that the government is using its authority to over-prosecute, stifling U.S. corporate competitiveness abroad. To argue the case for FCPA revisions in front of Congress, the Chamber of Commerce has hired Michael Mukasey, former attorney general under President George Bush.
Proposed changes, outlined by the Chamber in 2010, include making provisions for companies with "compliance programmes", a requirement that intentions to bribe be "willful", further specifications about the definition of "foreign official", and elimination of civil liability for corporate subsidiary companies.
But Dan Danielsen, a professor at Northeastern University School of Law and co-author of the OSF report along with David Kennedy, a Harvard Law School professor, said the FCPA has mainly only been applied to egregious cases and that it often gave corporations the chance to settle or reform their practices.
"If you read the cases and looked at the details...you begin to see that what is going on through the DOJ and SEC is really working with business through deferred and non-prosecution agreements to evolve best practices," Danielsen said.
Lester Myers, a business consultant and Georgetown University professor present at the meeting, said measures such as the FCPA that supported transparency actually worked in the favour of businesses.
"Bribery is damaging to capitalism," Myers told IPS.
Bennett Freeman, senior vice president of sustainability research and policy at Calvert Asset Management, said the FCPA helped businesses by ensuring an equal playing field and said his company had implemented standards to ensure the companies it invests in uphold certain standards in the areas of social governance criteria.
"For us, living by the FCPA is an absolute touchstone," Freeman said. "We want transparency, stability and rule of law in the diverse markets were companies work around the world - transparency is really the investor's best friend."
He said he believed the current attack on the FCPA was ill-judged and ill-timed at a moment when the U.S. should be raising its standards for transparency rather than lowering them.
"We have got to keep the USA on the side of governance, rule of law, and fair playing fields bound by that rule of law around the world," Freeman said.
OSF said the Aluminum Company of America (Alcoa) has publicly supported keeping FCPA in its current form.
Changing the FCPA now, opponents to changes argue, could make the U.S. look soft on corporate crime, out of step with global trends toward stronger corporate oversight, and out of touch with an emerging global reality in which revolutions across the Arab world were in part fueled by popular anger at corporate and government corruption.
"What is underlying this is the desire to radically alter corporate criminal liability," Sarah Pray, policy analyst with the Open Society Foundation (OSF), the international human rights, democracy and anti- corruption advocacy organization that published the report, told IPS.
"Nuancing who you can and cannot bribe, what part of the corporate structure can do the bribery – it is inappropriate, and it is wrong," Pray said.
Danielsen said the proposed changes significantly limited the scope of the FCPA by making the language of the provisions of the act more specific. While at first glance, the move might give the impression of making the law stricter, it actually essentially created a "line in the sand to cross," he said.
On closer inspection, Danielsen said, the proposed amended FCPA "looks more like a license to commit intentional acts of bribery".