- Notwithstanding the tone of much coverage, companies are not legally required to disclose past FCPA violations to the government when they emerge: “It’s my understanding from in-house counsel that those who [voluntarily] disclose are in the distinct minority,” says one observer. Also, Prof. Koehler notes that even if Wal-Mart successfully defends the Mexican outlays as lawful “facilitating payments,” the company could still be accused of violating FCPA’s “books and records” and internal control provisions as well as Sarbanes-Oxley. [Sue Reisinger, Corporate Counsel]
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Coyote recalls the eyes-averted maneuvers with which his former employer put itself in a posture of formal FCPA compliance when operating in corrupt countries;
- Must-read Scott Greenfield post: “The Foreign Corrupt Practices Act is the corporate version of blue laws, a reflection of American idealism born of our Puritanical origins, our Pollyanna-ish denial of how the sausage of business is made, our jingoistic belief that we are so integral to the economic functioning of the world that we can dictate a cultural and moral code for everyone, and they can either comply with our great American will or suck eggs. It’s a fantasy of self-righteousness, and even Wal-Mart got caught in the reality that the business of business is business, and not puffy-chested Americans can bully Mexicans into succumbing to our moralistic ways.” Also suggests what Wal-Mart might say in response (at least if Wal-Mart were a character in an Ayn Rand novel) and notes “efforts to take this mutt of a law and attempt to reform it, at least to the extent that it not make American multinational corporations chose between being criminals or uncompetitive.”
- Speaking of which, some reforms sought by business: “Bringing Transparency to the Foreign Corrupt Practices Act” [Michael Mukasey and James Dunlop, Federalist Society “Engage”]
- Jeffrey Miron: prosecute Wal-Mart but repeal FCPA [CNN/Cato]
- While agreeing that the FCPA we have at present is pretty bad, Prof. Bainbridge thinks a case can be made for such a law in principle;
- Something to get Capitol Hill Democrats on board for reform? FCPA might menace Hollywood on China dealings [WSJ “Corruption Currents”]
Earlier here, here, here, and (at Cato) here.
Filed under: China, Foreign Corrupt Practices Act, Mexico, Wal-Mart
3 Comments
You do need a law like this, in principle. Really, you don’t want corporations paying most types of bribes. The line between “everyone does this” bribes and ‘corrupting local officials’ is very fuzzy/non-existent, so it’s hard to defend these sort of payments.
The innovation of the FCPA, of course, is extraterritoriality, the idea of asserting American law over interactions that take place in other countries. That the U.S. government is growing accustomed to asserting extraterritorial authority in other areas of law too (e.g. antitrust, terrorism) does not make it any less troubling. The principle would not be that different if Congress began decreeing prison terms for American tourists who smoke pot in Amsterdam cafes (but I probably shouldn’t be giving them any ideas.)
In a perfect universe, Walmart would be tried before a jury of 12 impartial Mexicans on this question: Did Walmart’s actions, overall, harm or help Mexico? (But if Walmart was bribing officials to hobble competitors, by all means throw the book at them.)