In the wake of the Wal-Mart Mexican bribery scandal, there's been renewed attention paid to the 1977 Foreign Corrupt Practices Act (FCPA). As law professor Peter Henning pointed out earlier this week in the New York Times, there have been more prosecutions recently than in the first years of the act's life. In fact, government actions increased 85 percent between 2009 and 2010, with 74 prosecutions brought and more than $1 billion in fines collected. Depending upon the violation, according to the law, a company can be fined up to $20 million, and an individual can be fined up to $5 million and spend up to 20 years in jail for each violation.
Predictably, some pro-business pundits are claiming the FCPA hurts American competitiveness. I would argue that these people are not really serving the best interests of American business, not to mention the American way of life. A Huffington Post piece a couple of days ago put it this way:
"For the US government to attempt to apply America's definition of what constitutes acceptable business behavior--in America--in a one-size-fits-all approach to doing business abroad makes little sense in a world where no single standard effectively applies--to anything, and it runs counter to the government's stated objective of making American business more globally competitive."
This argument, of course, is very reminiscent of similar reasoning saying that the US must not apply American standards of human rights, or women's rights, or democracy, or religious freedom--you name
it--overseas. And I think it is just as wrong as these relativistic views on graver issues.
A friend of mine was once actually asked to pay a bribe in a foreign country. It was a thumping big bribe, too. I can't say which country it was in or what it was for, but I can say that she found it an infuriating and frightening experience, and that she was delighted to be able to reply to the man who solicited the bribe, "Sorry, I'm an American, and I can go to jail if I pay a foreign official anything." That was the end of the story. The guy in question was disappointed, but he knew what she was talking about. It's surprising how word of the FCPA has spread around--which is one of the reasons the law is a damned good idea. It allows Americans a face-saving way out in what could be a dangerous situation, a way that allows us to avoid insulting foreign officials.
Here's another reason to support the FCPA: it prevents the migration of foreign corruption to our own country. Countries where you get asked to pay bribes are sometimes poor and unimportant countries. But sometimes they are rich countries that are badly governed, like Qaddafi's Libya, or former Soviet countries that are ruled by strongmen, like Uzbekistan or Kazakhstan. And sometimes these countries' rulers like to invest in the West.
Woe to the places they favor. I haven't seen this so much in the US, but there is enormous corruption of the business and political environment in the UK because of Libyan, Syrian, and Gulf money. Think about the release of Lockerbie bomber Abdel Basset Ali al-Megrahi--there's a congressional report by Senator Robert Menendez's office called "Justice Undone" that makes worthwhile reading. Or spend some time, as I have, looking at the roster of MPs and former MPs who have been involved with business in Qaddafi's Libya or cozying up to the Assad regime through their involvement with the British Syrian Society. And, as you'd expect, Britain's version of the FCPA was only adopted in 2010 and is far weaker (the fine can be unlimited but the maximum prison term is ten years).
Saying no to bribery--and saying it proudly, because it's not what America stands for--is one of the unequivocal moral triumphs of our foreign policy in the last thirty years. It tells the world, We are rich and we are ethical, and you can be too. In fact, a good amount of research suggests that transparency and prosperity go hand in hand. Not only do you have to bribe foreign officials to make money overseas, but the presence of bribery precludes normal incentives for success and growth. Plus, it's good for kids to realize that you don't have to go to bed every night ashamed of yourself to become rich. Somehow, we've managed to innovate, and prosper, despite having lived for 35 years with the FCPA. And we could do with a lot more in the way of insulation from corrupt regimes, not less.