Foreign Corrupt Practices Act and the OECD Jina Yu US Global Trade Dr. Malawer
Overview • The FCPA of 1977 was enacted principally to prevent corporate bribery of foreign officials. • Encompassed “conscious disregard” and “willful blindness” • Not intended to cover ‘grease payments’ • 1998 amendment implemented the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. • Expanded scope of coverage to include some foreign persons and extended jurisdiction beyond the borders of the US.
US National Interest • In the competition-driven private sector, the United States has historically demanded a level playing field • With FCPA and OECD signatories would be playing with the same sets of rules • American corporations have argued that this legislation created an unfair disadvantage for American corporations in their efforts to export goods and services. • “Corruption is not a new problem…It’s a human problem and it has existed in some form in almost every society” Barack Obama, University of Nairobi, 2006
Effectiveness of FCPA • Increases the perceived cost of bribery for businesses • Resolution of cases through Non-Prosecution Agreements and Deferred Prosecution Agreements • Questionable deterrent effect • Possibly self-defeating in implementation • Lack of transparency • Inadequate measure of effectiveness
Policy proposal • Encourage greater transparency in Non- Prosecution Agreement (NPA) and Deferred Prosecution Agreement (DPA) resolutions • Increase scrutiny to determine effectiveness • Encourage greater international cooperation • Extradition, mutual legal assistance, mutual monitoring and enforcement • Encourage Corporate Social Responsibility • Emphasize limiting the bribery on the supply side in addition to demand side.
Sources • Hess, David. Enhancing the Effectiveness of the Foreign Corrupt Practices Act Through Corporate Social Responsibility (2012). Ohio State Law Journal, Vol 73, No5. http://ssrn.com/abstract=2221437 • Hollingshead, Ann. OECD gives US FCPA a pat on the back.Financial Integrity and Economic Development Task Force. 21 October 2010. http://www.financialtaskforce.org/2010/10/21/oecd-gives-u-s-fcpa-a-pat-on-the-back/ • Sanyal, Rajib. Patterns in International Bribery: Violations of the Foreign Corrupt Practices Act. Thunderbird International Business Review. Vol. 54, No. 3, May/June 2012. • Seitzinger, Michael. Foreign Corrupt Practices Act (FCPA): Congressional Interest and Executive Enforcement. Congression Research Service. 7 February 2012. www.crs.gov