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Is it really time to weaken the Foreign Corrupt Practices Act?
This guest post comes from Yewande Ajoke Agboola, a law student at University of Maryland School of Law currently interning with our campaigns team in Washington DC.
The Robert Murdoch News of the World police bribery and phone hacking scandal continues to evolve with the arrest and resignation of the company’s former editor this weekend and the resignation of the head of Scotland Yard on Sunday. In addition to resignations, there will be a hearing before British lawmakers investigating the allegations that is set to include Murdoch, his son, and the former editor today. With sordid new details emerging daily (including reports that employees or associates attempted to hack into phone conversations and voice mail of September 11 survivors, victims and their families) British and U.S. law enforcement investigations have begun and an important U.S. law, the Foreign Corrupt Practices Act (FCPA), is receiving renewed attention.
The FCPA makes it illegal for U.S.-listed companies, their employees or agents to make bribes to foreign officials. In this case, the Act may lead to liability for News of the World’s U.S. parent, News Corporation if News of the World was involved in the bribery scheme. The FCPA has not only punished companies that have bribed foreign officials to the tune of around $2 billion in fines in the last two years, but the threat of criminal fines and penalties has changed business practices for the better around the globe.
Not surprisingly, arguably the best tool the U.S. has to prevent international bribery is under attack from the very same corporations that have been the subject of FCPA investigations, fines, and compliance requirements. Spear-heading the movement to amend the FCPA is the U.S. Chamber of Commerce, which last October released a white paper detailing the Chamber’s desired amendments to the FCPA. The suggestions which in part include adding a ‘willfulness’ requirement for corporate criminal liability, limiting liability of a parent company for the acts of its subsidiaries, and limiting liability for acquired company acts, would greatly weaken the Department of Justice’s (DOJ) ability to prosecute companies under the FCPA.
So, who is bank rolling this campaign to weaken the FCPA? The Chamber of Commerce’s major donors include multinational oil companies, those involved in the defense industry and companies, which like News Corp, have been charged with or accused of bribing foreign officials. In fact, according the watchdog group, ChamberWatch, six current or former Chamber of Commerce or the Chamber’s Institute for Legal Reform board members (the Chamber’s institute responsible for the proposed FCPA amendments) have FCPA charges currently pending or have already been fined between $10 million and $800 million for violations of the FCPA.
While the Chamber has denied the link, News Corp’s $1 million donation to the Chamber just before the Chamber stepped-up efforts to weaken the FCPA is deeply troubling as are the more systemic implications -- that companies investigated and caught bribing foreign officials are using their economic and political influence to try and weaken anti-bribery laws through the U.S. Chamber of Commerce.
Of course, weakening anti-bribery laws is not the only priority of the Chamber of Commerce, who spent $6,030,000 lobbying on the FCPA and numerous other bills during the first quarter of 2011 and during the 4th quarter of 2010 spent an additional $14,490,000 pressing the U.S. government to toe the corporate line and modify, pass, and repeal laws that suit their corporate interests.
So, who in the U.S. government is buying what the Chamber is selling? Leading the charge is U.S. House of Representative Member James Sensenbrenner, a Republican from Wisconsin. On June 14th, Sensenbrenner, the Chairman of the House Subcommittee on Crime, Terrorism and Homeland Security held a hearing on the FCPA in which he made it clear that he in fact intends to follow the Chamber of Commerce’s recommendations to loosen the FCPA and make it easier for U.S. companies to escape liability for bribing foreign officials. Under the guise of “bring[ing] clarity to what is and what is not illegal”, Sensenbrenner is supporting amendments (that may in fact have been drafted by the Chamber itself) that will fatally weaken the Act, making it nearly impossible for the DOJ to prosecute companies for bribing foreign officials.
Incidents such as the Murdoch hacking scandal should remind readers why such laws are necessary. The FCPA provides a strong and effective mechanism to prosecute illegal payments made to foreign officials. It allows the DOJ to prosecute companies, like News Corp, that use bribes to gain an unfair advantage in their market. And lawmakers who are considering changing the law to make bribery easier need to answer to a skeptical public why a critical tool that prevents corruption should be dismantled.