NCJ Number
65772
Journal
Fortune Volume: 98 Dated: (OCTOBER 9, 1978) Pages: 182-184,188
Date Published
1978
Length
4 pages
Annotation
VARIOUS INTERPRETATIONS OF THE FOREIGN CORRUPT PRACTICES ACT OF 1977 (FCPA) ARE DISCUSSED IN RELATION TO BRIBES, FACILITATING PAYMENTS, FOREIGN REPRESENTATIVES, AND ACCOUNTING PRACTICES.
Abstract
IN THE WAKE OF WATERGATE AND LOCKHEED PAYOFFS, CONGRESS ENACTED A LAW PROHIBITING SOME TYPES OF BRIBERY WHILE SUGGESTING THAT OTHER TYPES ARE PERMISSIBLE. ALTHOUGH THE NEW LEGISLATION OUTLAWS BRIBES OR GIFTS TO FOREIGN OFFICIALS TO FURTHER BUSINESS INTERESTS AND MAKES PARENT COMPANIES LIABLE FOR FOREIGN SUBSIDIARIES, EXECUTIVES WILL SEARCH CAREFULLY FOR LOOPHOLES SINCE NO PRECEDENTS EXIST. THE DRAFTERS OF THE LAW EXEMPTED 'GREASE,' OR FACILITATING PAYMENTS, BY EXCLUDING MINISTERIAL OR CLERICAL EMPLOYEES FROM THE DEFINITION OF FOREIGN OFFICIAL. THEREFORE, BRIBERY COULD LEGALLY OCCUR ON LOWER LEVELS. BECAUSE PAYMENTS TO FOREIGN PURCHASING AGENTS ARE NOT CONSIDERED BRIBES, THIS LOOPHOLE PERMITS FOREIGN OFFICIALS TO CONTINUE SELLING THEIR INFLUENCE IN COUNTRIES WHERE THE DISTINCTIONS BETWEEN PUBLIC AND PRIVATE SECTORS ARE HAZY OR NONEXISTENT. EXTORTION PAYMENTS ARE EXCLUDED FROM THE LAW, BUT COMPANIES SHOULD PROTECT THEMSELVES BY REPORTING THE DEMAND TO THE JUSTICE DEPARTMENT BEFORE PAYING. BY REQUIRING THAT A CORPORATE DEFENDANT BE CONVICTED BEFORE AN AGENT OR EMPLOYEE CAN BE PROSECUTED, THE LAW GIVES BLANKET IMMUNITY TO CORRUPT FOREIGN REPRESENTATIVES. THE FCPA PROVISIONS WHICH MANDATE INTERNAL ACCOUNTING CONTROLS MAY ULTIMATELY HAVE THE GREATEST IMPACT. THESE PROVISIONS DO NOT EXEMPT TRANSACTIONS TOO SMALL TO FINANCIALLY AFFECT THE CORPORATION, AND DO NOT MENTION FOREIGN PAYMENTS. ACCOUNTANTS AND SHAREHOLDERS CAN USE THE LAW TO EXPAND THEIR INFLUENCE ON CORPORATE DECISIONS. BOTH THE SECURITIES AND EXCHANGE COMMISSION AND THE JUSTICE DEPARTMENT ARE CHARGED WITH ENFORCING THE FCPA AND ARE EXPECTED TO PROCEED VIGOROUSLY. ULTIMATELY, THE ACT MAY DO MORE TO CONCEAL FOREIGN BRIBERY THAN ERADICATE IT, ESPECIALLY IF THE ECONOMICS OF INTERNATIONAL COMPETITION DEMAND ILLEGAL PAYOFFS. (MJM)