Compliance Week invited me to write on what’s wrong with the Foreign Corrupt Practices Act. Excerpt:
Scenario: an American city hires an Asian-based bank to float a bond deal. Scandal! Turns out the bank wined and dined the mayor and council and treated them to sports events. After an investigation, the Asian bank agrees to put things right by paying millions of dollars to the government of France.
That’s crazy, right? What does any of this have to do with the government of France? But it’s certainly no crazier than the workings of our own Foreign Corrupt Practices Act, under which European companies have been made to pay penalties of $398 million and $240 million to the U.S. government over bribes paid to officials in Nigeria and Iran, respectively….
FCPA oversteps the proper bounds of federal lawmaking in at least four ways: it is extraterritorial, vicarious, punitive, and vague….
The business community in Washington has been pressing for legislation to clarify the 1977 law’s requirements, but I suggest we go further and re-examine things more fundamentally, including (beyond the problems above) the law’s break from principles of mutualism and comity in foreign relations and its role in scaring capable bidders away from infrastructure projects that could help lift some rural populations out of desperate poverty. “Making us feel better isn’t a good enough reason for a law.”