Chamber of Commerce Pushes ‘Radical Retreat’ from Global Fight Against Corrupt Business Practices, Report Says

by Jeremy Leaming

The U.S. Chamber of Commerce, the nation’s leading lobbyist for corporate America, is feverishly working to alter a federal law that has, as noted in a recent report published by the Open Society Foundations, helped spur a global effort to fight corrupt business practices.

In “Busting Bribery: Sustaining the Global Momentum of the Foreign Corrupt Practices Act,” scholars David Kennedy and Dan Danielsen write that the United States “has been a global leader in the fight against corruption,” citing the enactment in 1977 of the FCPA.

Early in the report Kennedy, a Harvard Law School professor, and Danielsen, a Northeastern University School of Law professor, note that the U.S. took the lead in fighting corrupt business practices overseas because its leaders realized that far-reaching “corruption abroad imposes enormous costs on American business, damages the global business environment and undermines the integrity and effectiveness of governments. A culture of corruption raises the costs of penetrating foreign markets and undermines predictability and business confidence. It imposes particular hardships on small and medium sized American enterprises seeking to participate in the global economy.”

Government and businesses had joined together to work to end corrupt business practices, which hobble efforts of smaller corporations to engage the global market. The passage of the FCPA, the authors write, “represented an alliance between the government and the American business community, driven by a shared recognition of the harms inflicted on American business by foreign corruption. The Act raised the cost of corruption and encouraged sound business practice. By criminalizing the payment of bribes abroad, the FCPA strengthened the hand of American business in refusing the demands of foreign officials. By requiring that listed companies maintain records and file reports, the FCPA encouraged internal vigilance by leading business actors.”

The passage of the FCPA, the authors note, spurred similar efforts worldwide. The United Nations, for example, in 2005 approved the Convention Against Corruption. The Chamber of Commerce, however, has argued the Department of Justice and the Securities and Exchange Commission have become heavy-handed in enforcing provisions of the FCPA. It is now pushing a string of amendments that it maintains is needed to restore “balance.”

The authors write that the Chamber, in a report calling for amendments to the FCPA, “makes a number of speculative claims about the risks of potential abuse of enforcement discretion by the DOJ and the SEC under the FCPA,” while offering “no actual evidence that these agencies are not achieving an appropriate balance between their FCPA compliance, on the one hand, and prosecuting the most egregious violations of the Act on the other.”

Kennedy and Danielsen argue that the Chamber is not seeking to restore a balance, but instead proposing measures that if adopted would significantly undermine the worldwide effort, sparked by the FCPA, to combat corrupt business practices.

“In fact,” the two write, “Congressional adoption of the Chamber’s proposed amendments to the FCPA would reflect a radical retreat in the global fight against corruption.”

The full report is available here.  

[image by Judit Kovács, Createch Ltd.]