Bribery becomes riskier under U.S.
By Daniel W Gottlieb -- Purchasing, 1/14/1999
U.S. companies doing business overseas or competing for government contracts often face a Hobson's choice: either pay a bribe and risk prosecution under U.S. law or lose the deal. Reason: Until re-cently the United States stood alone among nations in criminalizing bribes to a foreign government official for the purpose of winning public procurements, including those for state-run enterprises. The Foreign Corrupt Practices Act (fcpa) has been on the books for over two decades. Meanwhile, most major foreign governments looked the other way, then added insult to injury by allowing bribes to be deducted for tax purposes.The rules of the game are changing, thanks to adoption by major industrial nations of the Organization for Economic Cooperation and Development (oecd) anti-bribery treaty. Congress passed the necessary changes to the U.S. laws, making them effective January 1. Other governments are following suit.
The main effect of the oecd treaty will be to "greatly facilitate cooperation in investigation of bribery cases," says Dan Newcomb, an attorney in fcpa practice with Shearman & Sterling. The treaty also broadens the scope of the law to include payments in return for an improper advantage, such as reduction of an import fee or tax. Another change, according to a U.S. official, is that the U.S. can now bring charges against any company or individual involved in a bribe on U.S. territory.
"There has already been a great upsurge in prosecutions in the last year," Newcomb says. John Howard, at the U.S. Chamber of Commerce, says the fcpa "disadvantaged" U.S. companies. "Now there will be more competition on the basis of price and quality instead of who's scratching who," Howard explains. "The key is what the other governments do with their own laws."
Transparency International, U.S., a coalition to curb corruption in international business transactions, says the treaty has moved a number of governments to eliminate or toughen their tax laws with respect to deductibility of bribes.
Of course bribery isn't confined to government procurement. "We don't have very good information about private to private bribery," says Frank Vogl, chairman of Transparency International, and the oecd treaty does not deal with it. Transparency and various voluntary business codes are calling attention to it, however.
Of course, it will be some time before enough governments implement the treaty and enough cases are prosecuted to make a dent in bribery. But the rules of the game are definitely changing.
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