claims the government is unfairly tar- geting the two firms for trying to do business in countries where cultures and laws are quite different. American business mogul Don-
ald Trump agrees that the FCPA has become a liability. “[This country] prosecutes people for going to China and Mexico and getting business, and creating jobs,” Trump said recently on CNBC’s Squawk Box. “[That’s] abso- lutely crazy.” FCPA cases typically take between
two and four years to play out, accord- ing to Butler University professor Mike Koehler, one of America’s leading experts on FCPA law. Often, the end result is a corporate fine that goes into government coffers. In 2010 alone, FCPA violations accounted for a stag- gering $1.8 billion. That sum alone could run the risk of making U.S. firms less competitive. But Obama adminis- tration officials contend that instead of lowering U.S. standards, America should work with other countries to raise theirs. It is true that some 35 nations, including Britain and France, have added “FCPA-like” laws in the
past two decades. But critics say their enforcement of those laws is not near- ly as robust as in the United States.
B
oston law professor Elizabeth Spahn says the FCPA protects
businesses from blackmail by com- pelling them to reject bribe demands under threat of prosecution. “I think [the FCPA] gives them a
huge advantage; it’s a shelter,” said Spahn, a faculty member at New Eng- land Law in Boston, Mass. “If an indi- vidual business transaction or indi- vidual business pays a bribe, they’re vulnerable to repeated and increasing bribe demands.” Spahn acknowledges the pressure
that businesses are under to compete. But she is singularly unmoved by their plight. “I’m just saying if business- es can’t abide by the law, don’t do business,” she says. But Wagner, the expert on managing corporate risks abroad, sees it differently. “It makes little sense to paint all businesses with a similar brush and say the act enables them
or prevents them from functioning effectively,” he says. “Of course, each situation is different. But I believe it’s inherently disadvantageous, and U.S. businesses overall would be better off and more competitive if they didn’t have to contend with the act.”
The Price of Honesty
W
hile the debate rages over the Foreign Corrupt Practices Act,
some U.S. companies simply have opted out of foreign opportunities. How does that cost the U.S. economy each year? It is anybody’s guess, but it could be in the billions. “We’ve heard quite a bit from our members and nonmembers in the business community about challenges in complying with the FCPA, and how they’ve avoided certain markets,” said U.S. Chamber Institute for Legal Reform Executive Vice President Harold Kim. According to Deloitte’s 2011 annual
ADELSON
“Look Before You Leap” survey, 63 percent of corporate executives, investment bankers, and hedge-fund managers report that FCPA and anti-corruption issues caused them to renegotiate, or cancel, business deals over the last three years. Butler University professor Mike
63%
SAND PIT Sheldon Adelson’s Sands Cotai Central, in Macau, is being investigated by the Justice Department for allegedly dealing with Chinese organized crime.
Koehler, one of the top experts on corrupt-practices law, says playing by the rules doesn’t always nix the deal for U.S. businesses. But when it comes to America’s foremost business rival on the global stage, it often does, he says. “It’s well documented that the Chinese are building the bridges and infrastructure and paving the roads in many African and Central Asian countries in light of numerous allegations that Chinese companies are improperly securing contracts,” says Koehler.
AUGUST 2012 | NEWSMAX 15
Businesses that say FCPA created problems over potential deals.
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