Many of the underlying issues addressed by President Trump’s recent Executive Order have been part of the Foreign Corrupt Practices Act “conversation” for decades.
In 1980, the Carter administration (President Carter signed the FCPA into law in 1977) sent a report to Congress prepared by the Secretary of Commerce and the U.S. Trade Representative titled ‘Report of the President on Export Promotion Functions and Potential Export Disincentives.’
In pertinent part, the report stated:
“The [FCPA] is identified by businessmen and attorneys as one of the most significant export disincentives. […] The Act inhibits exporting because of uncertainty within the business community about the meaning and application of some of its key provisions.
Uncertainty about the meaning of key provisions of the FCPA and how it will be applied is having a negative effect on U.S. exports. Many of the businessmen and attorneys consulted expressed the view that this uncertainty has a far greater impact than the actual prohibition against bribery. The problem described, in essence, is that what conduct is prohibited and what conduct is not prohibited under the Act is often unclear. In order to avoid possible violations of the Act, attorneys often give such cautious guidance that their clients simply forego any transactions where the FCPA could possibly become an issue.
The effects of these uncertainties reportedly manifest themselves in various ways. Consultations with the private sector revealed instances in which U.S. companies: withdrew from joint ventures for fear they later could be held responsible for the acts of their foreign partners; incurred substantial legal and investigative costs to check the backgrounds of their sales agents abroad; were unable to obtain the services of effective sales agents; lost contracts simply because of the time needed to investigate sales agents abroad and institute safeguards; withdrew from existing markets; and declined to enter new markets.
Finally, companies point out that the extent to which companies have been successfully prosecuted under the FCPA does not define the extent of the disincentive. Uncertainty can be a disincentive without any prosecutions and, moreover, exports are inhibited merely by the possibility of public charges and the adverse publicity surrounding them. Even where a company is totally convinced that a court would find that it had not violated the FCPA, it nonetheless may forego the export opportunity for fear that an enforcement agency could publicly charge it with a violation of the Act.”
In 1981, the Government Accounting Office (‘GAO’), the investigative arm of Congress, released a report titled ‘Impact of Foreign Corrupt Practices Act on U.S. Business.’ The report was based in part on a GAO questionnaire survey of 250 companies randomly selected from the Fortune 1000 list of the largest industrial firms in the U.S. and the questionnaire addressed the FCPA’s relationship to the following four areas: (1) corporate policies and/or codes of conduct; (2) corporate systems of accountability; (3) cost burdens, if any, incurred by management to comply with the FCPA; and (4) corporate opinions regarding the: (i) FCPA’s effect on U.S. corporate foreign sales; (ii) the clarity of the FCPA’s provisions; (iii) the potential effectiveness of an international anti-bribery agreement; and (iv) perceived effectiveness of the FCPA in reducing questionable payments.
The GAO found that while the FCPA ‘has brought about efforts to strengthen corporate codes of conduct and systems of internal accounting control,’ corporations reported that ‘their efforts to comply with the [the FCPA] have resulted in costs that were greater than the benefits received’ and that a substantial number of businesses ‘reported that they had lost oversees business as a result’ of the FCPA. The GAO report noted concerns that the FCPA’s anti-bribery provisions were ‘vague and ambiguous’ and stated that while ‘unambiguous requirements may be impractical and could provide a roadmap for corporate bribery’ companies operating in the global marketplace ‘should be subject to clear and consistent demands by the Government agencies for enforcing the act.’
