As highlighted in this post, Senator Marco Rubio recently introduced in the Senate a bill titled “Countering Corporate Corruption in China Act of 2022.”
In this release, Senator Rubio states that the legislation is “to modernize the Foreign Corrupt Practices Act by clarifying that the definition of corrupt intent includes actions that excuse the genocide in Xinjiang, advance the Chinese Communist Party’s (CCP) propaganda efforts, or “invest” in core CCP activities, among other actions. The legislation would require companies engaged in suspicious behavior to demonstrate that their actions are related to their underlying business, not part of a corrupt bargain with the Chinese Government or the CCP to gain or retain market access or receive any other benefit.”
Regardless of the merits of the foreign policy objectives, the Foreign Corrupt Practices Act is not the place for country specific foreign policy.
For approximately 45 years the FCPA has existed as a general anti-corruption statute without reference to any specific country. Now is not the time to add country specific provisions into the FCPA.
If the FCPA were amended to include China specific provisions, which country would be next? If conditions changed in the country, would the FCPA then be re-amended to remove the country specific provisions?
Senator Rubio’s bill seeks to target “corporate actions currying favor with the Chinese Communist Party” including “the hiring, promotion, or retention of Chinese Communist Party officials and children of those officials, such as the unlawful practices admitted to by certain entities subject to the corporate anti-corruption laws in what are commonly known as the “princelings” settlements.”
If, as Senator Rubio’s bill acknowledges, the FCPA is already capable of capturing this sort of activity (see e.g., the JP Morgan enforcement action), then there should be no need to amend the FCPA to capture this specific issue.
The other examples of “corporate actions currying favor with the Chinese Community Party” include rather vague examples of conduct that may directly or indirectly benefit a foreign government.
However, the FCPA has never captured providing things of value to a foreign government. As the DOJ and SEC rightly acknowledge in the FCPA Guidance, “the FCPA prohibits payments to foreign officials, not to foreign governments.”
Should the FCPA be amended through Senator Rubio’s bill, the FCPA would capture providing certain things of value to one foreign government (China) but not the approximately other 190 sovereign foreign governments of the world.
In short, Senator Rubio’s bill (foreign policy objectives aside) is not a good idea and the FCPA should not be the place for country specific foreign policy.
