Previous posts here  and here  discussed the recently introduced Foreign Extortion Prevention Act which seeks to “prohibit a foreign official from demanding a bribe” by amending – not the FCPA – but rather 18 USC 201 (the so-called domestic bribery statute).
In introducing the bill, Representative John Curtis (R-UT), one of the co-sponsors, stated. “Currently, a business being extorted for a bribe can only say ‘I can’t pay you a bribe because it is illegal and I might get arrested.’ This long-overdue bill would enable them to add, ‘and so will you.”
This remark caused a mid-1970’s flashback because, as highlighted below, it largely mirrors the policy rationale of those who supported addressing the so-called foreign corporate payments through a disclosure approach and not the criminalization approach that ultimately became the Foreign Corrupt Practices Act.
By way of background and as discussed in more detail in “The Story of the Foreign Corrupt Practices Act ” two main legislative responses soon emerged in Congress to address the foreign corporate payments problem.
A criminalization approach as to a narrow set of payments and a disclosure approach as to a wider set of payments.
Generally speaking, Democrats favored the criminalization approach whereas Republicans favored a disclosure approach.
During Congress’s early deliberations, Republican President Gerald Ford was in office. As highlighted in this prior post , the Ford administration favored a disclosure approach as to a broad category of payments and in 1976 President Ford issued a memorandum to various federal agencies establishing a “Task Force on Questionable Corporate Payments Abroad” (the “Task Force”). In a 1976 letter to Senator Proxmire, the Secretary of Commerce set forth the views of the Task Force on “proposed legislation concerning questionable corporate payments abroad” which stated in pertinent part:
“Such disclosure would provide protection for U.S. businessmen from extortion and other improper pressures, since would-be extorters would have to be willing to risk the pressures which would result from disclosure of their actions to the U.S. public and to their own governments.”
In urging enactment of the disclosure legislation, President Ford observed: “It will help deter would-be foreign extorters from seeking improper payments from American businessmen.”
At Congressional hearings that followed, a Department of Commerce official stated as follows in advocating the Ford administration position:
“The existence of the criminal prosecution would be of some value to an American businessman in resisting improper requests for payments abroad. I don’t believe, however, that it would have as much value as the disclosure requirements, for the following reasons. A would-be foreign extorter who asks for $50,000 to do something of importance to the American company, on the one hand would be told, ‘I can’t give you that money because if I do I might have to go to jail,’ and the extorter says, ‘That is your problem, bud, but there is no way, your law can reach me.’ If you have a disclosure provision and the American businessman says, ‘If I give you that money, I am going to have to report the payment to the Department of Commerce, possibly to the SEC, and it will therefore be in the public record, and your name will be in the public record.’ If we are right that every other country in the world, virtually every other country, has laws against public bribery and extortion, then it is our guess that the extorter will be substantially deterred.”
And now back to 2019 as Congress considers once again how best to deter corrupt foreign officials from demanding bribe payments.
Strategies For Minimizing Risk Under The FCPA
A compliance guide with issue-spotting scenarios, skills exercises and model answers. "This book is a prime example of why corporate compliance professionals and practitioners alike continue to listen to Professor Koehler."