But everybody does it and unless they really want what you’re selling – like military hardware – you don’t have a prayer unless you are willing to grease a few palms. After all that’s what the competition is doing, and you’ve gotta do what you gotta do to compete. Hey, we do what we do, hire an “expediter,” and look the other way. That’s the attitude of too many American companies doing business in countries where bribery is a fact of life. Until not too long ago, some Western European nations even allowed such bribes to be legitimate deductions against a company’s income tax. Nations figured that as long as the bribes were being made “over there” and not in the home country, their businesses shouldn’t be disadvantaged where “that’s just the way it is.” Today, most modern countries have laws that proscribe such “business-enhancing” activities. And of course bribery is against the law in most countries, even if it is a way of life.
Despite the fact that such statutes are on the books of most countries, these laws are seldom enforced… except in the United States which applies its ban on bribing officials overseas to U.S. citizens, residents, companies that operate from the United States, etc. And hiring that expediter when you know or should know what is going to happen with all that money doesn’t get you off the hook. Treating officials to lavish trips or serious gifts on the road to a big sale is also a no-no. It’s a felony with huge fines and jail time for the participants. There are a few loopholes, that may still violate local law, like paying to have something happen faster if getting what you want would otherwise be certain… if later.
Here’s how the Department of Justice describes our laws on their website: “The Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §§ 78dd-1, et seq. ("FCPA"), was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. Specifically, the anti-bribery provisions of the FCPA prohibit the willful use of the mails or any means of instrumentality of interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a foreign official to influence the foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person.”
In the mid-1970s, investigations showed hundreds of millions of dollars of bribes being paid by US. companies to get deals done. Lockheed forked over a purported $22 million to sell fighter jets, and Chiquita paid allegedly paid a Honduran president $2.5 million to keep export taxes on bananas low. Think of Nigeria or Hamid Karzai in Afghanistan or so many corrupt regimes in Asia, Africa, Latin America… etc. I’m not talking about the common bribes in the United States that grab the headlines from time to time, but about legitimate businesses trying to sell products and services in a corrupt global environment. Big non-U.S. companies with a strong U.S. presence can get nailed too: “Daimler AG, the German automaker, [paid] big fines to the U.S. government because two of its subsidiaries, one in Germany and the other in Russia, made improper payments to government officials of countries other than the U.S., such as China, Egypt and Serbia.” Time Magazine, April 7, 2010.
It even happens to companies that try to project down-home “apple pie and motherhood” American values. A huge scandal is brewing involving America own Wal*Mart and its Mexican subsidiary, Wal*Mart de Mexico. When a former executive of the company sent an email to the home office about how Wal*Mart was able to expand its operations in Mexico so fast, “he said, the company had paid bribes to obtain permits in virtually every corner of the country. .. The former executive gave names, dates and bribe amounts. He knew so much, he explained, because for years he had been the lawyer in charge of obtaining construction permits for Wal-Mart de Mexico.
“Wal-Mart dispatched investigators to Mexico City, and within days they unearthed evidence of widespread bribery. They found a paper trail of hundreds of suspect payments totaling more than $24 million. They also found documents showing that Wal-Mart de Mexico’s top executives not only knew about the payments, but had taken steps to conceal them from Wal-Mart’s headquarters in Bentonville, Ark. In a confidential report to his superiors, Wal-Mart’s lead investigator, a former F.B.I. special agent, summed up their initial findings this way: ‘There is reasonable suspicion to believe that Mexican and USA laws have been violated.’ … The lead investigator recommended that Wal-Mart expand the investigation… Instead, an examination by The New York Times found, Wal-Mart’s leaders [purportedly] shut it down.
“Neither American nor Mexican law enforcement officials were notified. None of Wal-Mart de Mexico’s leaders were disciplined. Indeed, its chief executive, Eduardo Castro-Wright, identified by the former executive as the driving force behind years of bribery, was promoted to vice chairman of Wal-Mart in 2008. Until [the NY Times] article, the allegations and Wal-Mart’s investigation had never been publicly disclosed… Under fire from labor critics, worried about press leaks and facing a sagging stock price, Wal-Mart’s leaders recognized that the allegations could have devastating consequences, documents and interviews show. Wal-Mart de Mexico was the company’s brightest success story, pitched to investors as a model for future growth. (Today, one in five Wal-Mart stores is in Mexico.) Confronted with evidence of corruption in Mexico, top Wal-Mart executives focused more on damage control than on rooting out wrongdoing.” New York Times, April 21st.
What’s even more shocking is what the company wanted to have happen in the United States: “Wal-Mart, the giant retailer now under fire over allegations of bribery in Mexico, has participated in an aggressive and high-priced lobbying campaign to amend the long-standing U.S. anti-bribery law that the company may have violated.” Washington Post, April 24th.
How this saga will end and whether there will be a successful prosecution of the FCPA remains open, but America’s corporate and business leaders should be acutely aware that the federal government has stepped up prosecution of FCPA cases, and are looking for stiffer fines and real jail time for selected corporate miscreants who enabled the process.
I’m Peter Dekom, and you have got to believe that banning bribery and corruption wherever it occurs is a necessary moral practice.
Posts
No comments:
Post a Comment