Kickback backlash: under the US Foreign Corrupt Practices Act, overseas firms with business interests in the US are being prosecuted for allegedly bribing public officials in other countries. Neil Hodge reports on an escalation in Washington's worldwide war on corruption.
| Author | Hodge, Neil |
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While the UK government has been busy ratifying global conventions and enacting domestic legislation to battle corruption committed by British citizens and companies in foreign parts, it's the long arm of a US anti-bribery law that's been reaching further and causing more consternation.
The Foreign Corrupt Practices Act (FCPA) was created in 1977 after an investigation by the US Securities and Exchange Commission (SEC) found that over 400 American firms had made questionable or illegal payments totalling hundreds of millions of dollars to foreign government officials and political parties. The act has extended significantly in scope over the past three decades, with prosecutors using it in the tenacious pursuit of corporate wrongdoing, both in the US and abroad. Owing to the extra-territorial nature of the law--and its highly punitive measures--experts believe that many UK organisations and individuals could now be in the firing line without fully appreciating the danger.
Over the past few years authorities such as the SEC and the US Department of Justice (DoJ) have turned their attentions towards the more questionable activities of foreign companies. All overseas firms that do business in the US are subject to scrutiny, along with those that use service providers based there. The FCPA allows prosecutors to take action against such companies for corruption even though the illegal transactions may be taking place in another country.
Given that companies based in the world's leading economies are clearly prepared to grease palms in exchange for a more lucrative deal, it looks as though the US regulators will be able to declare open season on foreign companies, according to Transparency International. The anticorruption group's Bribe Payers Index is a measure of how willing a nation's businesses are to resort to giving backhanders. Ever keen to secure new contracts, Switzerland tops the chart, followed by Sweden, Australia, Austria, Canada, the UK, Germany and the Netherlands. The US comes equal ninth with Belgium. These countries account for more than a third of global exports. Curiously, given their countries' reputations for corrupt domestic practices, firms from Russia, China and India are among the least likely to pay bribes abroad.
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The DoJ has put some high-profile foreign firms under the microscope in recent months. In June 2007 it announced that it would be scrutinising transactions at BAE...
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