Transparency International’s 2011 Corruption Perception Index (http://transparency.am/cpi.php) for 183 countries ranks only 50 countries in the top 50% of possible scores, with the UK and the US ranked 16th and 24th respectively. Over 70% of the respondents to a 2010 KPMG survey of US and UK companies believe that there are places in the world where business can only be conducted with bribery or corruption.
The OECD, the U.S. and the U.N. have been reasonably successful in the global promotion of anti-corruption and anti-bribery guidelines, laws and Conventions. The U.K.’s Bribery Act exceeds the U.S. Foreign Corruption Practice Act by prohibiting bribery of private individuals and companies as well as foreign officials; creates an offense for “corporate failure to prevent bribery” under Section 7, regardless of corporate notice, knowledge, or the conscious avoidance of each; and facially outlaws facilitation payments. The D&O diary blog (www.dandodiary.com) on January 6, 2012 produced a nice summary of 2011 FCPA enforcement and follow on cases, highlighting an increased trend in individual enforcement cases and the 2010-11 fine/penalty rampage by the SEC and DOJ. Like the attempt to recoup tax avoidance through the Foreign Asset Tax Compliance Act (FATCA), collecting revenue in times of government deficits is a noble goal. FATCA is more challenging for the U.S. than FCPA, because it requires more cooperation from foreign governments in order to be viable. While the U.K. Bribery Act is still in its formative period, enforcement has been more restrained than in the U.S. Diminished resources of the Serious Fraud Office accounts for some of this.
FCPA has been a relief act to compliance consultants, lawyers and accountants whose compliance processes have mitigated higher penalties and fines. The latter comes at significant cost of time and expense, which is compounded when investigatory, enforcement and follow on actions ensue. Should the U.S. government be penalizing its exporters when foreign countries have anti-bribery and corruption laws to prosecute such actions? Law is secondary to relationships in many countries that have jurisprudence that is different than civil or common law, or that is structurally weak. In these countries U.S. corporations are being required to impose our legal culture on societies that in practice do not accept it or risk FCPA violation. Such countries may for nationalistic reasons, selectively enforce their laws against foreign competitors, so why must the U.S. prosecute these companies if prosecution is not brought locally. Foreign corrupt practices law developed because in the natural resource extractive industries, some countries were too weak and corrupt to combat it. This still exists in numerous countries today. Nonetheless, it is time to restore a balance in U.S. prosecution while promoting more effective anti-corruption and anti-bribery national enforcement through global institutions. FCPA should be strictly enforced by the SEC and DOJ when the offending act(s) occur in countries that effectively and fairly enforce their own anti-bribery and anti-corruption laws against their nationals and foreigners. A list of these countries should be publicly noticed by the U.S. government on an annual basis. Since may prove to be diplomatically embarrassing the alternative would be to internally develop such procedures or to redirect or limit subject agency resources to effectively limit prosecution to such countries.