Reports of kickbacks paid by British companies to Malaysian officials in exchange for construction contracts, and of the British government linking arms sales to its aid program, have again brought to the fore the issue of Western involvement in foreign corruption.
For a Swiss, Japanese or Dutch businessman, giving that little extra something to get a contract through in a foreign country is no problem - just
put it down on your income statement and you may even get a tax deduction.But for a U.S. executive, the same actions could result in criminal prosecution, heavy fines and a ban on future bidding for government- procurement contracts. Indeed, U.S. companies are forced to abide by laws that make it a crime to engage in efforts to secure any form of payment for preferential treatment on contracts outside the United States.
The Justice Department itself has prosecuted some three dozen criminal cases under the Foreign Corrupt Practices Act since the statute took effect in 1977, said Peter Clarke, deputy chief of Justice's fraud division and the man in charge of enforcing FCPA. He said about a dozen other cases involving the statute have been brought by different agencies.
In a bid to gain more equal footing in foreign markets, U.S. business leaders are lobbying for other developed nations to adapt the U.S. approach concerning corrupt practices abroad.
"We tried in the past to lobby Congress to relax laws concerning corruption and bribe giving that were making U.S. companies uncompetitive abroad," said Fritz Heimann, general counsel for General Electric and chairman of the U.S. chapter of Transparency International, an Amnesty International affiliate that opposes corruption.
"But trying to get Congress to vote for corruption was impossible, so we want other developed nations to adopt U.S.-style legislation."
GE has firsthand experience with the Foreign Corrupt Practices Act. A lengthy investigation by the U.S. Justice Department into GE's complicity in bribing Israeli military officials for a defense contract, resulted last year in an out-of-court settlement in which GE paid an $8 million fine and $52 million in restitution.
"The affair was an enormous black eye for General Electric and a public relations nightmare," Mr. Heimann said.
According to Mr. Clarke, any company that tries to get favorable treatment by bribing public officials or hiring relatives of public officials is automatically vulnerable to the FCPA.
"All it takes to set off a FCPA investigation is that a U.S. instrument was used in giving a bribe," he said in an interview. "This can entail a phone call from the United States, a letter sent by U.S. mail and in one case a courier who flew over the United States."
Mr. Clarke said that most of his investigations are sparked by "whistle- blowers," disgruntled employees who inform Justice of their company's questionable business dealings.
He said U.S. corporations are liable not only for their actions but for those of their subsidiaries and any consultants controlled or paid by the U.S. parent company.
Violating U.S. laws on foreign trade can be costly both to a company's bottom line and in terms of corporate image.
Take the case of the Baxter International health care group, which pleaded guilty to federal charges of bribing Arab officials to get off the Arab blacklist of companies doing business in Israel.
Baxter was accused of paying a $2.7 million bribe in 1989 and paid out $6.5 million in civil and criminal fines for violating the U.S. ban on cooperating with the Arab boycott of Israel. However, Baxter's problems did not end with the fine. Then New York City Comptroller Elizabeth Holtzman called for a ban on Baxter bidding on any New York City health-care contracts.
The severity of the law, and its top-down enforcement approach of interrogating the chairman of a company first, has many U.S. companies crying out for global standards for all developed countries in line with the U.S. act.
U.S. Secretary of State Warren Christopher has been lobbying members of Paris-based Organization for Economic Cooperation and Development to adapt U.S.-style anti-corruption legislation and to cease condoning bribery abroad.
Last November Mr. Christopher attempted to push through a comprehensive agreement at the OECD regarding illicit payments.
"The OECD's recommendation of giving a menu of domestic legislation that countries can pick from is not strong enough and we want something stronger," the U.S. official said. "We are pushing for some kind of agreement by the June ministerial of OECD. Bribery puts U.S. companies at a disadvantage and distorts scarce resources targeted to the Third World, because money is used for bribes rather than projects."
The official said it was important that the OECD talks do not remain at mid-senior level and that "it is taken up by the heads of states themselves. It is not ruled out that it could be discussed during the July Economic Summit in Naples in July."