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Explain the statement (either agreeing or disagreeing): The FCPA has too many...

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lscrivy | Student, Undergraduate | (Level 1) Salutatorian

Posted June 12, 2013 at 2:24 PM via web

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Explain the statement (either agreeing or disagreeing): The FCPA has too many exceptions to be an effective deterrent to unethical business practices.

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kipling2448 | (Level 2) Educator Emeritus

Posted June 12, 2013 at 3:51 PM (Answer #1)

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Throw a rock in Washington, D.C. and there is very good chance you will hit a lawyer, and a smart lawyer at that.  

Since's its passage in 1977, the Foreign Corrupt Practices Act (FCPA) has been enormously successful at changing the way American corporations conduct business abroad, particularly in the competition for contracts with foreign governments.  Having met in many countries with representatives of American multinational corporations, this educator has heard numerous complaints about the unfair advantage other countries' corporations enjoy because of the lack of legal restrictions in those countries on unethical business practices, mainly the bribing of foreign officials to win contracts.  For much of the world, "gratuities" or bribes to affect the completion of a contract is a routine and commonly accepted practice.  The FCPA has placed American companies at a competitive disadvantage when competing for contracts with many foreign governments, but the Act was and remains consistent with preferred American values.

Now, is it possible to exploit loopholes in the FCPA?  Clearly, a team of well-compensated corporate attornies can often find a way through a regulatory minefield.  And that is what it appears Walmart's attornies have done.

The provision in question reads as follows:

"(b) Exception for routine governmental action: Subsections (a) and (g) of this section shall not apply to any facilitating or expediting payment to a foreign official, political party, or party official the purpose of which is to expedite or to secure the performance of a routine governmental action by a foreign official, political party, or party official."

The intent of this provision of the law is to acknowledge global realities, and can, and has been, abused or exploited by American companies.  That loophole, however, has not substantially undermined the effectiveness or integrity of the FCPA.  The Department of Justice takes enforcement of the FCPA very seriously, and the fact that some companies have been found to be exploiting Section (c) of the FCPA does not detract from the law's overall effectiveness -- as many American corporations will attest in complaining about lost contracts because they couldn't bribe foreign officials like their competitors from other countries.

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