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Nov. 21, 2013

U.S. Chamber of Commerce Attempting to Undermine Anti-Bribery Law, Public Citizen Report Shows

As the Foreign Corrupt Practices Act Increasingly Is Used to Enforce Anti-Bribery Law, U.S. Chamber Calls for It to Be Watered Down

WASHINGTON, D.C. – The U.S. Chamber of Commerce has been attempting since 2010 to weaken the Foreign Corrupt Practices Act (FCPA), asking for changes to the law that would make it easier for companies to bribe foreign officials and would hurt the economy overall, according to a new report released today by Public Citizen’s U.S. Chamber Watch program.

The report, “License to Bribe,” highlights efforts over the past several years by the U.S. Chamber of Commerce to weaken the FCPA. According to the report, the U.S. Chamber’s five proposals “show that the organization either greatly misunderstands many of the FCPA’s enforcement realities, or that it is purposefully oversimplifying how the law is enforced (or both).”

The report also describes responses to these requests, from experts and from the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), which have joint jurisdiction over FCPA matters and released guidelines seemingly in response to the U.S. Chamber’s requests.

The responses highlight concerns that the U.S. Chamber’s proposals would make the law less effective at curbing bribery and would weaken the health of both the world’s economy and of democratic institutions across the globe. The U.S. Chamber’s request for the FCPA to limit a company’s liability for the acts of its subsidiary, for example, was rebuffed by the DOJ and SEC because that change would give companies an incentive to create subsidiaries for the very purpose of engaging in bribery. The proposal is especially concerning given the fact that so many of the cases in which companies have been found guilty or paid settlements were ones in which this was the mechanism by which the corrupt behavior was taking place.

The report chronicles six cases of FCPA violations that highlight the importance of the law. One case is from August 2012, when the SEC charged Pfizer with allowing its subsidiaries to bribe doctors and other health care professionals employed by foreign governments in order to win business. The widespread practice had been going on since 2001, with alleged violations taking place in Bulgaria, China, Croatia, the Czech Republic, Italy, Kazakhstan, Russia and Serbia. The subsidiaries attempted to hide the bribes by disguising them in accounting records as “promotional expenses, marketing, training, travel and entertainment, clinical trials, freight, conferences, and advertising.”

The U.S. Chamber’s five suggested changes to the FCPA call for adding a compliance defense; limiting a company’s liability for the prior actions of a company it has acquired; adding a “willfulness” requirement for corporate criminal liability; limiting a company’s liability for acts of a subsidiary; and narrowing the definition of a “foreign official” under the statute (which could make it easier for a company to sidestep the law by bribing someone who doesn’t fit that definition).

The U.S. Chamber first called for these changes in 2010, when the FCPA increasingly was being enforced – from just five cases enforced in 2004 to a high of 74 in 2009. Last year, the FCPA was enforced 23 times. Earlier this year the U.S. Chamber responded to the DOJ and SEC guidance by requesting again the same five changes to the FCPA and adding a sixth – that the agencies announce when they decline to prosecute a company after an investigation.

“The U.S. Chamber of Commerce says it supports the economy as a whole, but its actions on the FCPA show otherwise,” said Jake Parent, coordinator of Public Citizen’s U.S. Chamber Watch program. “Making it easier for big companies to bribe foreign officials means that the kind of small businesses that drive job creation will have a harder time competing, and governments will have a harder time governing.”

Read the report.


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