Rep. Lamar Smith's Fight to Make Bribery Easier For Big Business

June 09, 2011 9:44 am ET — Brian Powell

Rep. Lamar Smith

Rep. Lamar Smith (R-TX) seems to be taking on a surprising new cause celebre — fighting to roll back anti-bribery laws. He's using his power as the chair of the House Judiciary Committee to investigate the structure and enforcement of the decades-old Foreign Corrupt Practices Act, and according to his staff, Smith intends to parrot FCPA reform suggestions written by the U.S. Chamber of Commerce, one of the foremost financial backers of the GOP.

The FCPA was enacted in 1977 to prohibit "U.S. firms from bribing [foreign] officials to win or maintain business." Enforcement of the act under the Bush administration was exceptionally low — in 2004, the Department of Justice charged only two persons under the FCPA and only five were charged in 2005, for a total of $27.5 million in fines.

The Obama administration has since stepped up enforcement efforts, levying more than $1 billion in fines in 2010. Predictably, DOJ is now facing attacks from some Republicans like Smith and their Big Business backers who want to see the anti-bribery statute rolled back.

MainJustice.com has reported that Smith will be holding a hearing into FCPA on June 14, and reported that Smith's senior counsel, Sam Ramer, has already laid out specific changes to the FCPA that might be explored:

At the event in May, Ramer said the committee's staff is looking at four potential changes to the FCPA. They are considering whether to limit a company's "successor liability" to past FCPA violations committed by companies they have acquired, to create an affirmative compliance defense, to seek more specificity on the definition of a foreign official under the law, and to create a corporate willfulness requirement under the FCPA.

The "potential changes" highlighted by Smith's counsel mirror restrictions to the anti-bribery law that were proposed last October by the U.S. Chamber's Institute for Legal Reform, which were presumably made available at a Chamber Congressional staff briefing in April. The Chamber's recommendations:

Specifically, this paper recommends the following reforms:

  • 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

  • Defining a "foreign official" under the statute.

Smith's looming fight to make it easier for corporations to bribe governments would seem at first glance to be morally questionable and politically dangerous. Upon closer inspection, it's hardly surprising at all. Smith has close ties to the Chamber, who has presented him with multiple awards and a lifetime rating of 93% for his consistent record of advocating the Chamber's principles.

The icing on the corruption cake is found in a recent KPMG LLP poll of executives in the U.S. and the U.K., which indicates that the Chamber's animosity toward the FCPA, and therefore Smith's effort to reform it, is not supported by actual business leaders. A Wall Street Journal blog notes:

A KPMG LLP poll of 214 executives in the U.S. and the U.K. showed that only 39% believed anti-corruption laws had hurt them competitively, and fewer than 20% though enforcement of such laws was "excessive." The survey offered a glimpse into the C-Suite as the U.S. Chamber of Commerce intensifies efforts to amend the FCPA on the grounds that aggressive enforcement has held back U.S. business.

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