Take, for example, the case of Lindsey Manufacturing — a saga the U.S. Chamber of Commerce loves to cite as it lobbies to change the law.
After having a hard time winning contracts from a Mexican utility company, the California firm shifted tactics, according to the U.S. government .
Using an intermediary, Lindsey Manufacturing allegedly bribed employees of the electric company. Among the sweeteners: a $297,500 Ferrari Spyder sports car, bought in 2007 at a dealership in Beverly Hills, Calif., and a $1.8 million yacht named Dream Seeker, paid for in part with money wired from a Swiss bank account.
Over several years, Lindsey Manufacturing did millions of dollars of business with the Mexican utility, the government said.
This year, after Lindsey Manufacturing and its president, Keith E. Lindsey, were indicted on charges of violating a federal anti-corruption law, they asked that the case be thrown out. Their argument was this: The Foreign Corrupt Practices Act (FCPA) makes it a crime to bribe officials of foreign governments, but employees of a state-owned Mexican utility aren’t government officials.
The U.S. Chamber of Commerce, one of Washington’s most powerful business lobbies, says the Lindsey case shows that the law is bad for business and that the way the government is interpreting it has gotten out of hand.
“You’d laugh at the absurdity of it — unless you were Keith Lindsey and you were defending yourself in a trial in which how one defines ‘foreign official’ could mean jail and millions of dollars in fines,” Lisa A. Rickard, president of the Chamber’s Institute for Legal Reform, wrote in a May online commentary.
“The Lindsey case and others like it have brought attention to the need to reform an outdated law that many believe is hurting American businesses’ ability to compete fairly in the global market,” Rickard wrote.
The FCPA was signed into law in 1977 amid revelations that hundreds of U.S. corporations had made illegal or dubious payments to foreign politicians, parties and government officials.
Congress explained the law in economic as well as moral terms.
Bribery “short-circuits the marketplace by directing business to those companies too inefficient to compete in terms of price, quality or service, or too lazy to engage in honest salesmanship, or too intent upon unloading marginal products,” a House report on the legislation said. The practice “puts pressure on ethical enterprises to lower their standards or risk losing business,” the report added.
The FCPA can be a headache for companies operating in countries where payoffs are expected. It can also create hazards when a U.S. corporation buys another company. The new owner acquires any advantages obtained through past bribes — along with the legal liability.