Corporate America has mounted a well-funded lobbying campaign in recent years to persuade Congress to make changes to the law, known as the Foreign Corrupt Practices Act (FCPA) of 1977. That effort now appears stalled amid the outcry over allegations that Wal-Mart engaged in rampant bribery of officials in Mexico.
But the fight over how the law is enforced continues to intensify as the number of enforcement actions increases, from two in 2004 to 48 in 2010. Another significant jump is expected in 2012.
The Justice Department “is looking at another banner year,” Michael Volkov, a former federal prosecutor turned defense lawyer, wrote recently on the blog he maintains about FCPA issues. “Big cases are likely to start appearing on the radar screen. . . . Pharmaceutical and medical device companies are still being hammered. Movie studios may now be under the gun for activities in China. . . . The mill is churning.”
The enforcement spike has drawn praise from Secretary of State Hillary Rodham Clinton and other administration officials, who have hailed its impact in fighting corruption overseas. But it also has produced persistent and growing complaints from multinational companies, who argue that the law leaves too much uncertainty about what qualifies as bribery and that the government’s impulse to prosecute threatens to undermine U.S. competitiveness abroad.
Company officials and their advocates complain about what they see as murky language in the statute on issues such as who qualifies as a foreign official and the liability a parent company has for the behavior of subsidiaries.
Chamber of Commerce steps in
The lobbying effort to amend or clarify parts of the law has been headed by the U.S. Chamber of Commerce, which is outspoken in ways that individual companies are not. Several companies that are under investigation or have settled declined to comment beyond what they have disclosed in Securities and Exchange Commission filings.
The Chamber’s lobbying effort is centered in its Institute for Legal Reform, governed by a board of 40 corporate executives, at least 10 of whom represent firms that have been the subject of FCPA probes. Chamber officials say the issue is a priority for many of its members, whether they have been charged with violations or not.
Over the past two years, the Chamber has made slow but steady progress on Capitol Hill, where a lobbying team led by former U.S. attorney general Michael Mukasey met with key lawmakers and their staffs to outline potential legislative and executive branch changes.