The General Accounting Office yesterday recommended that Congress amend the Foreign Corrupt Practices Act to repeal criminal penalties associated with violations of the accounting provisions and that federal agencies involved in enforcement meet business community objections to the act. a
The Foreign Corrupt Practices Act was passed in 1977 after revelations about widespread corporate bribery and other wrongdoing. Major offenses had been uncovered by the Securities and Exchange Commission which found corporations had misled shareholders and disguised millions of dollars in payments.
As public concern over the revelations has subsided, corporations covered by the act have been successful in mitigating it, winning Justice Department and SEC agreement to give them some guidance in advance about whether contemplated actions would be violations.
The GAO noted that the provisions of the act have generated substantial changes in corporate activities. "Overall, these changes should strengthen the system of corporate accountability and reduce the occurrence of questionable corporate payments," according to the report.
But it went on to note that in response to a GAO questionnaire, approximately 55 percent of the largest industrial firms who were polled said that they believe efforts to comply with the act's accounting provision have cost more than the benefits received.
Some 30 percent said that the antibribery provisions may have caused U.S. corporations to lose foreign business. That complaint has been a refrain of corporations seeking to weaken the act.
Among other things, the GAO recommended that the SEC give firms more guidance about how the act will be enforced.