A major manufacturing company, reflecting the views of the National Association of Manufacturers, yesterday asked Congress to grant President Reagan power to suspend antibribery provisions of the Foreign Corrupt Practices Act.
Norman Pacun, vice president and general counsel of Ingeroll-Rand Co., a $3 billion producer of industrial machinery and equipment, said that temporarily removing those sanctions against American companies paying bribes overseas to win contracts would enhance the chances of negotiating an agreement among industrialized nations to eschew bribery as a tool for winning business.
An NAM official later said Pacun's statements reflected the organization's viewpoints.
Testifying before a Senate Banking, Housing and Urban Affairs hearing on revising the Foreign Corrupt Practices Act, Pacun noted that other industrial nations have not taken actions similar to the American law. That statute was adopted in 1977 after revelations of the widespread use, by U.S. corporations seeking contracts, of corporate slush funds to bribe foreign officials and others.
"Everyone concerned with this issue agrees that bribery is bad and that there should be an international agreement," said Pacun. "But no one explains how this is to be brought about in the presence of a U.S. law which rewards our competitors who use bribery to win contracts, while deferring action on an international agreement."
A suspension provision, Pacun said, "to be enforced at the discretion of the president for a reasonable period of time, perhaps six months," could be coupled with a renewed effort to win an international agreement.
But if no such agreement were achieved, the suspension could be extended at presidential discretion, Pacun said. He also suggested that the president be granted power to suspend the antibribery sanctions in specific geographic areas "if our exports were being affected adversely."
Pacun was one of several corporate officials yesterday who testified, much along the same lines as administration officials who have supported major modifications in the law -- changes that critics contend would gut the antibribery statute. The alterations, which would narrow some of the definitions of corruption, are contained in a bill introduced by Sen. John Chafee (R-R.I.) that generally has administration and business community backing.
Both corporate officials and administration representatives have asserted that the Foreign Corrupt Practices Act has limited U.S. exports, not just by outlawing bribery, but also because its provisions are so many and so unclear that it has paralyzed potential exporters.
The Chafee bill should respond to problems the law has created for American business "by clarifying and simplifying the law," said Robert McNeill, executive vice president for the Emergency Committee for American Trade, an organization of 63 large U.S. firms with extensive overseas business interests.
Shaw Mudge, president of a fragrance manufacturing company, testifying on behalf of the National Small Business Association, said that small businesses "cannot absorb the losses resulting from years of negotiating, followed by production and possible shipment, only to find that a foreign national requires 'grease.'" He was referring to so-called "grease payments" to clerical employes or minor functionaries, which are an accepted part of business in some countries.
Critics of the Foreign Corrupt Practices Act have complained that is is not clear which of these types of payments are allowable. The Chafee act seems to make that clear.
Mudge said in prepared testimony that his firm had spent $120,000 in negotiating, travel and other legitimate expenses to win a contract with a state-owned company abroad. Having beat our competitors and with the contract ready to sign, the U.S. company was confronted with a request by the manager of the state-owned plant for additional money to be deposited in a third country's bank.