A White House study group is having second thoughts about making a proposal that would legalize some overseas bribery in U.S. Corporations, even if the action were designed to foster U.S. trade overseas.
The White House Export Disincentive Task Force, after presumably determining that an overseas bribe can be an export incentive, had concluded that the Foreign Corrupt Practices Act of 1977, which prohibits overseas bribery, was costing the United States $1 billion a year in lost trade.
Subcommittees of the group had produced a draft report for the White House with several recommendations aimed at offsetting the reported $1 billion loss.
But when a copy of the report was leaked last week, several members of Congress reacted strongly to some of the proposals, including the one that would gut much of the bribery law and another that would take enforcement power from the Securities and Exchange Commission.
In addition, SEC and Justice Department officials said privately, much of the draft proposal reflected intense lobbying on the White House and the Commerce Department by businessmen seeking to undermine the bribery law.
At a House Commerce subcommittee hearing yesterday at which task force Chairman John C. Renner testified, Rep. Bob Eckhardt (D-Tex.) criticized efforts in undermine overseas bribery laws.
"The Foreign Corrupt Practices Act has had a history of attempts by its opponents to undermine its effectiveness, even before it was passed," Eckhardt said. "The present situation suggests that these efforts have not stopped."
After Renner's testimony before the panel, he returned to the White House for a committee meeting to evaluate the draft recommendation.
The public criticism from Eckhardt and private written criticism from the Justice Department and the SEC apparently forced the task force to rethink its recommendations.
"We discussed our proposals and tore them to bits," Renner said.
He said the group decided to send many of the recommendations back to the subcommittees that had proposed them because "major elements need to be redone."
He said the changes resulted from "comments we got because of circulating the draft" and not because of political pressure.
But another person who attended the meeting said the Justice Department came in with an alternative proposal and raised questions about the $1 billion figure cited as the economic cost of the Bribery laws. The department also forwarded SEC criticism of the draft proposal.
SEC enforcement head Stanley Sporkin said he found the task force recommendations "very bizarre. I don't know what's going on there."
Sporkin backs strong anti-bribery regulations, and opposes having the SEC's enforcement role in that area removed. He said one of the task force proposals. He publishing of guidelines on how companies can comply with the anti-bribery law, could even serve to help companies learn how to circumvent the law.
Renner said the purpose of his group was to look at how federal laws, regulations and policies affect exports and jobs.
He said he didn't know who named the group, but that when he told some European businessmen that he was working on "export disincentives," they asked what he was talking about.
"They couldn't figure out what we were looking at, or why," he said.