Bravo to Matthew Brzezinski [op-ed, Sept. 17] for his comments on foreign investment in Russia. As a logistics analyst in Russia and Africa whose job it was to organize operations for foreign firms and development projects, I have witnessed the willingness of Western corporate interests to look the other way for, or participate in, dealings that would be the basis for prosecution had they taken place in a country with a legal system strong enough to challenge powerful interests.
Many expatriate business executives think that graft and corruption are the only way to get things done in the developing world. U.S. companies and individuals thus routinely flout the Foreign Corrupt Practices Act by awarding large subcontracts to companies affiliated with influential individuals in a host country or by allying themselves with corrupt local partners to grease the wheels for them. Some countries go so far as to give tax exemptions to companies for payments made directly to foreign officials.
The act, passed in 1977, has failed in its mission for two reasons. First, it only applied to U.S. companies, which put them at a distinct disadvantage to their competitors. Second, not all people worth influencing are government officials (which the act covers), and bribery isn't the only way to buy influence. Lucrative subcontracts and "ghost" positions given to influential people are effective, legal and not unusual.
By far, however, the most common way for a multinational corporation to leverage its "assets" is to partner with an influential local figure. The corruption level of that local partner is not a consideration as long as whatever advantage sought is provided.
After 20 years under this ineffective law, the opportunity for reform presented itself at least year's meeting of the Organization for Economic Cooperation and Development, where members passed a resolution to have an agreement on anti-corruption laws in all member states by the end of 1998. Unfortunately, the result, with the cumbersome title of the Convention for Combating Bribery of Foreign Public Officials in International Business Transactions, leaves ample wiggle room for myriad financial sleights of hand, used to grease influential palms, that are not bribery in its strictest sense. What's more, it does nothing to address problem of multinational corporations funding corrupt local partners.
What is needed is an international legal regime (put in place through treaty or through strengthening of the U.N. World Court) that can promulgate and enforce regulations requiring multinational corporations to show due diligence in ensuring that their local partners are not engaging in corrupt practices. Until that time, we can look forward to situations parallel to the one in Russia all over the developing world.
BRUCE L. BARKER