Attorney General William French Smith took the Reagan administration's fight to overhaul the overseas bribery law to an international forum yesterday, contending that the law's ban on American companies paying bribes to get business abroad should be eased to reflect the reality of dealing in international markets.
Speaking at the United Nations in New York, Smith told about 1,000 members of the Union Internationale des Avocats, the oldest organization of international lawyers, that the administration intends "to eliminate the more offensive provisions of our law that both harm our companies' ability to compete abroad and offend the business sensibilities of other countries." He also advocated a multinational agreement on the issue.
The speech was Smith's first formal statement on the Foreign Corrupt Practices Act, which was passed in 1977 to stop American companies from paying bribes in foreign countries and has been under attack in recent months by U.S. multinational corporations.
Smith and other administration officials say they don't condone bribery. But they also make it clear they believe the bribery law was part of a "Watergate overreaction" period in Congress and should be amended to reflect international business realities.
Sen. John H. Chafee (R-R.I.) has introduced a bill that would amend the law in several respects to meet the objections of American businessmen who find its provisions onerous. Sen. William Proxmire (D-Wis.), a proponent of the law, has said the Chafee bill and the administration amendments amount to gutting the overseas bribery ban.
The attorney general did not elaborate on his reference to a multinational agreement on foreign bribery. But a State Department official told a Senate hearing in May that American diplomats have been pressing for such an agreement since 1976.
Ernest Johnson, deputy assistant secretary for economic and business affairs, told the Senate Banking Committee, which oversees the bribery law, that a U.N. committee had completed a draft of a proposed agreement. It never came to a vote, however, because Third World countries insisted on linking it with a code of conduct for multinational companies, Johnson said.
The administration has been looking for ways outside the U.N. to reach such an agreement, he said.
In his speech yesterday, Smith noted that the current bribery law prohibits some conduct by foreign intermediaries that is accepted in other countries. The administration amendments, he said, would show a "more appropriate regard" for such practices.
For instance, the administration supports the Chafee bill's provision to eliminate the current law's prohibition of payments to overseas agents if the American firm had "reason to know" it might be used for a bribe.
He did not spell out the other "offensive provisions" of the current law. But other administration officials, including Deputy Attorney General Edward C. Schmults, have criticized record-keeping requirements as burdensome and some key enforcement provisions as murky.
Smith said the Justice Department will support a growing trend in the courts to accommodate foreign government interests in cases here. Bilateral agreements with major trading partners might define when each country's law would apply, he said. Advance notice and consultation might at least narrow differences, Smith added.
The "extraterritorial" application of U.S. laws has been a major point of contention in American foreign policy in recent years. In the past few years, at least a dozen countries have passed laws blocking their own corporations from cooperating with U.S. investigations.
For instance, the government of Saudi Arabia has expressed consternation over a long-running Justice Department anti-trust investigation of the international oil companies.