The Chamber of Commerce is using misleading rhetoric to promote legislation that would shield businesses from punishment for bribery. Rep. Jim Sensenbrenner (R-WI) pledged to introduce a bill "reforming" the decades-old Foreign Corrupt Practices Act (FCPA) following a Judiciary Subcommittee hearing on the FCPA. The push for reform is fueled by the Chamber of Commerce's arguments that FCPA enforcement by both the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) is unprecedented and arbitrary. The Chamber claims that FCPA enforcement has been costly to business, which is in line with the Chamber's trite strategy of labeling just about every business regulation as a "jobs-killer."
Before this debate goes any further, and before Sensenbrenner introduces this bill, it's important to set the record straight about FCPA enforcement.
First, although FCPA enforcement has been on the rise in recent years, the bar for having a record year was set pretty low. Just five years ago, in 2006, the SEC and the DOJ handled just seven FCPA enforcement matters combined. Saying that FCPA enforcement is extraordinarily aggressive is like saying that a baseball player with a .150 batting average who gets three hits in one game is an all-star.
Second, in many cases the DOJ's and SEC's hits are being double-counted. On several occasions each agency charged the same company with violations of the FCPA, and in other cases, affiliated companies were charged in a single action. If we don't double-count cases and treat affiliated accusations as single matters, then there were just 20 FCPA enforcement matters in 2010.
Third, recent FCPA enforcement has been focused primarily on firms outside the U.S. In 2010, 11 of the 20 FCPA cases involved non-U.S. corporations, and these foreign corporations recreived a whopping 94 percent of all FCPA fines. 2010 is not an outlier either. According to Greg Andres, Deputy Assistant Attorney General of the Department of Justice’s Criminal Division, (see footage of his congressional testimony earlier this month), "Eight of the ten largest FCPA settlements in the history of the statute are against foreign companies." So, the argument that FCPA enforcement places an inordinate burden on U.S. corporations is simply not credible.
Fourth, the fines against U.S. corporations have been light by comparison. The nine FCPA enforcement matters in 2010 levied against U.S. corporations accounted for just six percent of all fines in 2010. These lighter settlements "call into question some of the outlandish claims made on both sides of the aisle—that the consequences of a FCPA violation are in all cases severe and dissuasive or that the enforcement penalties are out-of-control, extreme, and crippling," according to the FCPA specialists at Shearman & Sterling LLP.
In sum, FCPA enforcement, while on the rise, is hardly excessive, and FCPA enforcement has, at least recently, placed a greater burden on foreign firms than American firms—two important facts to consider when evaluating any provision that would infringe upon enforcement of this anti-bribery statute.
Ben Freeman is POGO’s National Security Fellow.