FCPA Not Well Developed???

FCPA not well developed???  B. Pinkowski
FCPA not well developed??? B. Pinkowski

Fighting corruption is tough. But succeeding in the international markets is tougher.  Particularly when well-intentioned laws in one country may attempt to change the operating culture for business across other countries. The FCPA is one of those well-intentioned laws.

We have good people in the US Government working to enforce the FCPA and generally create the boundaries that define an ethical working environment for business.  We also have good people in business working to build business, make relationships, and keep the wheels of commerce rolling.  (Both groups are highly dubious of each others’ motives.)  But after 35 years of FCPA, we have some opportunities to examine where our good intentions may have resulted in incomplete thinking.  Thinking that encourages business ventures to open outside the U.S.  Thinking that encourages businesses to put their money in other countries.  Thinking that creates unintended obstacles for U.S. businesses to succeed.

A full-on compliance industry has been created to address FCPA matters.  Complete with positives and negatives.  One of the negatives is an ever expanding due diligence checklists for businesses in response to uncertainty with the evolution of the FCPA and enforcement.

Kudos to Professor Mike Koehler for catching the tension in this issue with his recent blog: “SEC Official – ‘FCPA Law – Not Well Developed.” (www.FCPAprofessor.com)

Doing business internationally is challenging enough.  Finding  the path through the evolving FCPA minefield takes the challenges to a higher level.  (See Michael Volkov – targeting the seemingly endless due diligence activities.)  (http://.corruptioncrimecompliance.com) (When is enough enough?))

Many people recognize that the international fight against corruption in UNCAC and other international agreements is targeted at reducing the impacts that flow from governments weakened by corruption (destruction of national economies, poverty, human trafficking, human rights, and transnational crime).  The FCPA is very firmly, and appropriately part of that fight by creating rules to  control the way corporations engage to gain business advantage in foreign countries.

We have also seen that there are many ways of doing business in foreign countries that create the same negative results without violating the FCPA or local anti-corruption laws.  Especially in smaller countries.  (See Traditional Law.)

Business is fundamentally about building relationships that benefit the parties.  While we may complain about the situation, it is a fact that much of the world is based on relationships, and not simply a cold analysis of numbers.  Even in U.S. government procurement, there is the ongoing tension between finding a way to build relationship and affinity, and appearing to be “arms length.”

It’s not morally wrong that most activity in international business is targeted to “assist . . . in obtaining or retaining business.”  Seriously – Why else send the company representative to the foreign country?

Where the cost of a dinner threatens to put whole companies out of business we should take another look at (re)designing laws that more narrowly target the actions that create the devastating impacts from corruption.

Perhaps its time to look beyond enforcing the FCPA as it stands, to examining the consistency between the stated purpose of the FCPA, and our ideas about what businesses should be doing.   It may be time for some adjustments.

Brian Pinkowski

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