In these pixels, we’re fond of quoting A. A. Sommer, Jr. (1924-2002). During his years of public service, his perspective on the markets and their regulation was always influential, and is still worth studying. He was a commissioner of the Securities and Exchange Commission from 1973 to 1976 — during the lead up to enactment of the Foreign Corrupt Practices Act. Although he was a lawyer and not a CPA, he also served in the 1980s and 1990s as chairman of the Public Oversight Board and as a board member of the Financial Accounting Standards Advisory Council.
Here, from a speech he delivered on April 2, 1976 called “Business Ethics and the Free Enterprise System ,” are some of his thoughts about public corruption and its impact on global markets and ordinary citizens:
“[E]ven apart from the scandalous cases that have caught the headlines, there is something deeply troubling to me when business is done in the manner in which it is apparently done in some countries.
“All of us have been schooled in the notion that competition in price and quality among sellers is the surest road to the most efficient use of resources and maximum benefit to consumers. When business is bought by payments to gain official favor, this desirable competitive process is, somewhere in the world, subverted.
“And while we in this nation may not be the direct victims of this, nonetheless, such activity runs contrary to our heritage, our ideologies, our modes of thinking, and we therefore feel constrained to condemn it wherever it occurs and no matter what justification may be asserted.
“I think all of us would much prefer if all business, not just that done by American companies, were done in accordance with high ethics and strict adherence to the law. Regrettably, in some countries, apparently, the abortion of the competitive process is not seen as the evil that it is in this country and practices, repugnant to us, but which are ancient in origin and woven into the very structure of society, are accepted ways of doing business. This cultural clash, this conflict of ideologies, is a part of a total reality we cannot ignore and it is one that I would suggest we have not yet begun to understand fully or deal with effectively.”
He concluded by urging his listeners to ponder the harm to a country and its citizens when payments land in the pockets of corrupt officials instead of the national treasury: “This is surely a dimension that most people have not considered, and yet, I think is a most important one for it may well involve an ethical consideration that is perhaps more meaningful and more important than the legal problems associated with the bribe itself.”
As we’ve said before, Commissioner Sommer’s words always remind us why the FCPA matters.