Would The Tea Party Repeal The FCPA?

Republicans didn’t always like the FCPA. In their Minority Comments from September 1977, House Republicans said they abhorred bribery abroad. But the only real way to fight it, they insisted, was through disclosure.

“This is because the legislation will be extremely difficult, if not impossible, to enforce,” they wrote. “Payments falling within the scope of the legislation would include payments made on foreign soil to foreign officials and most of such payments certainly require the active cooperation of foreign individuals and governments. Without such cooperation, the difficulties of obtaining witnesses and evidence to successfully investigate and prosecute the case would be insurmountable.”

Despite their dire predictions, the FCPA worked reasonably well. Although there wasn’t much enforcement during the Reagan Administration, the FCPA was left in place. And by 2007, the Wall Street Journal even called enactment of the Foreign Corrupt Practices Act one of Congress’ finest moments.

But if given the chance, would today’s conservative politicians repeal the law, and in particular the antibribery provisions?

A core value of the Tea Party movement is “limited government, as authorized by the Constitution.” We’ve heard plenty of lawyers and business people say the feds shouldn’t be trying to regulate what happens overseas. Would Tea Partiers agree?

We doubt it. Long before the FCPA, there were some important U.S. laws with extra-territorial application. Among them were 18 U.S.C. § 1546 (fraud and misuse of visas, permits, and other entry documents), 18 U.S.C. § 2314 (transportation of stolen goods, securities, moneys, fraudulent state stamps, or articles used in counterfeiting), 18 U.S.C. § 2381 (treason committed “within the United States or elsewhere”), 50 App. 18 U.S.C. § 1 et seq. (Trading with the Enemy Act), 15 U.S.C. § 776 et seq. (Securities Exchange Act of 1934), 15 U.S.C. § 1-7 (Sherman Anti-Trust Act), 15 U.S.C. § 41 et seq. (Federal Trade Commission Act), et cetera.

How about free markets? In an unhampered system, isn’t some bribery a natural and organic part of trade and commerce? Sure it’s harmful, but aren’t lots of aspects of free markets potentially harmful? We should accept the bad with the good, the laissez-faire argument goes, which means getting rid of the FCPA — at least the antibribery provisions.

First, laissez-faire economics is a mighty tough sell since Alan Greenspan’s mea culpa for the Great Recession. (“I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”)

Beyond that, views about bribery abroad have changed over the past 25 years, and more so since 9/11. The link between integrity in the markets and global security is now a lot clearer.

That’s why in 2004, President George W. Bush supplemented the FCPA, which never reached bribe takers. He enacted a law barring foreign kleptocrats, their families, and friends from entering the United States. In Proclamation 7750, he even equated free markets to clean markets, debunking the laissez-faire approach. He said:

In light of the importance of legitimate and transparent public institutions to world stability, peace, and development, and the serious negative effects that corruption of public institutions has on the United States efforts to promote security and to strengthen democratic institutions and free market systems, and in light of the importance to the United States and the international community of fighting corruption

President Bush also swung the FCPA itself like a big axe. From 2001 to 2004, according to the DOJ, it resolved or charged 17 FCPA cases. From 2005 to 2008, there were 42 resolutions, an increase of more than 200 percent from Mr. Bush’s first term to his second.

Coming back to today’s Tea Party, would it repeal the antibribery provisions? No. It’s more likely to see the FCPA as part of the solution to keeping markets free and America safe.