Beyond Balance IV: New Players, Same Playing Field

Serendipity is a wonderful thing. What better segue from my last posting than Wednesday’s announcement that Russia has signed the OECD Anti-Bribery Convention. This is a remarkable and important event. I hope we fully understand why.

When the U.S. enacted the FCPA in 1977, it was the only law of its kind in the world. And we were by and large comfortable at the time in our assumed role as the lone ranger of international commercial bribery. When the question arose in congressional debates of whether the statute would put U.S. businesses at a competitive disadvantage, many testified that it would not. Why? Because, they said, when U.S. companies do business overseas, they are only competing against other U.S. companies. We were, or so we then thought, the only game in town.

How quaint that notion now seems. And indeed, within ten years we would come to see that the U.S. had ceased to be monolithic in international business. In 1988, Congress specifically instructed the President to lobby the world’s other capital-exporting nations to adopt similar laws. We would achieve historic success in 1997 in the form of the OECD Convention. And as my prior post explained, we thought at the time that the OECD encompassed all the major players in international business: the U.S., the U.K., Germany, France, Japan.

And now that notion, too, seems quaint. Just as the global business world was once U.S.-dominated, so too was that world once OECD-dominated. But no more. A prominent Asian anti-corruption activist once described the OECD to me as a “wealthy nations club.” How many of the BRICs are full members? Answer:  none.

All the more important, then, that we bring non-member nations within the anti-bribery fold. But why is it important? We have historically spoken of “leveling the playing field,” but this metaphor is deeply business-centric. If multinational corporations are the players in this supposed game, what then are the countries in which they do business? The spectators? Or the turf?

Indeed, what the business community sees as a “competitive disadvantage” is, from the perspective of a developing country, something altogether more harmful. When companies subject to FCPA jurisdiction lose business they are out-competed, and thus displaced, by companies that are not subject to anti-bribery laws. These companies pay bribes and engage in other socially destructive forms of business conduct without fear of penalty. When companies subject to the FCPA are rendered unable to do business, we leave developing countries to be ravaged by foreign competitors whose own governments don’t much care.

But we should care; those who fought so hard to enact the FCPA in 1977, and to amend it in 1998, most certainly did. And if we do indeed care, what does it mean for FCPA reforms? We’ll go there next.

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Andy Spalding teaches international business law at the Chicago-Kent College of Law; effective June 1, he’ll be an Assistant Professor at the University of Richmond School of Law. A former Fulbright Senior Research Scholar and lawyer at a major international firm, he has lectured and conducted research on anti-corruption law throughout the developing world. He can be contacted here.

We’re grateful to Professor Spalding for allowing us to serialize ‘Beyond Balance.’

Beyond Balance I can be viewed here, Beyond Balance II here, and Beyond Balance III here.