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Harry Cassin
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In defense of the Caldwell Doctrine

Image courtesy of C-Span via YoutubeAs the FCPA Blog reported last week, DOJ criminal division chief Leslie Caldwell recently gave an important talk at Duke Law School in which she laid out her vision of the Foreign Corrupt Practices Act. Her vision is compelling, and important, in so many ways. I rise in defense of one of them.

Caldwell said, in relevant part,

“Corruption thwarts economic development, traps entire populations in poverty, and leaves countries without a credible justice system. Corrupt officials who put their personal enrichment before the benefit of their citizenry create unstable countries.”

In other words, the FCPA is not merely about corporate governance.  Reading so many of the recent settlement documents — replete with references to internal controls and tone at the top but no mention of overseas impact — it’s easy to believe that all we’re trying to do is reform companies.

Not so, says Caldwell.

It is also tempting to believe — as scholars and commentators have sometimes suggested — that we don’t want our companies investing in corruption-prone countries. If the country isn’t clean, then we shouldn’t be there, so the argument goes. Better to wash our hands of it. Leave them to their own devices.

Not so, says Caldwell.

Quite the contrary. The aim of the FCPA is to engage. It’s a foreign policy tool. A tool for what? For building institutions committed to transparency, accountability, fairness, and stability. For creating the conditions that we believe tend to promote long-term prosperity and freedom. And Caldwell is directly in line with the founding purposes of the FCPA — the mid-1970s legislative history is chock full with the themes she articulates so well today.

Put another way, the FCPA is meant to improve the conditions in which people around the world live. It’s in our national interest. FCPA enforcement should help the true victims of corruption: the citizens whose governments fail them time and again. We’re trying to raise awareness, build political will, reform institutions.  

Interesting premise. Now query: if we were to build an enforcement regime truly committed to the Caldwell Doctrine, what would it look like? Would we merely penalize corporations?

Or would we do more?


Andy Spalding is a senior editor of the FCPA Blog. He is an Assistant Professor at the University of Richmond School of Law.

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  1. The FCPA was designed to keep US companies engaged in international business, but to impose certain standards of behavior on those companies. I dispute that there actually was an element of "save the world" or helping victims of corruption. Post-enactment discussions have introduced these elements, but they were not present at the time the FCPA was enacted.

  2. The drafters of the anti-corruption guidelines at the OECD and the World Bank would be really surprised to find that their anti-corruption efforts were not directed at poverty alleviation, let alone that their many years of efforts in the area would now be known as "The Caldwell Doctrine".

  3. If the Caldwell doctrine is to take root, we should be engaging corruption ambassadors in the most vulnerable countries to signal our intent to encourage institution building. The FCPA may be curbing corporate excesses at home but it is doing very little to prevent the kind of aggressive rent-seeking behavior that characterizes much of the third world.

  4. I agree whole heartedly with Ms. Caldwell's statements. And, to that end, we need to stop the political contributions in the United States that encourage elected officials to put the interests of their supporters above the needs of the citizens. Political contributions are no less dangerous than bribes in that they discourage politicians from making tough cross party decisions that benefit the population as a whole not just special interest groups and big money contributors.

  5. The operating phrase is "The aim of the FCPA is to engage". Having worked across various countries in S E Asia and India – I believe engagement is the key. Just like the KFCs and Subways teach our retailers to smile and serve (exception being Thailand where the smile was always there), the foreign direct investments and foreign entities teach, nay force, us to learn to comply. And it has a multiplier effect – auditors and accountants and CXOs move on from these 'attempting to comply to FCPA' organizations – and they spread the word. Some of them even will attempt to make 100% local entities understand the need to educate employees in best practices, include similar guidance in procurement contracts. Eventually as Andy says – 'raise awareness, build political will, reform institutions'. Knowledge works in many ways – the results may not be as earlier intended and though unperceived will be welcome.

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