Anti Corruption Bill Moves Through Congress

As global attention on corruption as a contributing factor in the creation and spread of the Asian Financial Crisis increases, the U.S. Congress is poised to consider legislation implementing an international anti-corruption agreement. Last December, the Organization for Economic Cooperation and Development (OECD) signed an agreement with 33 member countries, including the U.S. This agreement will significantly alter the way businesses conduct themselves international in the next century.

The Senate ratified the treaty, passed by 33 OECD members in December 1997, on July 31, 1998. However, in order for the Treaty to have the full force of law, implementing legislation must pass both houses of Congress. This is because the treaty alters existing U.S. laws, primarily the Securities Exchange Act of 1934 and the Foreign Corrupt Practices Act of 1977.

In the past, many U.S. businesses complained that they were at a significant disadvantage when it came to competing with foreign companies for foreign contract all over the globe. That is because the U.S. has made it illegal for a U.S. business to bribe a foreign official for the purpose of gaining a contract, trade advantage, or other similar action since 1977. This is the gist of the Foreign Corrupt Practices Act.

However, many other countries competing with U.S. firms are not restricted by their governments in bribery related issues. In fact, some European countries actually gave their companies tax write-offs for bribery expenses. In 1996, the U.S. initiated a move with the OECD to reach an international treaty that would globalize the main portions of the Foreign Corrupt Practices Act.

While there was much opposition from many countries in Europe, Latin America and Asia initially, a series of global media focus on the level of corruption in many of the world's developed and developing economies began to change the hearts and minds of those in opposition. By mid-1997, it was clear that there would indeed be an international treaty on corruption.

Now, Representative Thomas J. Bliley (R-VA) has introduced legislation (H.R. 4353) that would implement the treaty ratified by the U.S. Senate in July. Similar legislation in the Senate (S. 2375) passed the Senate banking, Housing, and Urban Affairs Committee in June.

Both bills would alter the Securities Exchange Act of 1934 and the Foreign Corrupt Practices Act of 1977 by tightening the legal definitions of bribery and to whom may be considered a recipient of the action. It is estimated that U.S. businesses lose billions of dollars a year to competitors who bribe foreign officials for contracts. Moreover, some U.S. businesses lose hundreds of millions more defending charges of bribery and violating the Foreign Corrupt Practices Act.

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