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Revealed: Chamber of Commerce funding effort to weaken anti-bribery law

By John Byrne
Thursday, October 28, 2010 18:00 EDT
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The US Chamber of Commerce, which has injected massive sums into 2010 election races, is allegedly behind a massive push to weaken anti-bribery laws.

The Foreign Corrupt Practices Act, first enacted in 1977, prohibits companies from paying bribes to foreign officials in order to retain or obtain business. Both US companies and foreign companies operating in the United States are bound by the law.

Earlier this month, the liberal blog ThinkProgress (an arm of the liberal thinktank Center for American Progress) broke the news that the Chamber’s political action fund was being underwritten by myriad high-profile multinational firms, including Paris-based insurer AXA, the Swiss bank Credit Suisse, London-based bank HSBC, and pharmaceutical firms Novartis and Sanofi-Aventis.

The list also included nine companies located in the Middle Eastern kingdom of Bahrain, including Gulf Petrochemical Industries, which is owned partly by the Bahrain, Saudi and Kuwaiti governments, and Gulf Air, the national air carrier of Bahrain owned by the government of Bahrain.

All the contributions ranged from $5,000 to $20,000. ThinkProgress calculated that the 83 companies, in total, contributed $885,000 to the Chamber general fund, which pays for political ads.

As such, part of the Chamber’s activities were being funded by foreign firms, which stand to be particularly affected by US anti-bribery laws.

ThinkProgress noted Thursday in a new report that as part of the US Chamber Institute For Legal Reform Legal Reform Summit, the group is presenting a paper titled “Restoring Balance: Proposed Amendments to the Foreign Corrupt Practices Act.” Among the revisions to US anti-bribery law the paper argues for are:

– Limiting a company’s successor criminal FCPA liability for prior acts of a company it has acquired: The Chamber’s paper advocates for restricting the amount of liability a company can take on from a firm it merges with that is guilty of FCPA violations. This would allow companies to engage in corrupt practices and then merge with other businesses and reduce the penalties they face. (page 14)

– Limiting a parent company’s civil liability for the acts of a subsidiary: This amendment would restrict the ability of the SEC and DOJ to hold American companies accountable for the actions of their foreign subsidiaries as long as the American parent firms could reasonably prove that they were not aware of the actions of their foreign subsidiaries. The problem with changing the law in this way is that it could greenlight corruption abuses by foreign subsidiaries that the parent company would profit from but not be held accountable for. (page 22)

– Clarifying definition of “foreign official”: The Chamber complains about a 2009 case by the Obama DOJ and SEC where they fined Control Components, Inc. for bribing state-owned companies in China, Malaysia, South Korea, and the UAE. The government defined bribing state-owned companies as the same as bribing foreign governments. The Chamber seeks to limit this definition, which it believes is too broad. Overly restricting the government’s ability to hold firms accountable for bribing state-owned companies just as if they were bribing foreign governments would potentially open up new channels of corruption. One of the Chamber’s cited cases of supposed abuse of this government authority is for fining defense contractor KBR for bribing a company that is 49 percent owned by the Nigerian government. Presumably, 49 percent is not a high enough threshold for the business lobby to consider it corrupt influencing of a foreign government. (pages 24-26)

The site notes that the Obama Administration has been much more aggressive in enforcing the law than the administration of former President George W. Bush. In 2010, the Obama Administration collected at least $1.2 billion in fines; in 2007, under Bush, this amount was just $87 million.

Among the biggest companies fined was Daimler AG — the parent company of Mercedes — which allegedly paid off officials in China, Egypt and Serbia. Daimler and its subsidiaries agreed to pay the US government $185 million.

Why prosecute corruption, from a business point of view?

“If investors know that U.S. companies’ profits aren’t a house of cards built on corruption, they will be more likely to invest their money in U.S. markets,” Benjamin Longlet, senior counsel to the assistant attorney general in Justice’s Criminal Division, told America.gov in 2007. “And that’s good for all businesses.”

With earlier reporting by Daniel Tencer.

 
 
 
 
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