[Congressional Record Volume 142, Number 48 (Tuesday, April 16, 1996)]
[Senate]
[Pages S3409-S3410]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
INTERNATIONAL BRIBERY
Mr. FEINGOLD. Mr. President, export promotion is a critical component
of both domestic economic growth in this country and of our foreign
policy. One of the barriers to more trade for U.S. companies has been a
virtual subsidy by the governments of many of our trade competitors for
offering bribes to win foreign contracts. Of course, U.S. business is
prohibited from engaging in bribery by the Foreign Corrupt Practices
Act. While there have been calls to repeal the FCPA, for almost 2
years, I have been working to promote universal acceptance of the
principles of the FCPA. I introduced legislation and a sense of the
Senate resolution last year to move forward in that direction. A
version of the proposals were included in the Senate State
authorization bill, but not included in the conference agreement.
For a problem that no one seems to want to talk about publicly, there
has been some important movement to help eradicate this practice in
Europe. Two years ago the Organization for Economic Cooperation and
Development a group of 26 major industrialized countries, passed a
resolution to ``deter, prevent, and combat bribery.'' Now it has
expanded on that by recommending that members terminate the tax-
deductibility of bribes, such as allowed in Germany and elsewhere.
This is a significant step toward leveling the playing field for U.S.
exports. It is also important that major newspapers, such as the New
York Times and the Washington Post, have carried opinion pieces in the
past couple of days on this issue. I ask that the articles be printed
in the Record and commend them to my colleagues for their review.
Bribery and corruption are serious impediments to our exports, and
promote bad business practice. We should be supportive of efforts, such
as the recent initiatives by the OECD to help protect American
business.
The articles follow:
[From the Washington Post, Apr. 16, 1996]
An End to Corruption
(By Robert S. Leiken)
If a German bribes a German, he gets thrown in jail; if he
bribes a foreign official he gets a tax deduction. Only
American businessmen can be prosecuted at home for bribing
foreigners.
But the day when U.S. business was a solitary straight
arrow seems to be ending. This is not because the Foreign
Corrupt Practices Act (FCPA) has become a dead letter. IBM-
Argentina, now under federal investigation, can testify to
that. What may be opening a new chapter in commercial
diplomacy is a revolution in public opinion, the repudiation
of bribery and kickbacks by societies that once tolerated
them.
Last week the Organization for Economic Cooperation and
Development (OECD), the league of wealthy industrial nations,
recommended that is members stop allowing tax write-offs for
bribes. Sources close to those protracted negotiations said
that the public reaction to recent bribery scandals helped
overcome resistance to the measure led by France, Germany and
Japan.
The end of the Cold War, the spread of democracy, the rise
of civil societies have sparked disclosure of corruption East
and West. This is the case not only in the former Soviet bloc
but also among Western allies where military regimes or
ruling-party dominance has given way to competitive politics.
An intriguing community of interests is forming between
U.S. corporations and democracy. For the solution to
translational bribery lies not in a futile attempt to repeal
the Foreign Corrupt Practices Act but in universalizing it
and supporting reforms in emerging countries.
Corruption is being challenged by opposition parties, and
unmuzzled press, religious groups and other nongovernment
organizations, as well as prosecutors, magistrates and other
civil servants. Anti-corruption movements have emerged in
countries as diverse as Argentina, Cambodia, Italy, Hungary,
Pakistan, Saudi Arabia, El Salvador, South Korea,
Switzerland, Taiwan, Tanzania, Thailand, New Zealand and
Zimbabwe. Citizens who have silently endured corruption for
generations now take to the streets to protest corrupt
practices, to elect anticorruption candidates and to impeach
corrupt presidents, vice presidents, premiers, cabinet
ministers and party leaders.
Many countries have appointed national commissions to
recommend reforms and have established government agencies to
prosecute abuses. Small countries are beginning to make known
their anticorruption sentiments. Recently, for example,
Malaysia and Singapore each declared several foreign firms
caught bribing officials ineligible for bidding on future
contracts.
The stakes are enormous for U.S. companies and workers. As
emerging nations drop trade barriers and privatize state
monopolies, more than $200 billion of export and investment
contracts will be open to international bidding. Our trade
rivals understand that these contracts will determine who
builds tomorrow's economies. The U.S. Department of Commerce
has calculated that from April 1994 to May 1995 nearly 100
foreign contracts worth $45 billion were lost to foreign
competitors through graft. The most egregious bribers,
according to U.S. government and business officials, include
companies from Japan, France, Germany, Spain, Britain, Taiwan
and South Korea.
These bribes cost Americans jobs, and since less
competitive firms must bribe to win contracts, they cost
emerging countries efficiency--which is what they need most.
Studies show corrupt procurement practices deter foreign
investment while as much as doubling the price that emerging
countries pay for goods and services.
As globalization offers corporations more options,
corruption has come to be a factor in choosing where to
invest. Meanwhile, emerging nations wishing to shed bad
reputations have begun to court firms with ``squeaky clean''
images. In some emerging markets, U.S. firms now advertise
their liability to the FCPA as surety of their integrity.
Several governments have engaged the ``credibility services''
of reputable Western
[[Page S3410]]
firms in such tasks as procurement, accounting and auditing.
Bribery and corruption are no longer unmentionables in
international diplomacy. A Convention Against Corruption will
soon criminalize ``transnational bribery'' throughout the
Western Hemisphere. The treaty provides for extradition of
corrupt officials and urges transparency in hiring and
procurement as well as laws against the ``illicit
enrichment'' of government officials. When the United States
goes to international forums to demand a level playing field
it can take Canada and the developing nations of the
hemisphere with it. Along with its success at the OECD,
Washington is also making headway in getting the new World
Trade Organization to universalize transparent procurement
practices. Top administration officials want the United
States to press for a recommendation at the next G-7 meeting
to criminalize transnational bribery--in other words, to
universalize the Foreign Corrupt Practices Act.
The way impatience with corruption is crossing frontiers
recalls the human rights campaigns of past decades.
Transparency International, modeled on the human rights
organization Amnesty International, was formed in Germany in
1993.
Yesterday the guilty's first line of defense was that human
rights was ``an internal matter.'' But dissidents welcomed
and were emboldened by international attention. Human rights
subsequently became a universal watchword. Today opponents of
corruption insist that ``sunlight is the best disinfectant.''
During this crucial stage when democracy and must
institutionalize or perish, ``transparency'' may emerge as a
banner.
For the first time in 60 years, there is no international
danger of tyranny. Our national interest is more immediately
menaced today by such ``unconventional'' dangers as
international crime cartels, the smuggling of weapons of mass
destruction, drug trafficking, the spread of pestilent
viruses--all of which entail corrupt government officials.
Corruption has been provided the pretext for tyrants to
topple fledgling democracies. Already, pervasive corruption
has paved the way for reaction in and around Russia. Today's
decisive battles for democracy and development may be fought
on the terrain of corrupt practices.
____
[From the New York Times, Apr. 16, 1996]
A Defeat for Business Bribery Abroad
The United States has successfully pressured its allies to
stop subsidizing corruption. Western European governments
routinely allow companies that pay bribes to win business
contracts from foreign officials to deduct those kickbacks
from their taxable income. Last week the Organization for
Economic Cooperation and Development, a group of 26 major
industrialized countries, agreed to end tax-deductible
bribes. That does not go nearly as far as America, which
outlaws foreign bribery altogether, would like, but it is a
big first step.
Industrial countries outlaw bribes within their borders,
but only the United States bars companies from paying bribes
to foreign officials. That noble stance puts American
business at a disadvantage when competing for a foreign
contract against businesses that operate under no such
constraints. The United States has labeled the payment of
bribes a trade barrier and is fighting to get its trade
partners to end the practice completely. The Administration
says it has identified about 100 cases between April 1994 and
May 1995 in which American companies lost business to those
that paid bribes to foreign officials in order to win
contracts in the construction, telecommunications and other
lucrative industries.
So far, the United States has acted unilaterally--losing
business but having a limited impact on corruption. By
bringing the other major industrialized countries along, the
anti-corruption campaign will pack more wallop and remove
American companies as a special target of retaliation. The
best way to fight corruption is to present a united front.
That way the pressure on offending governments to clean up
their act is maximized and the businesses of no one country
are victimized. The Administration's lobbying may not end
foreign bribes. But its multilateral approach is
smart.
____________________