[Congressional Record Volume 143, Number 55 (Thursday, May 1, 1997)]
[Extensions of Remarks]
[Pages E809-E810]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              MORE UNFAIR COMPETITION: SUBSIDIZED BRIBERY

                                 ______
                                 

                        HON. GERALD B.H. SOLOMON

                              of new york

                    in the house of representatives

                         Thursday, May 1, 1997

  Mr. SOLOMON. Mr. Speaker, I would like to insert for the Record an 
article in the International Herald Tribune that outlines Germany's and 
France's opposition to making foreign bribery a crime.
  I think most Americans would be shocked to learn that in Germany and 
France, not only is bribery of foreign officials not illegal, it 
qualifies as a tax deduction! Meanwhile, American firms trying to do 
business abroad operate under our Foreign Corrupt Practices Act, which

[[Page E810]]

makes bribery illegal and possibly punishable with a jail sentence.
  This is yet another example of the unfair competition our firms face, 
Mr. Speaker, and we should be resolute in demanding that Germany, 
France, and other countries change their laws. This is absolutely 
critical to maintaining our industrial base, including our military 
industrial base in these times of declining defense budgets.

                [From the International Herald Tribune]

                   Foreign Bribery Should Be a Crime

                           (By Reginald Dale)

       Washington.--An American caught bribing a foreign official 
     for commercial gain will be fined or jailed for violating 
     U.S. law. Europeans who bribe the same official may well 
     qualify for a tax deduction.
       U.S. corporations are estimated to be losing contracts 
     worth tens of billions of dollars because of corrupt 
     practices by their competitors. It is hardly surprising that 
     Washington is leading an aggressive campaign to crack down on 
     international bribery and corruption.
       What is surprising is that the campaign, dismissed as 
     hopelessly naive and moralistic only a few years ago, is 
     beginning to bear fruit.
       At next month's ministerial meeting of the Organization for 
     Economic Cooperation and Development in Paris, Washington 
     hopes other industrial countries will commit themselves to 
     making foreign commercial bribery a criminal offense, as the 
     United States did in 1977.
       Many developing and ex-Communist countries back the U.S. 
     stand and are asking the major exporting nations to help them 
     fight corruption.
       The main holdouts are two close American allies, Germany 
     and France. These two countries do not dispute that bribery 
     is bad. Many international corporations say corruption is the 
     main obstacle to business in places such as Russia, China and 
     much of Southeast Asia.
       Bribery, according to Alan P. Larson, a senior State 
     Department official, denies developing countries access to 
     the most efficient bidders, diverts funds that could have 
     been spent on economic and social development, and corrupts 
     fragile democratic institutions.
       Washington is not too worried by the small sums often 
     needed to persuade bureaucrats to do the jobs they are 
     supposed to be doing anyway, such as issuing licenses or 
     visas. The problem is big payments to induce an official to 
     do something illegal--bribing a public employee to secure a 
     contract is against the law all over the world.
       Last year, Germany and France subscribed to a nonbinding 
     OECD recommendation to end tax deductions for bribery abroad 
     and agreed ``in principle'' to make it a criminal offense. 
     The difficulty is persuading them to follow through. The two 
     countries have not ended the tax deductibility, and they say 
     they want to negotiate a binding international convention 
     before criminalizing foreign bribery. Washington wants each 
     OECD member simply to enact its own legislation next year.
       France and Germany argue that without a watertight legal 
     convention, other countries will cheat. This argument is 
     ``clearly a delaying tactic,'' says Frank Vogl, vice chairman 
     of Transparency International, an independent group that 
     monitors business corruption. Negotiating an international 
     convention could take years.
       But many Europeans also argue that U.S. military and 
     political power gives American businesses an unfair 
     advantage. Americans say their country's leading role just as 
     often sets them at a disadvantage--for example, when 
     Washington puts pressure on China to improve its record on 
     human rights and weapons proliferation and European 
     governments seek commercial favors by keeping quiet.
       The two issues are not comparable. A telephone call from 
     President Bill Clinton is not the equivalent of a bribe--nor 
     should it be an excuse for offering one.
       The hope must be that European voters, increasingly 
     disgusted by scandal and corruption in their own countries, 
     will press governments to act on an international level. The 
     European Union plans to criminalize bribery within the EU. 
     That will have the bizarre effect of making it a criminal 
     offense for a German, say, to bribe French officials but not 
     Russian ones. Europeans, who pride themselves on their logic, 
     must surely see the absurdity of that.

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