[House Report 105-802]
[From the U.S. Government Publishing Office]
105th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 105-802
_______________________________________________________________________
INTERNATIONAL ANTI-BRIBERY AND FAIR COMPETITION ACT OF 1998
_______________________________________________________________________
October 8, 1998.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Bliley, from the Committee on Commerce, submitted the following
R E P O R T
[To accompany H.R. 4353]
[Including cost estimate of the Congressional Budget Office]
The Committee on Commerce, to whom was referred the bill
(H.R. 4353) to amend the Securities Exchange Act of 1934 and
the Foreign Corrupt Practices Act of 1977 to improve the
competitiveness of American business and promote foreign
commerce, and for other purposes, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS
Page
Amendment........................................................ 2
Purpose and Summary.............................................. 9
Background and Need for Legislation.............................. 9
Hearings......................................................... 16
Committee Consideration.......................................... 16
Roll Call Votes.................................................. 17
Committee Oversight Findings..................................... 17
Committee on Government Reform and Oversight..................... 17
New Budget Authority, Entitlement Authority, and Tax Expenditures 17
Committee Cost Estimate.......................................... 17
Congressional Budget Office Estimate............................. 17
Federal Mandates Statement....................................... 19
Advisory Committee Statement..................................... 19
Constitutional Authority Statement............................... 19
Applicability to Legislative Branch.............................. 19
Section-by-Section Analysis of the Legislation................... 19
Changes in Existing Law Made by the Bill, as Reported............ 27
Amendment
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``International Anti-Bribery and Fair
Competition Act of 1998''.
SEC. 2. AMENDMENTS TO THE FOREIGN CORRUPT PRACTICES ACT GOVERNING
ISSUERS.
(a) Prohibited Conduct.--Section 30A(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78dd-1(a)) is amended--
(1) by amending subparagraph (A) of paragraph (1) to read as
follows:
``(A)(i) influencing any act or decision of such
foreign official in his official capacity, (ii)
inducing such foreign official to do or omit to do any
act in violation of the lawful duty of such official,
or (iii) securing any improper advantage; or'';
(2) by amending subparagraph (A) of paragraph (2) to read as
follows:
``(A)(i) influencing any act or decision of such
party, official, or candidate in its or his official
capacity, (ii) inducing such party, official, or
candidate to do or omit to do an act in violation of
the lawful duty of such party, official, or candidate,
or (iii) securing any improper advantage; or''; and
(3) by amending subparagraph (A) of paragraph (3) to read as
follows:
``(A)(i) influencing any act or decision of such
foreign official, political party, party official, or
candidate in his or its official capacity, (ii)
inducing such foreign official, political party, party
official, or candidate to do or omit to do any act in
violation of the lawful duty of such foreign official,
political party, party official, or candidate, or (iii)
securing any improper advantage; or''.
(b) Officials of International Organizations.--Paragraph (1) of
section 30A(f) of the Securities Exchange Act of 1934 (15 U.S.C. 78dd-
1(f)(1)) is amended to read as follows:
``(1)(A) The term `foreign official' means any officer or
employee of a foreign government or any department, agency, or
instrumentality thereof, or of a public international
organization, or any person acting in an official capacity for
or on behalf of any such government or department, agency, or
instrumentality, or for or on behalf of any such public
international organization.
``(B) For purposes of subparagraph (A), the term `public
international organization' means--
``(i) an organization that is designated by Executive
order pursuant to section 1 of the International
Organizations Immunities Act (22 U.S.C. 288); or
``(ii) any other international organization that is
designated by the President by Executive order for the
purposes of this section, effective as of the date of
publication of such order in the Federal Register.''.
(c) Alternative Jurisdiction Over Acts Outside the United States.--
Section 30A of the Securities Exchange Act of 1934 (15 U.S.C. 78dd-1)
is amended--
(1) by adding at the end the following:
``(g) Alternative Jurisdiction.--
``(1) It shall also be unlawful for any issuer organized
under the laws of the United States, or a State, territory,
possession, or commonwealth of the United States or a political
subdivision thereof and which has a class of securities
registered pursuant to section 12 of this title or which is
required to file reports under section 15(d) of this title, or
for any United States person that is an officer, director,
employee, or agent of such issuer or a stockholder thereof
acting on behalf of such issuer, to corruptly do any act
outside the United States in furtherance of an offer, payment,
promise to pay, or authorization of the payment of any money,
or offer, gift, promise to give, or authorization of the giving
of anything of value to any of the persons or entities set
forth in paragraphs (1), (2), and (3) of subsection (a) of this
section for the purposes set forth therein, irrespective of
whether such issuer or such officer, director, employee, agent,
or stockholder makes use of the mails or any means or
instrumentality of interstate commerce in furtherance of such
offer, gift, payment, promise, or authorization.
``(2) As used in this subsection, the term `United States
person' means a national of the United States (as defined in
section 101 of the Immigration and Nationality Act (8 U.S.C.
1101)) or any corporation, partnership, association, joint-
stock company, business trust, unincorporated organization, or
sole proprietorship organized under the laws of the United
States or any State, territory, possession, or commonwealth of
the United States, or any political subdivision thereof.'';
(2) in subsection (b), by striking ``Subsection (a)'' and
inserting ``Subsections (a) and (g)''; and
(3) in subsection (c), by striking ``subsection (a)'' and
inserting ``subsection (a) or (g)''.
(d) Penalties.--Section 32(c) of the Securities Exchange Act of 1934
(15 U.S.C. 78ff(c)) is amended--
(1) in paragraph (1)(A), by striking ``section 30A(a)'' and
inserting ``subsection (a) or (g) of section 30A'';
(2) in paragraph (1)(B), by striking ``section 30A(a)'' and
inserting ``subsection (a) or (g) of section 30A''; and
(3) by amending paragraph (2) to read as follows:
``(2)(A) Any officer, director, employee, or agent of an issuer, or
stockholder acting on behalf of such issuer, who willfully violates
subsection (a) or (g) of section 30A of this title shall be fined not
more than $100,000, or imprisoned not more than 5 years, or both.
``(B) Any officer, director, employee, or agent of an issuer, or
stockholder acting on behalf of such issuer, who violates subsection
(a) or (g) of section 30A of this title shall be subject to a civil
penalty of not more than $10,000 imposed in an action brought by the
Commission.''.
SEC. 3. AMENDMENTS TO THE FOREIGN CORRUPT PRACTICES ACT GOVERNING
DOMESTIC CONCERNS.
(a) Prohibited Conduct.--Section 104(a) of the Foreign Corrupt
Practices Act of 1977 (15 U.S.C. 78dd-2(a)) is amended--
(1) by amending subparagraph (A) of paragraph (1) to read as
follows:
``(A)(i) influencing any act or decision of such
foreign official in his official capacity, (ii)
inducing such foreign official to do or omit to do any
act in violation of the lawful duty of such official,
or (iii) securing any improper advantage; or'';
(2) by amending subparagraph (A) of paragraph (2) to read as
follows:
``(A)(i) influencing any act or decision of such
party, official, or candidate in its or his official
capacity, (ii) inducing such party, official, or
candidate to do or omit to do an act in violation of
the lawful duty of such party, official, or candidate,
or (iii) securing any improper advantage; or''; and
(3) by amending subparagraph (A) of paragraph (3) to read as
follows:
``(A)(i) influencing any act or decision of such
foreign official, political party, party official, or
candidate in his or its official capacity, (ii)
inducing such foreign official, political party, party
official, or candidate to do or omit to do any act in
violation of the lawful duty of such foreign official,
political party, party official, or candidate, or (iii)
securing any improper advantage; or''.
(b) Penalties.--Section 104(g) of the Foreign Corrupt Practices Act
of 1977 (15 U.S.C. 78dd-2(g)) is amended--
(1) by amending subsection (g)(1) to read as follows:
``(g)(1)(A) Penalties.--Any domestic concern that is not a natural
person and that violates subsection (a) or (i) of this section shall be
fined not more than $2,000,000.
``(B) Any domestic concern that is not a natural person and that
violates subsection (a) or (i) of this section shall be subject to a
civil penalty of not more than $10,000 imposed in an action brought by
the Attorney General.''; and
(2) by amending paragraph (2) to read as follows:
``(2)(A) Any natural person that is an officer, director, employee,
or agent of a domestic concern, or stockholder acting on behalf of such
domestic concern, who willfully violates subsection (a) or (i) of this
section shall be fined not more than $100,000 or imprisoned not more
than 5 years, or both.
``(B) Any natural person that is an officer, director, employee, or
agent of a domestic concern, or stockholder acting on behalf of such
domestic concern, who violates subsection (a) or (i) of this section
shall be subject to a civil penalty of not more than $10,000 imposed in
an action brought by the Attorney General.''.
(c) Officials of International Organizations.--Paragraph (2) of
section 104(h) of the Foreign Corrupt Practices Act of 1977 (15 U.S.C.
78dd-2(h)) is amended to read as follows:
``(2)(A) The term `foreign official' means any officer or
employee of a foreign government or any department, agency, or
instrumentality thereof, or of a public international
organization, or any person acting in an official capacity for
or on behalf of any such government or department, agency, or
instrumentality, or for or on behalf of any such public
international organization.
``(B) For purposes of subparagraph (A), the term `public
international organization' means--
``(i) an organization that is designated by Executive
order pursuant to section 1 of the International
Organizations Immunities Act (22 U.S.C. 288); or
``(ii) any other international organization that is
designated by the President by Executive order for the
purposes of this section, effective as of the date of
publication of such order in the Federal Register.''.
(d) Alternative Jurisdiction Over Acts Outside the United States.--
Section 104 of the Foreign Corrupt Practices Act of 1977 (15 U.S.C.
78dd-2) is further amended--
(1) by adding at the end the following:
``(i) Alternative Jurisdiction.--
``(1) It shall also be unlawful for any United States person
to corruptly do any act outside the United States in
furtherance of an offer, payment, promise to pay, or
authorization of the payment of any money, or offer, gift,
promise to give, or authorization of the giving of anything of
value to any of the persons or entities set forth in paragraphs
(1), (2), and (3) of subsection (a), for the purposes set forth
therein, irrespective of whether such United States person
makes use of the mails or any means or instrumentality of
interstate commerce in furtherance of such offer, gift,
payment, promise, or authorization.
``(2) As used in this subsection, the term `United States
person' means a national of the United States (as defined in
section 101 of the Immigration and Nationality Act (8 U.S.C.
1101)) or any corporation, partnership, association, joint-
stock company, business trust, unincorporated organization, or
sole proprietorship organized under the laws of the United
States or any State, territory, possession, or commonwealth of
the United States, or any political subdivision thereof.'';
(2) in subsection (b), by striking ``Subsection (a)'' and
inserting ``Subsections (a) and (i)'';
(3) in subsection (c), by striking ``subsection (a)'' and
inserting ``subsection (a) or (i)''; and
(4) in subsection (d)(1), by striking ``subsection (a)'' and
inserting ``subsection (a) or (i)''.
(e) Technical Amendment.--Section 104(h)(4)(A) of the Foreign Corrupt
Practices Act of 1977 (15 U.S.C. 78dd-2(h)(4)(A)) is amended by
striking ``For purposes of paragraph (1), the'' and inserting ``The''.
SEC. 4. AMENDMENTS TO THE FOREIGN CORRUPT PRACTICES ACT GOVERNING OTHER
PERSONS.
Title I of the Foreign Corrupt Practices Act of 1977 is amended by
inserting after section 104 (15 U.S.C. 78dd-2) the following new
section:
``SEC. 104A. PROHIBITED FOREIGN TRADE PRACTICES BY PERSONS OTHER THAN
ISSUERS OR DOMESTIC CONCERNS.
``(a) Prohibition.--It shall be unlawful for any person other than an
issuer that is subject to section 30A of the Securities Exchange Act of
1934 or a domestic concern (as defined in section 104 of this Act), or
for any officer, director, employee, or agent of such person or any
stockholder thereof acting on behalf of such person, while in the
territory of the United States, corruptly to make use of the mails or
any means or instrumentality of interstate commerce or to do any other
act in furtherance of an offer, payment, promise to pay, or
authorization of the payment of any money, or offer, gift, promise to
give, or authorization of the giving of anything of value to--
``(1) any foreign official for purposes of--
``(A)(i) influencing any act or decision of such
foreign official in his official capacity, (ii)
inducing such foreign official to do or omit to do any
act in violation of the lawful duty of such official,
or (iii) securing any improper advantage; or
``(B) inducing such foreign official to use his
influence with a foreign government or instrumentality
thereof to affect or influence any act or decision of
such government or instrumentality,
in order to assist such person in obtaining or retaining
business for or with, or directing business to, any person;
``(2) any foreign political party or official thereof or any
candidate for foreign political office for purposes of--
``(A)(i) influencing any act or decision of such
party, official, or candidate in its or his official
capacity, (ii) inducing such party, official, or
candidate to do or omit to do an act in violation of
the lawful duty of such party, official, or candidate,
or (iii) securing any improper advantage; or
``(B) inducing such party, official, or candidate to
use its or his influence with a foreign government or
instrumentality thereof to affect or influence any act
or decision of such government or instrumentality,
in order to assist such person in obtaining or retaining
business for or with, or directing business to, any person; or
``(3) any person, while knowing that all or a portion of such
money or thing of value will be offered, given, or promised,
directly or indirectly, to any foreign official, to any foreign
political party or official thereof, or to any candidate for
foreign political office, for purposes of--
``(A)(i) influencing any act or decision of such
foreign official, political party, party official, or
candidate in his or its official capacity, (ii)
inducing such foreign official, political party, party
official, or candidate to do or omit to do any act in
violation of the lawful duty of such foreign official,
political party, party official, or candidate, or (iii)
securing any improper advantage; or
``(B) inducing such foreign official, political
party, party official, or candidate to use his or its
influence with a foreign government or instrumentality
thereof to affect or influence any act or decision of
such government or instrumentality,
in order to assist such person in obtaining or retaining
business for or with, or directing business to, any person.
``(b) Exception for Routine Governmental Action.--Subsection (a) of
this section shall not apply to any facilitating or expediting payment
to a foreign official, political party, or party official the purpose
of which is to expedite or to secure the performance of a routine
governmental action by a foreign official, political party, or party
official.
``(c) Affirmative Defenses.--It shall be an affirmative defense to
actions under subsection (a) of this section that--
``(1) the payment, gift, offer, or promise of anything of
value that was made, was lawful under the written laws and
regulations of the foreign official's, political party's, party
official's, or candidate's country; or
``(2) the payment, gift, offer, or promise of anything of
value that was made, was a reasonable and bona fide
expenditure, such as travel and lodging expenses, incurred by
or on behalf of a foreign official, party, party official, or
candidate and was directly related to--
``(A) the promotion, demonstration, or explanation of
products or services; or
``(B) the execution or performance of a contract with
a foreign government or agency thereof.
``(d) Injunctive Relief.--
``(1) When it appears to the Attorney General that any person
to which this section applies, or officer, director, employee,
agent, or stockholder thereof, is engaged, or about to engage,
in any act or practice constituting a violation of subsection
(a) of this section, the Attorney General may, in his
discretion, bring a civil action in an appropriate district
court of the United States to enjoin such act or practice, and
upon a proper showing, a permanent injunction or a temporary
restraining order shall be granted without bond.
``(2) For the purpose of any civil investigation which, in
the opinion of the Attorney General, is necessary and proper to
enforce this section, the Attorney General or his designee are
empowered to administer oaths and affirmations, subpoena
witnesses, take evidence, and require the production of any
books, papers, or other documents which the Attorney General
deems relevant or material to such investigation. The
attendance of witnesses and the production of documentary
evidence may be required from any place in the United States,
or any territory, possession, or commonwealth of the United
States, at any designated place of hearing.
``(3) In case of contumacy by, or refusal to obey a subpoena
issued to, any person, the Attorney General may invoke the aid
of any court of the United States within the jurisdiction of
which such investigation or proceeding is carried on, or where
such person resides or carries on business, in requiring the
attendance and testimony of witnesses and the production of
books, papers, or other documents. Any such court may issue an
order requiring such person to appear before the Attorney
General or his designee, there to produce records, if so
ordered, or to give testimony touching the matter under
investigation. Any failure to obey such order of the court may
be punished by such court as a contempt thereof.
``(4) All process in any such case may be served in the
judicial district in which such person resides or may be found.
The Attorney General may make such rules relating to civil
investigations as may be necessary or appropriate to implement
the provisions of this subsection.
``(e) Penalties.--
``(1)(A) Any juridical person that violates subsection (a) of
this section shall be fined not more than $2,000,000.
``(B) Any juridical person that violates subsection (a) of
this section shall be subject to a civil penalty of not more
than $10,000 imposed in an action brought by the Attorney
General.
``(2)(A) Any natural person who willfully violates subsection
(a) of this section shall be fined not more than $100,000 or
imprisoned not more than 5 years, or both.
``(B) Any natural person who violates subsection (a) of this
section shall be subject to a civil penalty of not more than
$10,000 imposed in an action brought by the Attorney General.
``(3) Whenever a fine is imposed under paragraph (2) upon any
officer, director, employee, agent, or stockholder of a person,
such fine may not be paid, directly or indirectly, by such
person.
``(f) Definitions.--For purposes of this section:
``(1) The term `person', when referring to an offender, means
any natural person other than a national of the United States
(as defined in section 101 of the Immigration and Nationality
Act (8 U.S.C. 1101) or any corporation, partnership,
association, joint-stock company, business trust,
unincorporated organization, or sole proprietorship organized
under the law of a foreign nation or a political subdivision
thereof.
``(2)(A) The term `foreign official' means any officer or
employee of a foreign government or any department, agency, or
instrumentality thereof, or of a public international
organization, or any person acting in an official capacity for
or on behalf of any such government or department, agency, or
instrumentality, or for or on behalf of any such public
international organization.
``(B) For purposes of subparagraph (A), the term `public
international organization' means--
``(i) an organization that is designated by Executive
order pursuant to section 1 of the International
Organizations Immunities Act (22 U.S.C. 288); or
``(ii) any other international organization that is
designated by the President by Executive order for the
purposes of this section, effective as of the date of
publication of such order in the Federal Register.
``(3)(A) A person's state of mind is knowing, with respect to
conduct, a circumstance or a result if--
``(i) such person is aware that such person is
engaging in such conduct, that such circumstance
exists, or that such result is substantially certain to
occur; or
``(ii) such person has a firm belief that such
circumstance exists or that such result is
substantially certain to occur.
``(B) When knowledge of the existence of a particular
circumstance is required for an offense, such knowledge is
established if a person is aware of a high probability of the
existence of such circumstance, unless the person actually
believes that such circumstance does not exist.
``(4)(A) The term `routine governmental action' means only an
action which is ordinarily and commonly performed by a foreign
official in--
``(i) obtaining permits, licenses, or other official
documents to qualify a person to do business in a
foreign country;
``(ii) processing governmental papers, such as visas
and work orders;
``(iii) providing police protection, mail pick-up and
delivery, or scheduling inspections associated with
contract performance or inspections related to transit
of goods across country;
``(iv) providing phone service, power and water
supply, loading and unloading cargo, or protecting
perishable products or commodities from deterioration;
or
``(v) actions of a similar nature.
``(B) The term `routine governmental action' does not include
any decision by a foreign official whether, or on what terms,
to award new business to or to continue business with a
particular party, or any action taken by a foreign official
involved in the decision-making process to encourage a decision
to award new business to or continue business with a particular
party.
``(5) The term `interstate commerce' means trade, commerce,
transportation, or communication among the several States, or
between any foreign country and any State or between any State
and any place or ship outside thereof, and such term includes
the intrastate use of--
``(A) a telephone or other interstate means of
communication, or
``(B) any other interstate instrumentality.''.
SEC. 5. TREATMENT OF INTERNATIONAL ORGANIZATIONS PROVIDING COMMERCIAL
COMMUNICATIONS SERVICES.
(a) Definition.--For purposes of this section:
(1) International organization providing commercial
communications services.--The term ``international organization
providing commercial communications services'' means--
(A) the International Telecommunications Satellite
Organization established pursuant to the Agreement
Relating to the International Telecommunications
Satellite Organization; and
(B) the International Mobile Satellite Organization
established pursuant to the Convention on the
International Maritime Satellite Organization.
(2) Pro-Competitive privatization.--The term ``pro-
competitive privatization'' means a privatization that the
President determines to be consistent with the United States
policy of obtaining full and open competition to such
organizations (or their successors), and nondiscriminatory
market access, in the provision of satellite services.
(b) Treatment as Public International Organizations.--
(1) Treatment.--An international organization providing
commercial communications services shall be treated as a public
international organization for purposes of section 30A of the
Securities Exchange Act of 1934 (15 U.S.C. 78dd-1) and sections
104 and 104A of the Foreign Corrupt Practices Act of 1977 (15
U.S.C. 78dd-2) until such time as the President certifies to
the Committee on Commerce of the House of Representatives and
the Committees on Banking, Housing and Urban Affairs and
Commerce, Science, and Transportation that such international
organization providing commercial communications services has
achieved a pro-competitive privatization.
(2) Limitation on effect of treatment.--The requirement for a
certification under paragraph (1), and any certification made
under such paragraph, shall not be construed to affect the
administration by the Federal Communications Commission of the
Communications Act of 1934 in authorizing the provision of
services to, from, or within the United States over space
segment of the international satellite organizations, or the
privatized affiliates or successors thereof.
(c) Extension of Legal Process.--
(1) In general.--Except as specifically and expressly
required by mandatory obligations in international agreements
to which the United States is a party, an international
organization providing commercial communications services, its
officials and employees, and its records shall not be accorded
immunity from suit or legal process for any act or omission
taken in connection with such organization's capacity as a
provider, directly or indirectly, of commercial
telecommunications services to, from, or within the United
States.
(2) No effect on personal liability.--Paragraph (1) shall not
affect any immunity from personal liability of any individual
who is an official or employee of an international organization
providing commercial communications services.
(d) Elimination or Limitation of Exceptions.--The President and the
Federal Communications Commission shall, in a manner that is consistent
with specific and express requirements in mandatory obligations in
international agreements to which the United States is a party--
(1) expeditiously take all actions necessary to eliminate or
to limit substantially any privileges or immunities accorded to
an international organization providing commercial
communications services, its officials, its employees, or its
records from suit or legal process for any act or omission
taken in connection with such organization's capacity as a
provider, directly or indirectly, of commercial
telecommunications services to, from, or within the United
States, that are not eliminated by subsection (c);
(2) expeditiously take all appropriate actions necessary to
eliminate or to reduce substantially all privileges and
immunities not eliminated pursuant to paragraph (1); and
(3) report to the Committee on Commerce of the House of
Representatives and the Committee on Commerce, Science, and
Transportation of the Senate on any remaining privileges and
immunities of an international organization providing
commercial communications services within 90 days of the
effective date of this act and semiannually thereafter.
(e) Preservation of Law Enforcement and Intelligence Functions.--
Nothing in subsection (c) or (d) of this section shall affect any
immunity from suit or legal process of an international organization
providing commercial communications services, or the privatized
affiliates or successors thereof, for acts or omissions--
(1) under chapters 119, 121, 206, or 601 of title 18, United
States Code, the Foreign Intelligence Surveillance Act of 1978
(50 U.S.C. 1801 et seq.), section 514 of the Comprehensive Drug
Abuse Prevention and Control Act of 1970 (21 U.S.C. 884), or
Rules 104, 501, or 608 of the Federal Rules of Evidence;
(2) under similar State laws providing protection to service
providers cooperating with law enforcement agencies pursuant to
State electronic surveillance or evidence laws, rules,
regulations, or procedures; or
(3) pursuant to a court order.
(f) Rules of Construction.--
(1) Negotiations.--Nothing in this section shall affect the
President's existing constitutional authority regarding the
time, scope, and objectives of international negotiations.
(2) Privatization.--Nothing in this section shall be
construed as legislative authorization for the privatization of
INTELSAT or Inmarsat, nor to increase the President's authority
with respect to negotiations concerning such privatization.
SEC. 6. ENFORCEMENT AND MONITORING.
(a) Reports Required.--Not later than July 1 of 1999 and each of the
5 succeeding years, the Secretary of Commerce shall submit to the
Committee on Commerce of the House of Representatives and the Committee
on Banking, Housing, and Urban Affairs of the Senate a report that
contains the following information with respect to implementation of
the Convention:
(1) Ratification.--A list of the countries that have ratified
the Convention, the dates of ratification by such countries,
and the entry into force for each such country.
(2) Domestic legislation.--A description of domestic laws
enacted by each party to the Convention that implement
commitments under the Convention, and assessment of the
compatibility of such laws with the Convention.
(3) Enforcement.--As assessment of the measures taken by each
party to the Convention during the previous year to fulfill its
obligations under the Convention and achieve its object and
purpose including--
(A) an assessment of the enforcement of the domestic
laws described in paragraph (2);
(B) an assessment of the efforts by each such party
to promote public awareness of such domestic laws and
the achievement of such object and purpose; and
(C) an assessment of the effectiveness, transparency,
and viability of the monitoring process for the
Convention, including its inclusion of input from the
private sector and non-governmental organizations.
(4) Laws prohibiting tax deduction of bribes.--An explanation
of the domestic laws enacted by each party to the Convention
that would prohibit the deduction of bribes in the computation
of domestic taxes.
(5) New signatories.--A description of efforts to expand
international participation in the Convention by adding new
signatories to the Convention and by assuring that all
countries which are or become members of the Organization for
Economic Cooperation and Development are also parties to the
Convention.
(6) Subsequent efforts.--An assessment of the status of
efforts to strengthen the Convention by extending the
prohibitions contained in the Convention to cover bribes to
political parties, party officials, and candidates for
political office.
(7) Advantages.--Advantages, in terms of immunities, market
access, or otherwise, in the countries or regions served by the
organizations described in section 5(a), the reason for such
advantages, and an assessment of progress toward fulfilling the
policy described in that section.
(8) Bribery and transparency.--An assessment of anti-bribery
programs and transparency with respect to each of the
international organizations covered by this Act.
(b) Definition.--For purposes of this section, the term
``Convention'' means the Convention on Combating Bribery of Foreign
Public Officials in International Business Transactions adopted on
November 21, 1997, and signed on December 17, 1997, by the United
States and 32 other nations.
Purpose and Summary
H.R. 4353, the International Anti-Bribery and Fair
Competition Act of 1998, amends the Securities Exchange Act of
1934 and the Foreign Corrupt Practices Act of 1977 to improve
the competitiveness of American business and promote foreign
commerce. The bill includes implementing language for the
Organization for Economic Cooperation and Development (OECD)
Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions (the OECD Convention). The
bill also includes reporting requirements to monitor the
implementation and enforcement of other nations' commitments
under the OECD Convention and a section to promote the
reduction of privileges and immunities for international
organizations providing commercial communications services
(e.g., INTELSAT and Inmarsat).
Background and Need for Legislation
This legislation is designed to level the playing field for
business worldwide by seeking to reduce foreign bribery
generally as well as special privileges and immunities from law
in the satellite industry.
Investigations by the Securities and Exchange Commission
(SEC) in the mid-1970s revealed that over 400 U.S. companies
admitted making questionable or illegal payments in excess of
$300 million to foreign government officials, politicians, and
political parties. Many public companies maintained cash
``slush funds'' from which illegal campaign contributions were
being made in the United States and illegal bribes were being
paid to foreign officials. Scandals involving payments by U.S.
companies to public officials in Japan, Italy, and Mexico led
to political repercussions within those countries and damaged
the reputation of American companies throughout the world.
In the wake of these disclosures, Congress enacted the
Foreign Corrupt Practices Act of 1977 (the FCPA). The Foreign
Corrupt Practices Act of 1977, Pub. L. No. 95-213, 91 Stat.
1494, 15 U.S.C. Sec. Sec. 78m, 78dd-1, 78dd-2, 78ff (1998), as
amended by the Omnibus Trade and Competitiveness Act of 1988
Sec. Sec. 5001-5003, Pub. L. No. 100-418, (H.R. 4848). The FCPA
amended the Securities Exchange Act of 1934, 15 U.S.C. Sec. 78
et seq., to require issuers of publicly traded securities to
institute adequate accounting controls and to maintain accurate
books and records. Civil and criminal penalties were enacted
for the failure to do so. In addition, the FCPA required both
issuers and all other U.S. nationals or residents, as well as
U.S. business entities and foreign entities with their primary
place of business in the United States (defined as ``domestic
concerns'') to refrain from making any unlawful payments to
public officials, political parties, party officials, or
candidates for public office, directly or through others, for
the purpose of causing that person to make a decision or take
an action, or refrain from taking an action, for the purpose of
obtaining or retaining business.
Since the passage of the FCPA, American businesses have
operated at a disadvantage relative to foreign competitors who
have continued to pay bribes without fear of penalty. See,
Trade Promotion Coordinating Committee Sixth Annual Report to
the United States Congress, The National Export Strategy (Sept.
1998). Such bribery is estimated to affect international
contracts valued in the billions of dollars each year. Some of
our trading partners have explicitly encouraged and subsidized
such bribes by permitting businesses to claim them as tax-
deductible business expenses. Id.
Beginning in 1989, the U.S. government began an effort to
convince our trading partners at the OECD to criminalize the
bribery of foreign public officials. Achieving comparable
prohibitions in other developed countries and combating
corruption generally has been a major priority of the U.S.
business community, the U.S. Congress, and successive
Administrations since the late 1970s.
International bribery and corruption continue to be
problems worldwide. They undermine the goals of fostering
economic development, trade liberalization, and achieving a
level playing field throughout the world for businesses. It is
impossible to calculate with certainty the losses suffered by
U.S. businesses due to bribery by foreign competitors. The
Commerce Department has stated that it has learned of
significant allegations of bribery by foreign firms in
approximately 240 international commercial contracts since mid-
1994 valued at nearly $108 billion. Id. This legislation,
coupled with implementation of the OECD Convention by our major
trading partners, is designed to result in a substantial
leveling of the playing field for U.S. businesses.
The goal of the United States is the promotion of stronger,
more reliable, and transparent foreign legal regimes that, in
turn, make for more reliable and attractive investment
climates. Rather than competing directly on the price and
quality of products and services, companies competing against
firms paying bribes may lose to someone offering an inferior
deal. Competition without bribery gives the buyer the best
value for the money. Moreover, countries that have the most
corruption have trouble attracting foreign investment because
the need to bribe acts as a substantial added tax on the
investor.
Fortunately, in the 1990s the international community has
made a concerted effort in the fight against corruption.
Gradually, as awareness of the effects of transnational bribery
became more apparent, progress was made in efforts to combat
bribery overseas. After almost four years of substantial work
in the OECD's Working Group on Bribery, on May 27, 1994, the
OECD Council approved a Recommendation on Bribery in
International Business Transactions (the Recommendations). The
29 OECD member states agreed that bribery distorts
international competitive conditions; that all countries share
a responsibility to combat bribery in international business
transactions, however their nationals may be involved; and that
further action is needed on the national and international
level. Id. Member states agreed to ``take concrete and
meaningful steps'' to meet the goal of deterring, preventing,
and combating bribery of foreign officials. However, the
Recommendation did not require each member state to criminalize
the bribery of officials of another country.
These efforts ultimately culminated in the signing of the
Organization for Economic Cooperation and Development
Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions (the OECD Convention).
Thirty-three countries, composed of most of the world's largest
trading nations, signed the OECD Convention on December 17,
1997. For twenty years after the passage of the Foreign Corrupt
Practices Act, the United States was virtually alone in
criminalizing foreign bribery. Now, thirty-four other countries
have taken a step in this direction. Twenty-eight of the
twenty-nine OECD member countries along with five other
countries, Argentina, Bulgaria, Brazil, Chile, and the Slovak
Republic, signed the OECD Convention. Australia, the only OECD
member which did not sign, participated in the negotiations and
adoption of the OECD Convention. Because of new internal treaty
processes of the Australian parliament, Australia cannot sign
the OECD Convention until it has completed its necessary
national procedures. However, the Commerce Department expects
Australia to sign and ratify the OECD Convention by the
December 31, 1998 deadline.
Under the OECD Convention:
The U.S. and its trading partners agreed to
criminalize bribery of foreign public officials,
including officials in all branches of government, and
to criminalize payments to officials of public agencies
and public international organizations;
The OECD Convention also calls for criminal penalties
for those who bribe foreign public officials. If a
nation's legal system lacks the concept of corporate
criminal liability, the nation must provide for
equivalent non-criminal sanctions, such as fines;
Parties to the agreement pledged to work to provide
legal assistance in investigations and proceedings
within the scope of the OECD Convention and to make
bribery of foreign public officials an extraditable
offense; and
The OECD Convention requires the Parties to cooperate
in an OECD follow-up program to monitor and promote
full implementation.
This legislation amends the FCPA to conform it to the
requirements of and to implement the OECD Convention.
Intergovernmental Satellite Organizations
The International Telecommunications Satellite Organization
(INTELSAT) is a global communications satellite cooperative
with 143 member countries which provides space segment for
international telecommunications and is the world's primary
provider of international ``fixed'' satellite services (e.g.,
transoceanic telephone calls, video feeds). The International
Mobile Satellite Organization (Inmarsat) developed out of the
perceived need for a global maritime communications satellite
system that would provide distress, safety, and communications
services to seafaring nations in a cooperative, cost-sharing
entity. Inmarsat began providing commercial service in 1982.
Today, Inmarsat has 82 member countries.
INTELSAT and Inmarsat are controlled by ``Parties'' and
``signatories.'' The Parties, which are the national government
members of the INTELSAT and Inmarsat agreements, have ultimate
control. The signatories hold ownership interests and assist
with the operation and management of the systems and are
distributors of INTELSAT and Inmarsat services in their own
country. Many signatories are government-owned or controlled
telecommunications monopolies or dominant service providers.
There are many ways to ``control'' access to markets. Legal
control is one means. Control through facilities ownership or
influence with authorities are others. For example, France
Telecom, which is the dominant provider of telecommunications
services in France, is the signatory to INTELSAT and Inmarsat.
In some markets, the signatory is the actual licensing body for
that country.
The ownership structure of the intergovernmental satellite
organizations (IGOs) provides them with advantages in terms of
market access and regulatory processes over their competitors
and potential competitors. Changing this structure by ending or
reducing ownership by government owned or controlled entities
would greatly facilitate opening markets to competitive
suppliers of telecommunications services and would help lower
the costs of international communications for the benefit of
consumers in the United States and worldwide.
The U.S. is the largest user in both systems and, since
ownership is based on usage, currently holds an approximately
18 percent ownership share in INTELSAT and 23 percentownership
share in Inmarsat. The U.S. signatory to INTELSAT and Inmarsat is
COMSAT, which Congress determined was subject to the antitrust laws and
which was created in order to facilitate our policy goal of having an
independent entity, organized to maintain and strengthen competition,
as our signatory. This pro-competitive policy is described in section
102(c) of the Communications Satellite Act of 1962, as amended (the
Satellite Act or 1962 Act); 47 U.S.C. 701(c):
In order to facilitate this development and to
provide for the widest possible participation by
private enterprise, United States participation in the
global market shall be in the form of a private
corporation, subject to appropriate governmental
regulation. It is the intent of Congress that all
authorized users have nondiscriminatory access to the
system; that maximum competition be maintained in the
provision of equipment and services utilized by the
system; that the corporation created under this Act be
so organized and operated as to maintain and strengthen
competition in the provision of communications services
to the public; and that the activities of the
corporation created under this Act and of the persons
or companies participating in the ownership of the
corporation shall be consistent with the Federal
antitrust laws.
The Satellite Act also empowers the Federal Communications
Commission (the FCC or the Commission) in its administration of
the Communications Act of 1934, as amended, to assure
nondiscriminatory use of and equitable access to the satellite
system. See Section 201(c)(2) of the Satellite Act; 47 U.S.C.
721(c)(2). The Satellite Act also gives the Commission
discretion in implementing this provision by regulating the
manner in which facilities of the system and stations are
allocated among users. Id. Thus Congress sought to promote
competition in this market by permitting broad availability of
the systems to carriers and users.
The Committee included language to address the special
advantages of the intergovernmental satellite organizations and
to ensure that they do not improperly escape coverage by the
FCPA. Thus the legislation makes it clear that bribery of
intergovernmental satellite organizations does not escape the
coverage of the FCPA through a privatization which is not
deemed pro-competitive. It also seeks to remove the special
advantages of such organizations, in particular privileges and
immunities. The Committee intends that American companies
should not suffer competitive disadvantages due to either
foreign bribery, or due to privileges and immunities resulting
from the fact that the intergovernmental satellite
organizations have not yet achieved the U.S. policy of
obtaining a pro-competitive privatization.
Privileges and Immunities
INTELSAT and Inmarsat enjoy a range of privileges and
immunities, such as tax exemptions, immunity from lawsuits,
potential antitrust immunity, and preferential access to
orbital locations. These privileges and immunities may make it
difficult for private competitors to obtain legal redress for
anti-competitive activities that INTELSAT and Inmarsat may
engage in. These privileges and immunities could distort
competition which would be detrimental to the interests of
consumers and American workers.
The legal status of INTELSAT's and Inmarsat's immunity from
suit and legal process is unclear. Under U.S. law,
international organizations such as INTELSAT and Inmarsat
generally have the same immunity as foreign governments, and
the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C.
Sec. Sec. 1602 et seq., provides that foreign governments are
not immune for actions taken in connection with their
commercial activities. However, there is a lack of case law on
this issue. It is particularly important to resolve this issue
in the context of INTELSAT and Inmarsat, whose primary mission
(unlike the primary missions of other international
organizations) is to provide commercial services.
These privileges and immunities make it more difficult for
private companies to compete against these intergovernmental
organizations. Such privileges and immunities give INTELSAT and
Inmarsat a commercial advantage which their competitors cannot
match and which make it more difficult for the competitors to
have nondiscriminatory access to satellite telecommunications
markets in countries that are members of INTELSAT and Inmarsat.
Just as implementing the OECD Convention is designed to help
level the playing field for American business overseas through
reduction of bribery, reduction of immunities from law will
help level the playing field for business by applying the same
laws to the intergovernmental satellite organizations that
apply to their would-be private sector competitors.
Thus this legislation addresses the issue of privileges and
immunities and clarifies the law on this issue. It provides
that INTELSAT and Inmarsat are not immune from suit or legal
process in connection with their commercial activities, which
include provision of commercial communications services.
Further, this legislation directs the President and the
Commission to substantially limit or eliminate other privileges
and immunities that INTELSAT and Inmarsat presently enjoy.
Legal Analysis
There may be an open question as to the extent to which
INTELSAT and Inmarsat are currently subject to suit and legal
process in connection with their commercial activities. The
lack of clear standards is apparent from a review of INTELSAT's
and Inmarsat's organizational documents, the International
Organizations Immunities Act (IOIA), 22 U.S.C. Sec. 288 et
seq., the Foreign Sovereign Immunities Act, and relevant court
decisions.
In the case of INTELSAT, neither the Agreement Relating to
the International Telecommunications Satellite Organization
(the INTELSAT Agreement), TIAS 7532, nor its implementing
agreement, the INTELSAT Headquarters Agreement (the INTELSAT HQ
Agreement), TIAS 8542, provides clear guidance on the issue of
immunity. Article XV(c) of the INTELSAT Agreement states that
the Party in whose territory INTELSAT's headquarters is located
(i.e., the United States) shall grant privileges, exemptions,
and immunities ``inaccordance with the Headquarters
Agreement,'' and that the other Parties shall make a grant ``in
accordance with the [privileges, exemptions, and immunities]
Protocol.''
Article XV(c) does not, however, specify what the
privileges, exemptions, and immunities should be, other than to
state that they should be ``appropriate,'' and that, as to
``immunity from legal process in respect of acts done or words
written or spoken in the exercise of . . . [officers' and
employees'] duties,'' the privileges, exemptions, and
immunities should be ``to the extent and in the cases to be
provided for in the Headquarters Agreement and Protocol.''
The INTELSAT Headquarters Agreement also leaves largely
unanswered the question of to what extent INTELSAT and its
officials are immune from suit or legal process. Section 16 of
the INTELSAT Headquarters Agreement affords immunity ``from
suit and legal process'' to ``[t]he officers and employees of
INTELSAT, the representatives of the Parties and of the
Signatories and persons participating in arbitration
proceedings pursuant to the INTELSAT Agreement.'' This
immunity, however, is limited to ``acts performed by them in
their official capacity and falling within their functions,''
and section 16 does not elaborate upon the intended meaning of
those terms.
The INTELSAT Protocol suggests that the parties to the
INTELSAT Agreement never intended for INTELSAT to be immune for
its commercial activities. See Protocol on INTELSAT Privileges,
Exemptions, and Immunities, May 19, 1978. The Protocol
implements the same immunity language in Article XV(c) of the
INTELSAT Agreement as the INTELSAT Headquarters Agreement
implements, and governs INTELSAT's privileges, immunities, and
exemptions in all INTELSAT member nations other than the United
States. Article III, Section 1 of the Protocol states that
INTELSAT's ``immunity from jurisdiction and immunity from
execution'' does not apply ``in respect of its commercial
activities.'' Thus, apparently the other parties to INTELSAT
have taken the position that Article XV(c) confers no immunity
for commercial activities to INTELSAT, its parties, or its
signatories, but the status of commercial activities in the
United States has not been as explicitly addressed.
The International Organizations Immunities Act (IOIA),
which applies to INTELSAT through an implementing Executive
Order, limits immunity for international organizations to the
immunities granted to ``foreign governments.'' The IOIA also
provides that the President may restrict the immunity of any
particular organization. The reason for this reservation of
right was to ``permit the adjustment or limitation of the
privileges in the event that any international organization
should engage, for example, in activities of a commercial
nature.'' S. Rep. No. 861, 79th Cong., 1st Sess. 4 (1945).
In 1976, Congress passed the Foreign Sovereign Immunities
Act (FSIA). The FSIA provides that foreign governments are not
immune for any ``action [that] is based upon a commercial
activity carried on in the United States by the foreign state;
or upon an act performed in the United States in connection
with a commercial activity of the foreign state elsewhere; or
upon an act outside the territory of the United States in
connection with a commercial activity of the foreign state
elsewhere and that the act causes a direct effect in the United
States.'' 28 U.S.C. Sec. 1605(a)(2). Although the IOIA affords
international organizations the same immunity as foreign
governments, the FSIA did not explicitly mention the IOIA. See
Broadbent v. Organization of American States, 628 F.2d 27 (D.C.
Cir. 1980).
The Inmarsat agreements, like those regarding INTELSAT, do
not speak meaningfully to the issue of the scope of immunity.
This legislation helps define the scope of that immunity. The
extent to which immunity applies to commercial activities has
been unclear not only with respect to INTELSAT and Inmarsat,
but also in the case of their U.S. signatory, Comsat. Comsat is
neither an international organization nor a foreign government.
As a result, Comsat itself has no antitrust immunity, and the
Satellite Act expressly subjects Comsat to the antitrust laws.
One court, however, has held Comsat to be immune from
antitrust liability for actions Comsat took in connection with
INTELSAT's commercial role of providing communications
satellite services. In Alpha Lyracom v. Communications
Satellite Corporation, 946 F.2d 168, 174 (2d Cir. 1991), cert.
denied, 502 U.S. 1096 (1992), the court concluded that section
16 of the INTELSAT Headquarters Agreement, when read in
conjunction with Article XV of the INTELSAT Agreement, granted
immunity to Comsat when it is engaged in signatory activities,
without regard to whether the signatory activities concerned
INTELSAT's commercial functions. Further, on remand, the
Federal District Court for the Southern District of New York
concluded that Comsat's signatory immunity extended to its
participation in an INTELSAT resolution calling for a boycott
of private satellite systems. Alpha Lyracom Space
Communications, Inc. v. Comsat Corporation, 968 F. Supp. 876
(S.D.N.Y. 1996). The Second Circuit affirmed, finding that
``Comsat's activities in connection with a so-called ``boycott
resolution,'' adopted and reaffirmed at meetings of INTELSAT,
were immune from discovery and could not be considered as
evidence to support . . . [a separate system's] antitrust
claims.'' 113 F.3d 372 (2d Cir. 1997).
The FCC has found that the immunity from antitrust that the
court in Alpha Lyracom found to be conferred on Comsat provides
Comsat with a ``competitive advantage'' that ``allows
commercial decisions and activities to be conducted under a
cloak of immunity unavailable to Comsat's competitors.''
Amendment of the Commission's Regulatory Policies to Allow Non-
U.S. Licensed Space Stations to Provide Domestic and
International Satellite Service in the United States, FCC 97-
399 (Nov. 26, 1997) at para. 125.
Federal Communications Commission
The Commission has in the past worked to eliminate
immunities associated with the intergovernmental satellite
organizations.
In The Merger of MCI Communications Corporation and British
Telecommunication plc, FCC 97-302 (Sept. 24, 1997), the FCC
conditioned its approval of the proposed merger between British
Telecommunications plc (BT) and MCI Communications Corporation
on BT making ``awaiver of any claim to immunity from U.S.
antitrust laws acting in its capacity as signatory to INTELSAT * * * as
such immunity may apply to BT's provision of services in the United
States.'' Id. para. 328 (Note that this merger addressed in this
decision did not ultimately occur).
In its ``DISCO II'' decision, the FCC held that it would
``require Comsat to make an appropriate waiver of immunity from
any suit as part of its application to provide domestic
services via INTELSAT or Inmarsat.'' Amendment of the
Commission's Regulatory Policies to Allow Non-U.S. Licensed
Space Stations to Provide Domestic and International Satellite
Service in the United States, 12 FCC Rcd 24094 (1997) at para.
126 (emphasis in original).
The FCC also determined that it should continue to regulate
Comsat as a dominant carrier in the provision of switched
voice, private line, and occasional-use video service in non-
competitive markets because, among other reasons, Comsat had
not made ``an appropriate waiver * * * of its immunity, in form
and substance satisfactory to the [Federal Communications]
Commission.'' Comsat Corporation, FCC 98-78 (Apr. 28, 1998) at
para. 162.
Hearings
The Subcommittee on Finance and Hazardous Materials held a
hearing on H.R. 4353, the International Anti-Bribery and Fair
Competition Act of 1998, on September 10, 1998. Appearing
before the Subcommittee were Mr. Andrew Pincus, General
Counsel, Office of General Counsel, U.S. Department of
Commerce, on behalf of the Administration, and Mr. Paul V.
Gerlach, Associate Director, Division of Enforcement,
Securities and Exchange Commission.
Committee Consideration
On September 16, 1998, the Subcommittee on Finance and
Hazardous Materials met in open markup session and approved
H.R. 4353, the International Anti-Bribery and Fair Competition
Act of 1998, for Full Committee consideration, amended, by a
voice vote. On September 24, 1998, the Full Committee met in
open markup session and ordered H.R. 4353 reported to the
House, amended, by a voice vote, a quorum being present.
Rollcall Votes
Clause 2(l)(2)(B) of rule XI of the Rules of the House
requires the Committee to list the recorded votes on the motion
to report legislation and amendments thereto. There were no
recorded votes taken in connection with ordering H.R. 4353
reported. An Amendment in the Nature of Substitute offered by
Mr. Oxley was adopted by a voice vote. A motion by Mr. Bliley
to order H.R. 4353 reported to the House, amended, was agreed
to by a voice vote, a quorum being present.
Committee Oversight Findings
Pursuant to clause 2(l)(3)(A) of rule XI of the Rules of
the House of Representatives, the Committee held a legislative
hearing and made findings that are reflected in this report.
Committee on Government Reform and Oversight
Pursuant to clause 2(l)(3)(D) of rule XI of the Rules of
the House of Representatives, no oversight findings have been
submitted to the Committee by the Committee on Government
Reform and Oversight.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 2(l)(3)(B) of rule XI of the
Rules of the House of Representatives, the Committee finds that
H.R. 4353, the International Anti-Bribery and Fair Competition
Act of 1998, would result in no new or increased budget
authority, entitlement authority, or tax expenditures or
revenues.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 2(l)(3)(C) of rule XI of the Rules of
the House of Representatives, the following is the cost
estimate provided by the Congressional Budget Office pursuant
to section 402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 30, 1998.
Hon. Tom Bliley,
Chairman, Committee on Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4353, the
International Anti-Bribery and Fair competition Act of 1998.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Mark
Grabowicz and Mark Hadley.
Sincerely,
June E. O'Neill, Director.
Enclosure.
H.R. 4353--International Anti-Bribery and Fair Competition Act of 1998
CBO estimates that implementing H.R. 4353 would not result
in any significant cost to the federal government. Because
enactment of the bill could affect direct spending and
receipts, pay-as-you-go procedures would apply. However, CBO
estimates that any impact on direct spending and receipts would
not be significant.
CBO has determined that this legislation is excluded from
the application of the Unfunded Mandates Reform Act (UMRA)
because it would amend the Foreign Corrupt Practices Act (FCPA)
and other laws in ways that are necessary to implement the
Organization for Economic Cooperation and Development
Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions. Section 4 of UMRA excludes
from the application of that act any legislative provisions
that are necessary for the ratification or implementation of
international treaty obligations.
H.R. 4353 would expand the FCPA to cover additional
offenses relating to corporate bribery of foreign officials. As
a result, the federal government would be able to pursue cases
that it otherwise would not be able to prosecute. CBO expects
that the government probably would not pursue many such cases,
however, so we estimate that any increase in federal costs for
law enforcement, court proceedings, or prison operations would
not be significant. Any such additional costs would be subject
to the availability of appropriated funds.
Because those prosecuted and convicted under the bill could
be subject to civil and criminal fines, the federal government
might collect additional fines (which are categorized as
governmental receipts) if the bill is enacted. However, CBO
expects that any additional fines would be negligible because
of the small number of cases involved. Collections of criminal
fines are deposited in the Crime Victims Fund and spent in the
following year. Because any increase in direct spending would
equal the fines collected with a one-year lag, the additional
direct spending from the Crime Victims Fund also would be
negligible.
H.R. 4353 would require the Department of Commerce to
submit reports each year during the 1999-2004 period detailing
the enforcement and monitoring efforts of foreign countries
that ratified the convention. Based on information from the
department, CBO estimates that such efforts would cost less
than $500,000 a year and would be subject to the availability
of appropriated funds.
The CBO staff contacts for this estimate are Mark Grabowicz
and Mark Hadley. This estimate was approved by Paul N. Van de
Water, Assistant Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 2(l)(4) of rule XI of the Rules of the
House of Representatives, the Committee finds that the
Constitutional authority for this legislation is provided in
Article I, section 8, clause 3, which grants Congress the power
to regulate commerce with foreign nations, among the several
States, and with the Indian tribes.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
Section 1.--Short title
Section 1 establishes the short title of the legislation as
the ``International Anti-Bribery and Fair Competition Act of
1998.''
Section 2.--Amendments to the Foreign Corrupt Practices Act governing
issuers
Subsection (a) implements the OECD Convention by amending
Sec. 30A of the Securities Exchange Act of 1934 (the Securities
Exchange Act) to prohibit any payments made to foreign
officials for the purpose of securing ``any improper
advantage.'' See OECD Convention, Art. 1, para. 1.
Subsection (b) implements the OECD Convention by amending
Sec. 30A(f)(1) of the Securities Exchange Act to expand the
definition of ``foreign official'' to include an official of a
public international organization. See OECD Convention, Art. 1,
para. 4(a). Public international organizations are then
defined, first, by reference to those organizations designated
by Executive Order pursuant to the International Organizations
Immunities Act (IOIA) (22 U.S.C. Sec. 288), and second, by
reference to any other international organization that is
designated by the President for the purposes of this section.
The Committee intends that citizens will be given adequate
notice of such designations.
Subsection (c) implements the OECD Convention by creating
an additional basis for jurisdiction over foreign bribery by
U.S. issuers and U.S. persons that are officers, directors,
employees, or agents, or stockholders of such issuers. See OECD
Convention, Art. 4, para. 2. This section extends coverage for
acts outside the United States to U.S. issuers that are
organized under the laws of the United States or of a State,
territory, or commonwealth, or a political subdivision thereof
and U.S. persons acting on such issuers' behalf. Under the new
Sec. 30A(g) of the Securities Exchange Act, U.S. issuers or
U.S. persons acting on a U.S. issuer's behalf violate the FCPA
if they make any of the payments prohibited under the existing
statute outside of the United States, irrespective of whether
in doing so they make any use of the mails or means or
instrumentality of interstate commerce. Although this section
limits liability to U.S. issuers and U.S. persons acting on
U.S. issuers' behalf, it is expected that the established
principles of liability, including principles of vicarious
liability, that apply under the current version of the FCPA
shall apply to the liability of U.S. issuers for acts taken on
their behalf by their officers, directors, employees, agents,
or stockholders outside the territory of the United States,
regardless of the nationality of the officer, director,
employee, agent, or stockholder. The subsection also inserts
references to the new offense in the provisions of the existing
statute governing exceptions and affirmative defenses.
Subsection (d) implements the OECD Convention by amending
Sec. 32(c) of the Securities Exchange Act (15 U.S.C. 78 ff (c))
to eliminate the current disparity in treatment between U.S.
nationals that are employees or agents of issuers and foreign
nationals that are employees or agents of issuers. Presently,
foreign nationals who are employees or agents (as opposed to
officers or directors) are subject only to civil sanctions.
Eliminating this preferential treatment implements the OECD
Convention's requirement that ``[e]ach Party shall take such
measures as may be necessary to establish that it is a criminal
offense under its law for any person to [make unlawful
payments].'' OECD Convention, Article 1. In addition,
subsection (d) provides that the same penalties shall apply to
issuers for violation of the new provisions for acts outside
the United States as apply to violations of the existing
statute.
Section 3.--Amendments to the Foreign Corrupt Practices Act governing
domestic concerns
Subsection (a) implements the OECD Convention by amending
Sec. 104(a) of the FCPA to prohibit any payments made to
foreign officials for the purpose of securing ``any improper
advantage,'' Art. 1, para. 1.
Subsection (b) implements the OECD Convention by
eliminating the current disparity in treatment between U.S.
nationals that are employees or agents of domestic concerns and
foreign nationals that are employees or agents of domestic
concerns. Presently, foreign nationals who are employees or
agents (as opposed to officers or directors) are subject only
to civil sanctions. Eliminating this preferential treatment
implements the OECD Convention's requirement that``[e]ach Party
shall take such measures as may be necessary to establish that it is a
criminal offense under its law for any person to [make unlawful
payments].'' OECD Convention, Article 1. In addition, section 3(b)
provides that the same penalties shall apply to U.S. persons for
violation of the new Sec. 104(i) for acts outside the United States as
apply to violations of the existing FCPA.
Subsection (c) implements the OECD Convention by amending
Sec. 104(h)(2) of the FCPA, 15 U.S.C. 78dd-2(h)(2), to expand
the definition of ``foreign official'' to include an official
of a public international organization. See OECD Convention,
Art. 1, para. 4(a). Public international organizations are then
defined, first, by reference to those organizations designated
by Executive order pursuant to the International Organizations
Immunities Act (22 U.S.C. Sec. 288), and second, by reference
to any other international organization that is designated by
the President for the purposes of this section. The Committee
intends that citizens will be given adequate notice of such
designations.
Subsection (d) implements the OECD Convention by creating
an additional basis for jurisdiction over foreign bribery by
U.S. persons. See OECD Convention, Art. 4, para. 2. This
section limits coverage to businesses organized under the laws
of the United States, a State, territory, possession, or
commonwealth, or a political subdivision thereof, or U.S.
nationals. U.S. nationals are defined by reference to the
Immigration and Nationality Act, 8 U.S.C. Sec. 1101(22), which
defines a ``national of the United States'' as ``(A) a citizen
of the United States, or (B) a person, who though not a
citizen, owes permanent allegiance to the United States.''
Under the new Sec. 104(i), a U.S. person violates the FCPA if
it makes any of the payments prohibited under the existing
statute outside of the United States, irrespective of whether
in doing so it makes any use of the mails or means or
instrumentality of interstate commerce. Although this section
imposes liability only on U.S. persons, it is expected that the
established principles of liability, including principles of
vicarious liability, that apply under the current version of
the FCPA shall apply to the liability of U.S. businesses for
acts taken on their behalf by their officers, directors,
employees, agents or stockholders outside the United States,
regardless of the nationality of the officer, director,
employee, agent, or stockholder. Subsection (d) also inserts
references to the new offense in the provisions of the existing
statute governing exceptions, affirmative defenses, and
injunctive relief.
Section 4.--Amendments to the Foreign Corrupt Practices Act governing
other persons
Section 4 creates a new section in the FCPA, Sec. 104A,
providing for criminal and civil penalties over persons not
covered under the existing FCPA provisions regarding issuers
and domestic concerns. This section closes the gap left in the
original FCPA and implements the OECD Convention's requirement
that Parties criminalize bribery by ``any person.'' OECD
Convention, Art. 1, para. 1. The prohibited acts are the same
as those covered by Sec. 30A(a) of the Securities Exchange Act,
15 U.S.C. 78dd-1(a), and Sec. 104(a) of the FCPA, 15 U.S.C.
78dd-2(a), with two qualifications.
First, the offense created under this section requires that
an act in furtherance of the bribe be taken within the
territory of the United States. The OECD Convention requires
each Party to ``take such measures as may be necessary to
establish its jurisdiction over the bribery of a foreign public
official when the offense is committed in whole or in party in
its territory.'' OECD Convention, Art. 4, para. 1. The new
offense complies with this section by providing for criminal
jurisdiction in this country over bribery by foreign nationals
of foreign officials when the foreign national takes some act
in furtherance of the bribery within the territory of the
United States. It is expected that the established principles
of liability, including principles of vicarious liability, that
apply under the current version of the FCPA shall apply to the
liability of foreign businesses for acts taken on their behalf
by their officers, directors, employees, agents or stockholders
in the territory of the United States, regardless of the
nationality of the officer, director, employee, agent, or
stockholder.
As envisioned in the OECD the territorial basis for
jurisdiction should be interpreted broadly so that an extensive
physical connection to the bribery act is not required. See
Commentaries on the Convention on Combating Bribery of Foreign
Public Officials in International Business Transactions (OECD
Commentary) at para. 24. Further, ``territory of the United
States'' should be understood to encompass all areas over which
the United States asserts territorial jurisdiction. See 18
U.S.C. Sec. 5 (``The term `United States', as used in this
title in a territorial sense, includes all places and waters,
continental or insular, subject to the jurisdiction of the
United States, except the Canal Zone.''); 18 U.S.C. Sec. 7
(special maritime and territorial jurisdiction of the United
States, 49 U.S.C. Sec. 46501(2) (special aircraft jurisdiction
of the United States)).
Although this section limits jurisdiction over foreign
nationals and companies to instances in which the foreign
national or company takes some action while physically present
within the territory of the United States, Congress does not
thereby intend to place a similar limit on the exercise of U.S.
criminal jurisdiction over foreign nationals and companies
under any other statute or regulation.
The second difference from the existing FCPA provisions is
that this section expands the commerce nexus to include not
only the use of the mails or any means or instrumentality of
interstate commerce but ``any other act'' within the United
States.
Section 5.--Treatment of international organizations providing
commercial communications services
Subsection (a) establishes definitions and policy.
Paragraph (1) defines ``international organization providing
commercial communications services'' to mean INTELSAT and
Inmarsat.
Paragraph (2) defines the term ``pro-competitive
privatization'' for purposes of section 5 to mean one the
President determines to be consistent with the U.S. policy of
obtaining full and open competition to such organizations (or
their successors), and nondiscriminatory market access, in the
provision of satellite services. This language makes clear that
it is the Presidentwho is to make a determination for purposes
of applicability of section 5(b) as to whether a privatization is
consistent with the U.S. policy set forth in paragraph (2). That policy
is to be one of obtaining full and open competition to such
organizations (or their successors), and nondiscriminatory market
access.
Subsection (b) deals with the treatment of public
international organizations. Paragraph (1) extends the FCPA to
bribery of officials of public international organizations.
Pursuant to subsection (b)(1), the classification of INTELSAT
and Inmarsat as ``public international organizations'' for
purposes of the FCPA remains in effect until the President
certifies that INTELSAT or Inmarsat, as the case may be, has
achieved a ``pro-competitive privatization.'' Prior to this
certification, therefore, a prohibited payment made to an
official of INTELSAT or Inmarsat will constitute a violation of
the FCPA. The certification requirement is designed to ensure
that neither INTELSAT nor Inmarsat falls outside the FCPA by
engaging in activity that is a privatization that the President
has not certified as pro-competitive pursuant to subsection
a(2). The Committee expects that the President will not make
this certification unless the privatization facilitates full
and fair competition to INTELSAT, Inmarsat, and their
successors and fosters non-discriminatory market access in the
provision of satellite services. The Committee also intends
that the President will seek to achieve a pro-competitive
privatization described in this section 5.
Paragraph (2) states that the requirement in paragraph (1)
for a Presidential certification does not affect the authority
of the FCC under the Communications Act of 1934, as amended
(the Communications Act), to authorize services to, from, or
within the United States via the satellite systems of INTELSAT
and Inmarsat, and the satellite systems of privatized
affiliates and successors of INTELSAT and Inmarsat.
This paragraph clarifies that the FCC's responsibilities
under the Communications Act are independent of any
Presidential authority pursuant to this section. When presented
with an application seeking authority to use one of these
satellite systems, and regardless of whether the President has
made a certification for the system pursuant to paragraph (1),
the FCC must make its own determination under the
Communications Act as to whether use of the system is
consistent with the public convenience, interest, and
necessity. In light of the fact that the Executive Branch's
procedures may lack the transparency that the FCC's procedures
possess, moreover, there is a risk that, absent an independent
review by the FCC, the public would not have an adequate
opportunity to comment on a privatization. The Commission may
use any existing authority to achieve the mandates of this
legislation, including requiring waiver of privileges and
immunities, conditioning licenses, and conducting rulemakings.
Subsection (c) is entitled ``Extension of Legal Process.''
Paragraph (1) states that neither INTELSAT and Inmarsat, nor
their officials, employees and records, are immune from suit or
legal process for acts or omissions taken in connection with
INTELSAT or Inmarsat providing commercial telecommunications
services to, from, or within the United States, except that
immunity continues to apply to the extent ``specifically and
expressly required by mandatory obligations in international
agreements to which the United States is a party.'' This
legislation is designed to put the intergovernmental satellite
organizations on an equal legal footing with their private
sector competitors.
This paragraph provides, therefore, that INTELSAT and
Inmarsat, and their officials, employees, and records, do not
have immunity in connection with their commercial role of
providing telecommunications services to, from, or within the
United States. The use of ``directly or indirectly'' in
subsection (b) reflects the fact that, although INTELSAT and
Inmarsat services are generally provided indirectly through a
signatory such as COMSAT, it is possible with the ongoing
restructuring within INTELSAT and Inmarsat that either
organization will be providing services directly. The Committee
uses the terms ``express,'' ``specific,'' ``mandatory,'' and
``obligations'' because it wishes to make very clear that it
intends that obligations under international agreements be
narrowly construed. The Committee does not anticipate that any
commercial activities will be deemed immune under any
agreements to which the U.S. is party. INTELSAT's and
Inmarsat's activities are almost entirely commercial. For
example, INTELSAT operates a network that the Congress, in the
Satellite Act, characterized as ``a commercial communications
satellite system,'' 47 U.S.C. Sec. 701(a).
Paragraph (2) clarifies that paragraph (1) does not affect
any immunity officials and employees of INTELSAT and Inmarsat
may or may not have with respect to personal liability.
Although paragraph (2) protects the personal funds of officials
and employees of INTELSAT and Inmarsat to the extent that the
officials and employees are immune, those individuals remain
subject to legal process and injunctions, and similar matters,
and may be required to appear as witnesses and to respond to
discovery requests.
Subsection (d) requires the President and the FCC,
consistent with specific and express requirements in mandatory
obligations in international agreements to which the United
States is a party, each act to limit or eliminate the
privileges and immunities enjoyed by INTELSAT and Inmarsat. The
Committee uses the terms ``express,'' ``specific,''
``mandatory,'' and ``obligations'' because it wishes to make
clear that it intends that obligations under international
agreements be narrowly construed. The Committee does not intend
to require the President to abrogate international agreements
to which the U.S. is a party. The Committee does intend,
however, that the President and the Commission will work
expeditiously to eliminate those immunities or privileges which
are required by international agreements to which the U.S. is a
party.
The FCC has a role in U.S. government oversight of COMSAT's
participation in INTELSAT and Inmarsat which is reflected in
subsection (d). The Committee intends that the Commission will
use its authority under the Communications Act to take all
measures necessary to protect competition in the U.S. markets
and to open markets for our companies overseas through
elimination of privileges and immunities.
This section explicitly requires ``expeditious'' action
because the Committee intends for the President and Commission
to act as soon as possible, and specifically not to wait
pending the result of discussions with respect to
privatization.
Pursuant to subsection (d)(1), the President and the FCC
each expeditiously must take all actions necessary to eliminate
or limit substantially any additional privileges or immunities
from suit or legal process that INTELSAT or Inmarsat enjoy that
subsection (c) does not already eliminate. On the part of the
President, this includes seeking the revision of existing
agreements to accomplish the purposes of this paragraph. The
IOIA already gives the President the authority ``to withhold or
withdraw'' from any international organization or its officers
or employees ``any of the privileges, exemptions, and
immunities provided for [in the IOIA],'' or to ``condition or
limit the enjoyment by any such organization or its officers or
employees of any such privilege, exemption, or immunity.'
Subsection (d)(1) is also intended to require that the FCC
may use any existing authority to achieve the mandates of this
subsection, including requiring waiver of privileges and
immunities, conditioning licenses, and conducting rulemakings.
Pursuant to subsection (d)(2), the President and the FCC
must expeditiously take all appropriate actions that are
necessary to eliminate or reduce substantially all privileges
and immunities not eliminated by subsection (d)(1). INTELSAT
and Inmarsat appear to enjoy a broad range of privileges and
immunities in addition to the immunity from suit or legal
process. These include immunity from import duties and taxes,
immunity from income taxes, immunity from communications and
property taxes, and preferential treatment in international
organizations, processes and coordinations.
Subsection (d)(2) requires the President and the FCC to do
whatever is necessary, including seeking the revision of
international agreements, as appropriate, so that these
privileges and immunities can be eliminated or reduced
substantially.
The IOIA already gives the President the authority ``to
withhold or withdraw'' from any international organization or
its officers or employees ``any of the privileges, exemptions,
and immunities provided for [in the IOIA],'' or to ``condition
or limit the enjoyment by any such organization or its officers
or employees of any such privilege, exemption, or immunity.''
Subsection (d)(3) requires the President and the FCC
independently to report to the Committee and the relevant
Senate Committees of jurisdiction on a semiannual basis
concerning any privileges and immunities that INTELSAT and
Inmarsat continue to hold. The purpose is to create a record
for the Congress and the private sector to use to review the
progress of the President and the Commission in eliminating
such privileges and immunities. The Committee expects that, to
satisfy their reporting obligations, the President and the FCC
each will maintain a comprehensive inventory of remaining
privileges and immunities, and will solicit information and
comment from a wide range of sources and report with respect to
each of INTELSAT's and Inmarsat's member countries, including
with respect to the extent to which these organizations'
privileges and immunities may potentially give rise to barriers
to market entry or otherwise adversely affect competition.
Subsection (e) clarifies that subsections (c) and (d) do
not affect INTELSAT's and Inmarsat's immunity from suit and
legal process for acts or omissions: (i) under specific State
and Federal laws for the benefit of law enforcement and
intelligence activities; and (ii) pursuant to court orders.
Subsection (e) expresses the intent of Congress that nothing in
the preceding sections removing or urging the removal of
privileges and immunities from international organizations
providing commercial communications services shall be deemed to
affect privileges and immunities conferred by the U.S. and
State constitutions, statutes, rules and common law that
pertain to cooperation with law enforcement and intelligence
agencies. This is in no way designed to narrow the elimination
of immunities traditionally associated with such international
organizations; it is merely designed to make it clear that this
section does not eliminate the law enforcement or intelligence
related immunities such organizations would have if they were
private companies.
Subsection (f)(1) provides that nothing in section 5 shall
affect the President's existing constitutional authority
regarding the time, scope, and objectives of international
negotiations. While the Committee understands that in the
absence of a constitutional amendment legislation cannot modify
the Constitution's allocations of power between the Congress
and the Executive, in order to clarify the Committee's intent
and address concerns in this regard some have raised, this
subsection makes clear that this section does not attempt to
change the President's constitutional authority with respect to
international negotiations. Similarly, this language is not
meant to change the constitutional authority of the Congress in
this regard.
Subsection (f)(2) makes clear that section 5 does not
provide legislative authority or implementing legislation for a
privatization plan for INTELSAT or Inmarsat. Moreover, the
Committee expects the President will faithfully execute the
U.S. law with respect to Inmarsat and its privatization plan.
Section 6.--Enforcement and monitoring
Subsection (a) requires the Secretary of Commerce to
submit, not later than July 1, 1999, and for each of the five
succeeding years, a report to the House of Representatives and
Senate. The Committee intends the report to be thoroughly
researched and to contain considerable detail. The Committee
expects Commerce Department officials to consult with the
Congress prior to filing the report.
First, the report is to contain a list of the countries
that have ratified the OECD Convention, the dates of
ratification, and the date on which the OECD Convention has
entered into force for those countries. With respect to those
countries that have not ratified, the report is to contain a
description of efforts made to encourage them to join and an
assessment of why they have not.
Second, the Secretary is to include a description of the
laws enacted by Parties to the OECD Convention to implement the
OECD Convention, as well as an assessment of such lawsand of
their compatibility with the OECD Convention, including an assessment
of how they may differ from the requirements of the OECD Convention.
Third, the report is to assess the enforcement measures
taken by each Party to the OECD Convention during the previous
year, including enforcement of domestic laws, promotion of
public awareness of such laws, and the effectiveness,
transparency, and viability of the OECD Convention's monitoring
process. In particular, the Secretary is to assess the
inclusion of input from the private sector and non-governmental
organizations.
Fourth, the report should explain the domestic laws enacted
by each Party to the OECD Convention that would prohibit the
deduction of bribes in the computation of domestic taxes. The
report should include a list of all nations which in any way
permit the deduction of bribes and a description of any efforts
in such nations to change such laws.
Fifth, the report will describe efforts to expand
international participation in the OECD Convention through the
addition of new signatories and by assuring that all countries
that are or become members of the Organization for Economic
Cooperation and Development are also Parties to the OECD
Convention.
Sixth, the Secretary should assess the status of efforts to
strengthen the OECD Convention by extending its prohibitions to
cover bribery of political parties, party officials, and
candidates for political office.
Seventh, the report is to in detail address advantages, in
terms of market access, government ownership, government
contacts or connections, privileges and immunities, favorable
treatment by national regulatory authorities or tax treatment,
or otherwise, in the countries or regions served by the
organizations described in section 5, and the reasons for such
advantages. The report should include individual reports for
all nations unless substantially identical information can be
applied to all nations within a region, in which case the
report can include such region. The regional exception is
designed to avoid creating an overly burdensome process with
respect to nations which make little or no use of the system
but is not a reason for failing to report on nations with
significant or potentially significant traffic or potential or
actual advantages such as those described above. The Committee
intends that the Secretary of Commerce consult with the Federal
Communications Commission in preparing this report. The
Committee also intends that the Secretary of Commerce seek and
incorporate comments from the private sector, including
competing satellite companies and users of satellite services,
in preparing this section of the report. The report should also
include a detailed assessment of the progress toward fulfilling
the policy described in section 5 of this Act, including an
assessment of efforts made to achieve this policy.
Eighth, the report should assess the anti-bribery programs
and transparency with respect to international public
organizations covered by this legislation.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3 of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the
bill, as reported, are shown as follows (existing law proposed
to be omitted is enclosed in black brackets, new matter is
printed in italic, existing law in which no change is proposed
is shown in roman):
SECURITIES EXCHANGE ACT OF 1934
* * * * * * *
TITLE I--REGULATION OF SECURITIES EXCHANGES
* * * * * * *
prohibited foreign trade practices by issuers
Sec. 30A. (a) Prohibition.--It shall be unlawful for any
issuer which has a class of securities registered pursuant to
section 12 of this title or which is required to file reports
under section 15(d) of this title, or for any officer,
director, employee, or agent of such issuer or any stockholder
thereof acting on behalf of such issuer, to make use of the
mails or any means or instrumentality of interstate commerce
corruptly in furtherance of an offer, payment, promise to pay,
or authorization of the payment of any money, or offer, gift,
promise to give, or authorization of the giving of anything of
value to--
(1) any foreign official for purposes of--
[(A)(i) influencing any act or decision of
such foreign official in his official capacity,
or (ii) inducing such foreign official to do or
omit to do any act in violation of the lawful
duty of such official, or]
(A)(i) influencing any act or decision of
such foreign official in his official capacity,
(ii) inducing such foreign official to do or
omit to do any act in violation of the lawful
duty of such official, or (iii) securing any
improper advantage; or
* * * * * * *
(2) any foreign political party or official thereof
or any candidate for foreign political office for
purposes of--
[(A)(i) influencing any act or decision of
such party, official, or candidate in its or
his official capacity, or (ii) inducing such
party, official, or candidate to do or omit to
do an act in violation of the lawful duty of
such party, official, or candidate,]
(A)(i) influencing any act or decision of
such party, official, or candidate in its or
his official capacity, (ii) inducing such
party, official, or candidate to do or omit to
do an act in violation of the lawful duty of
such party, official, or candidate, or (iii)
securing any improper advantage; or
* * * * * * *
(3) any person, while knowing that all or a portion
of such money or thing of value will be offered, given,
or promised, directly or indirectly, to any foreign
official, to any foreign political party or official
thereof, or to any candidate for foreign political
office, for purposes of--
[(A)(i) influencing any act or decision of
such foreign official, political party, party
official, or candidate in his or its official
capacity, or (ii) inducing such foreign
official, political party, party official, or
candidate to do or omit to do any act in
violation of the lawful duty of such foreign
official, political party, party official, or
candidate, or]
(A)(i) influencing any act or decision of
such foreign official, political party, party
official, or candidate in his or its official
capacity, (ii) inducing such foreign official,
political party, party official, or candidate
to do or omit to do any act in violation of the
lawful duty of such foreign official, political
party, party official, or candidate, or (iii)
securing any improper advantage; or
* * * * * * *
(b) Exception for Routine Governmental Action.--
[Subsection (a)] Subsections (a) and (g) shall not apply to any
facilitating or expediting payment to a foreign official,
political party, or party official the purpose of which is to
expedite or to secure the performance of a routine governmental
action by a foreign official, political party, or party
official.
(c) Affirmative Defenses.--It shall be an affirmative
defense to actions under [subsection (a)] subsection (a) or (g)
that--
(1) * * *
* * * * * * *
(f) Definitions.--For purposes of this section:
[(1) The term ``foreign official'' means any officer
or employee of a foreign government or any department,
agency, or instrumentality thereof, or any person
acting in an official capacity for or on behalf of any
such government or department, agency, or
instrumentality.]
(1)(A) The term ``foreign official'' means any
officer or employee of a foreign government or any
department, agency, or instrumentality thereof, or of a
public international organization, or any person acting
in an official capacity for or on behalf of any such
government or department, agency, or instrumentality,
or for or on behalf of any such public international
organization.
(B) For purposes of subparagraph (A), the term
``public international organization'' means--
(i) an organization that is designated by
Executive order pursuant to section 1 of the
International Organizations Immunities Act (22
U.S.C. 288); or
(ii) any other international organization
that is designated by the President by
Executive order for the purposes of this
section, effective as of the date of
publication of such order in the Federal
Register.
(g) Alternative Jurisdiction.--
(1) It shall also be unlawful for any issuer
organized under the laws of the United States, or a
State, territory, possession, or commonwealth of the
United States or a political subdivision thereof and
which has a class of securities registered pursuant to
section 12 of this title or which is required to file
reports under section 15(d) of this title, or for any
United States person that is an officer, director,
employee, or agent of such issuer or a stockholder
thereof acting on behalf of such issuer, to corruptly
do any act outside the United States in furtherance of
an offer, payment, promise to pay, or authorization of
the payment of any money, or offer, gift, promise to
give, or authorization of the giving of anything of
value to any of the persons or entities set forth in
paragraphs (1), (2), and (3) of subsection (a) of this
section for the purposes set forth therein,
irrespective of whether such issuer or such officer,
director, employee, agent, or stockholder makes use of
the mails or any means or instrumentality of interstate
commerce in furtherance of such offer, gift, payment,
promise, or authorization.
(2) As used in this subsection, the term ``United
States person'' means a national of the United States
(as defined in section 101 of the Immigration and
Nationality Act (8 U.S.C. 1101)) or any corporation,
partnership, association, joint-stock company, business
trust, unincorporated organization, or sole
proprietorship organized under the laws of the United
States or any State, territory, possession, or
commonwealth of the United States, or any political
subdivision thereof.
* * * * * * *
penalties
Sec. 32. (a) * * *
* * * * * * *
(c)(1)(A) Any issuer that violates [section 30A(a)]
subsection (a) or (g) of section 30A shall be fined not more
than $2,000,000.
(B) Any issuer that violates [section 30A(a)] subsection
(a) or (g) of section 30A shall be subject to a civil penalty
of not more than $10,000 imposed in an action brought by the
Commission.
[(2)(A) Any officer or director of an issuer, or stockholder
acting on behalf of such issuer, who willfully violates section
30A(a) shall be fined not more than $100,000, or imprisoned not
more than five years, or both.
[(B) Any employee or agent of an issuer who is a United
States citizen, national, or resident or is otherwise subject
to the jurisdiction of the United States (other than an
officer, director, or stockholder acting on behalf of such
issuer), and who willfully violates section 30A(a), shall be
fined not more than $100,000, or imprisoned not more than 5
years, or both.
[(C) Any officer, director, employee, or agent, of an
issuer, or stockholder acting on behalf of such issuer, who
violates section 30A(a) shall be subject to a civil penalty of
not more than $10,000 imposed in an action brought by the
Commission.]
(2)(A) Any officer, director, employee, or agent of an
issuer, or stockholder acting on behalf of such issuer, who
willfully violates subsection (a) or (g) of section 30A of this
title shall be fined not more than $100,000, or imprisoned not
more than 5 years, or both.
(B) Any officer, director, employee, or agent of an issuer,
or stockholder acting on behalf of such issuer, who violates
subsection (a) or (g) of section 30A of this title shall be
subject to a civil penalty of not more than $10,000 imposed in
an action brought by the Commission.
* * * * * * *
----------
SECTION 104 OF THE FOREIGN CORRUPT PRACTICES ACT OF 1977
prohibited foreign trade practices by domestic concerns
Sec. 104. (a) Prohibition.--It shall be unlawful for any
domestic concern, other than an issuer which is subject to
section 30A of the Securities Exchange Act of 1934, or for any
officer, director, employee, or agent of such domestic concern
or any stockholder thereof acting on behalf of such domestic
concern, to make use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance
of an offer, payment, promise to pay, or authorization of the
payment of any money, or offer, gift, promise to give, or
authorization of the giving of anything of value to--
(1) any foreign official for purposes of--
[(A)(i) influencing any act or decision of
such foreign official in his official capacity,
or (ii) inducing such foreign official to do or
omit to do any act in violation of the lawful
duty of such official, or]
(A)(i) influencing any act or decision of
such foreign official in his official capacity,
(ii) inducing such foreign official to do or
omit to do any act in violation of the lawful
duty of such official, or (iii) securing any
improper advantage; or
* * * * * * *
(2) any foreign political party or official thereof
or any candidate for foreign political office for
purposes of--
[(A)(i) influencing any act or decision of
such party, official, or candidate in its or
his official capacity, or (ii) inducing such
party, official, or candidate to do or omit to
do an act in violation of the lawful duty of
such party, official, or candidate,]
(A)(i) influencing any act or decision of
such party, official, or candidate in its or
his official capacity, (ii) inducing such
party, official, or candidate to do or omit to
do an act in violation of the lawful duty of
such party, official, or candidate, or (iii)
securing any improper advantage; or
* * * * * * *
(3) any person, while knowing that all or a portion
of such money or thing of value will be offered, given,
or promised, directly or indirectly, to any foreign
official, to any foreign politicalparty or official
thereof, or to any candidate for foreign political office, for purposes
of--
[(A)(i) influencing any act or decision of
such foreign official, political party, party
official, or candidate in his or its official
capacity, or (ii) inducing such foreign
official, political party, party official, or
candidate to do or omit to do any act in
violation of the lawful duty of such foreign
official, political party, party official, or
candidate, or]
(A)(i) influencing any act or decision of
such foreign official, political party, party
official, or candidate in his or its official
capacity, (ii) inducing such foreign official,
political party, party official, or candidate
to do or omit to do any act in violation of the
lawful duty of such foreign official, political
party, party official, or candidate, or (iii)
securing any improper advantage; or
* * * * * * *
(b) Exception for Routine Governmental Action.--[Subsection
(a)] Subsections (a) and (i) shall not apply to any
facilitating or expediting payment to a foreign official,
political party, or party official the purpose of which is to
expedite or to secure the performance of a routine governmental
action by a foreign official, political party, or party
official.
(c) Affirmative Defenses.--It shall be an affirmative defense
to actions under [subsection (a)] subsection (a) or (i) that--
(1) * * *
* * * * * * *
(d) Injunctive Relief.--(1) When it appears to the Attorney
General that any domestic concern to which this section
applies, or officer, director, employee, agent, or stockholder
thereof, is engaged, or about to engage, in any act or practice
constituting a violation of [subsection (a)] subsection (a) or
(i) of this section, the Attorney General may, in his
discretion, bring a civil action in an appropriate district
court of the United States to enjoin such act or practice, and
upon a proper showing, a permanent injunction or a temporary
restraining order shall be granted without bond.
* * * * * * *
[(g) Penalties.--(1)(A) Any domestic concern that violates
subsection (a) shall be fined not more than $2,000,000.
[(B) Any domestic concern that violates subsection (a) shall
be subject to a civil penalty of not more than $10,000 imposed
in an action brought by the Attorney General.
[(2)(A) Any officer or director of a domestic concern, or
stockholder acting on behalf of such domestic concern, who
willfully violates subsection (a) shall be fined not more than
$100,000, or imprisoned not more than 5 years, or both.
[(B) Any employee or agent of a domestic concern who is a
United States citizen, national, or resident or is otherwise
subject to the jurisdiction of the United States (other than an
officer, director, or stockholder acting on behalf of such
domestic concern), and who willfully violates subsection (a),
shall be fined not more than $100,000, or imprisoned not more
than 5 years, or both.
[(C) Any officer, director, employee, or agent of a domestic
concern, or stockholder acting on behalf of such domestic
concern, who violates subsection (a) shall be subject to a
civil penalty of not more than $10,000 imposed in an action
brought by the Attorney General.]
(g) Penalties.--(1)(A) Any domestic concern that is not a
natural person and that violates subsection (a) or (i) of this
section shall be fined not more than $2,000,000.
(B) Any domestic concern that is not a natural person and
that violates subsection (a) or (i) of this section shall be
subject to a civil penalty of not more than $10,000 imposed in
an action brought by the Attorney General.
(2)(A) Any natural person that is an officer, director,
employee, or agent of a domestic concern, or stockholder acting
on behalf of such domestic concern, who willfully violates
subsection (a) or (i) of this section shall be fined not more
than $100,000 or imprisoned not more than 5 years, or both.
(B) Any natural person that is an officer, director,
employee, or agent of a domestic concern, or stockholder acting
on behalf of such domestic concern, who violates subsection (a)
or (i) of this section shall be subject to a civil penalty of
not more than $10,000 imposed in an action brought by the
Attorney General.
* * * * * * *
(h) Definitions.--For purposes of this section:
(1) * * *
[(2) The term ``foreign official'' means any officer
or employee of a foreign government or any department,
agency, or instrumentality thereof, or any person
acting in an official capacity for or on behalf of any
such government or department, agency, or
instrumentality.]
(2)(A) The term ``foreign official'' means any
officer or employee of a foreign government or any
department, agency, or instrumentality thereof, or of a
public international organization, or any person acting
in an official capacity for or on behalf of any such
government or department, agency, or instrumentality,
or for or on behalf of any such public international
organization.
(B) For purposes of subparagraph (A), the term
``public international organization'' means--
(i) an organization that is designated by
Executive order pursuant to section 1 of the
International Organizations Immunities Act (22
U.S.C. 288); or
(ii) any other international organization
that is designated by the President by
Executive order for the purposes of this
section, effective as of the date of
publication of such order in the Federal
Register.
* * * * * * *
(4)(A) [For purposes of paragraph (1), the] The term
``routine governmental action'' means only an action
which is ordinarily and commonly performed by a foreign
official in--
(i) * * *
* * * * * * *
(i) Alternative Jurisdiction.--
(1) It shall also be unlawful for any United States
person to corruptly do any act outside the United
States in furtherance of an offer, payment, promise to
pay, or authorization of the payment of any money, or
offer, gift, promise to give, or authorization of the
giving of anything of value to any of the persons or
entities set forth in paragraphs (1), (2), and (3) of
subsection (a), for the purposes set forth therein,
irrespective of whether such United States person makes
use of the mails or any means or instrumentality of
interstate commerce in furtherance of such offer, gift,
payment, promise, or authorization.
(2) As used in this subsection, the term ``United
States person'' means a national of the United States
(as defined in section 101 of the Immigration and
Nationality Act (8 U.S.C. 1101)) or any corporation,
partnership, association, joint-stock company, business
trust, unincorporated organization, or sole
proprietorship organized under the laws of the United
States or any State, territory, possession, or
commonwealth of the United States, or any political
subdivision thereof.
SEC. 104A. PROHIBITED FOREIGN TRADE PRACTICES BY PERSONS OTHER THAN
ISSUERS OR DOMESTIC CONCERNS.
(a) Prohibition.--It shall be unlawful for any person other
than an issuer that is subject to section 30A of the Securities
Exchange Act of 1934 or a domestic concern (as defined in
section 104 of this Act), or for any officer, director,
employee, or agent of such person or any stockholder thereof
acting on behalf of such person, while in the territory of the
United States, corruptly to make use of the mails or any means
or instrumentality of interstate commerce or to do any other
act in furtherance of an offer, payment, promise to pay, or
authorization of the payment of any money, or offer, gift,
promise to give, or authorization of the giving of anything of
value to--
(1) any foreign official for purposes of--
(A)(i) influencing any act or decision of
such foreign official in his official capacity,
(ii) inducing such foreign official to do or
omit to do any act in violation of the lawful
duty of such official, or (iii) securing any
improper advantage; or
(B) inducing such foreign official to use his
influence with a foreign government or
instrumentality thereof to affect or influence
any act or decision of such government or
instrumentality,
in order to assist such person in obtaining or
retaining business for or with, or directing business
to, any person;
(2) any foreign political party or official thereof
or any candidate for foreign political office for
purposes of--
(A)(i) influencing any act or decision of
such party, official, or candidate in its or
his official capacity, (ii) inducing such
party, official, or candidate to do or omit to
do an act in violation of the lawful duty of
such party, official, or candidate, or (iii)
securing any improper advantage; or
(B) inducing such party, official, or
candidate to use its or his influence with a
foreign government or instrumentality thereof
to affect or influence any act or decision of
such government or instrumentality,
in order to assist such person in obtaining or
retaining business for or with, or directing business
to, any person; or
(3) any person, while knowing that all or a portion
of such money or thing of value will be offered, given,
or promised, directly or indirectly, to any foreign
official, to any foreign political party or official
thereof, or to any candidate for foreign political
office, for purposes of--
(A)(i) influencing any act or decision of
such foreign official, political party, party
official, or candidate in his or its official
capacity, (ii) inducing such foreign official,
political party, party official, or candidate
to do or omit to do any act in violation of the
lawful duty of such foreign official, political
party, party official, or candidate, or (iii)
securing any improper advantage; or
(B) inducing such foreign official, political
party, party official, or candidate to use his
or its influence with a foreign government or
instrumentality thereof to affect or influence
any act or decision of such government or
instrumentality,
in order to assist such person in obtaining or
retaining business for or with, or directing business
to, any person.
(b) Exception for Routine Governmental Action.--Subsection
(a) of this section shall not apply to any facilitating or
expediting payment to a foreign official, political party, or
party official the purpose of which is to expedite or to secure
the performance of a routine governmental action by a foreign
official, political party, or party official.
(c) Affirmative Defenses.--It shall be an affirmative defense
to actions under subsection (a) of this section that--
(1) the payment, gift, offer, or promise of anything
of value that was made, was lawful under the written
laws and regulations of the foreign official's,
political party's, party official's, or candidate's
country; or
(2) the payment, gift, offer, or promise of anything
of value that was made, was a reasonable and bona fide
expenditure, such as travel and lodging expenses,
incurred by or on behalf of a foreign official, party,
party official, or candidate and was directly related
to--
(A) the promotion, demonstration, or
explanation of products or services; or
(B) the execution or performance of a
contract with a foreign government or agency
thereof.
(d) Injunctive Relief.--
(1) When it appears to the Attorney General that any
person to which this section applies, or officer,
director, employee, agent, or stockholder thereof, is
engaged, or about to engage, in any act or practice
constituting a violation of subsection (a) of this
section, the Attorney General may, in his discretion,
bring a civil action in an appropriate district court
of the United States to enjoin such act or practice,
and upon a proper showing, a permanent injunction or a
temporary restraining order shall be granted without
bond.
(2) For the purpose of any civil investigation which,
in the opinion of the Attorney General, is necessary
and proper to enforce this section, the Attorney
General or his designee are empowered to administer
oaths and affirmations, subpoena witnesses, take
evidence, and require the production of any books,
papers, or other documents which the Attorney General
deems relevant or material to such investigation. The
attendance of witnesses and the production of
documentary evidence may be required from any place in
the United States, or any territory, possession, or
commonwealth of the United States, at any designated
place of hearing.
(3) In case of contumacy by, or refusal to obey a
subpoena issued to, any person, the Attorney General
may invoke the aid of any court of the United States
within the jurisdiction of which such investigation or
proceeding is carried on, or where such person resides
or carries on business, in requiring the attendance and
testimony of witnesses and the production of books,
papers, or other documents. Any such court may issue an
order requiring such person to appear before the
Attorney General or his designee, there to produce
records, if so ordered, or to give testimony touching
the matter under investigation. Any failure to obey
such order of the court may be punished by such court
as a contempt thereof.
(4) All process in any such case may be served in the
judicial district in which such person resides or may
be found. The Attorney General may make such rules
relating to civil investigations as may be necessary or
appropriate to implement the provisions of this
subsection.
(e) Penalties.--
(1)(A) Any juridical person that violates subsection
(a) of this section shall be fined not more than
$2,000,000.
(B) Any juridical person that violates subsection (a)
of this section shall be subject to a civil penalty of
not more than $10,000 imposed in an action brought by
the Attorney General.
(2)(A) Any natural person who willfully violates
subsection (a) of this section shall be fined not more
than $100,000 or imprisoned not more than 5 years, or
both.
(B) Any natural person who violates subsection (a) of
this section shall be subject to a civil penalty of not
more than $10,000 imposed in an action brought by the
Attorney General.
(3) Whenever a fine is imposed under paragraph (2)
upon any officer, director, employee, agent, or
stockholder of a person, such fine may not be paid,
directly or indirectly, by such person.
(f) Definitions.--For purposes of this section:
(1) The term ``person'', when referring to an
offender, means any natural person other than a
national of the United States (as defined in section
101 of the Immigration and Nationality Act (8 U.S.C.
1101) or any corporation, partnership, association,
joint-stock company, business trust, unincorporated
organization, or sole proprietorship organized under
the law of a foreign nation or a political subdivision
thereof.
(2)(A) The term ``foreign official'' means any
officer or employee of a foreign government or any
department, agency, or instrumentality thereof, or of a
public international organization, or any person acting
in an official capacity for or on behalf of any such
government or department, agency, or instrumentality,
or for or on behalf of any such public international
organization.
(B) For purposes of subparagraph (A), the term
``public international organization'' means--
(i) an organization that is designated by
Executive order pursuant to section 1 of the
International Organizations Immunities Act (22
U.S.C. 288); or
(ii) any other international organization
that is designated by the President by
Executive order for the purposes of this
section, effective as of the date of
publication of such order in the Federal
Register.
(3)(A) A person's state of mind is knowing, with
respect to conduct, a circumstance or a result if--
(i) such person is aware that such person is
engaging in such conduct, that such
circumstance exists, or that such result is
substantially certain to occur; or
(ii) such person has a firm belief that such
circumstance exists or that such result is
substantially certain to occur.
(B) When knowledge of the existence of a particular
circumstance is required for an offense, such knowledge
is established if a person is aware of a high
probability of the existence of such circumstance,
unless the person actually believes that such
circumstance does not exist.
(4)(A) The term ``routine governmental action'' means
only an action which is ordinarily and commonly
performed by a foreign official in--
(i) obtaining permits, licenses, or other
official documents to qualify a person to do
business in a foreign country;
(ii) processing governmental papers, such as
visas and work orders;
(iii) providing police protection, mail pick-
up and delivery, or scheduling inspections
associated with contract performance or
inspections related to transit of goods across
country;
(iv) providing phone service, power and water
supply, loading and unloading cargo, or
protecting perishable products or commodities
from deterioration; or
(v) actions of a similar nature.
(B) The term ``routine governmental action'' does not
include any decision by a foreign official whether, or
on what terms, to award new business to or to continue
business with a particular party, or any action taken
by a foreign official involved in the decision-making
process to encourage a decision to award new business
to or continue business with a particular party.
(5) The term ``interstate commerce'' means trade,
commerce, transportation, or communication among the
several States, or between any foreign country and any
State or between any State and any place or ship
outside thereof, and such term includes the intrastate
use of--
(A) a telephone or other interstate means of
communication, or
(B) any other interstate instrumentality.