The Foreign Corrupt Practices Act Within the American Response to Domestic Corruption
| Date | 01 February 1997 |
| DOI | https://doi.org/10.1108/eb027129 |
| Pages | 125-137 |
| Published date | 01 February 1997 |
| Author | Henry H. Rossbacher,Tracy W. Young |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control —
Vol.
1. No. 2
The Foreign Corrupt Practices Act Within the
American Response to Domestic Corruption
Henry H. Rossbacher and Tracy W. Young
In King Henry
VIII,
Cardinal Wolsey, in his final
speech of expiation, urges Cromwell to act hon-
ourably, arguing: 'corruption wins not more than
honesty'.1 Hopefully, the radical nature of this sen-
timent did not cause the historic burning of the
Globe Theatre during the inaugural performances
of the play.2 Just as Wolsey's recantation of his past
sins and practices came a little too late with much
too little, so American and, especially, international
anti-corruption efforts have been either nonexist-
ent or, at the least, largely admonitory.
Wolsey's adjuration is unreflected in the inter-
national business climate of today. Regrettably,
bribery and corruption, endemic to certain cultures
and a mainstay of human greed, is now, as it has
always been, a thorn in our righteous side.
Corruption is as old as man. Yet throughout
history good men have fought back. The Bible
condemns corruption throughout, from the Old
Testament's fire and brimstone threats of destruc-
tion after 'God looked on the earth, and … [be-
held],
it was corrupt',3 to the New Testament's
more poetic approach, 'For oppression makes a
wise man mad, and a bribe corrupts the heart'.4
In conjunction with religious condemnation,
man has also fought back with laws seeking to
expose and punish various forms of corruption.
The article will address primarily that insidious
form of corruption known as bribery, and more
particularly the international aspects of corruption
by bribery within the context of the American
response to domestic corruption.
Until the Watergate scandals and Nixon debacle
during the 1970s, there was no specific law curb-
ing the practice of Americans and American busi-
nesses bribing
foreign
officials, and the government
had not expressed any official concern about such
practices. The Watergate scandal and resulting
investigation of illegal domestic political contribu-
tions helped to focus attention on what America
would soon learn was a shockingly prevalent prac-
tice,
the bribery of foreign officials by American
nationals.
When the magnitude of the problem was finally
exposed, the public outcry was deafening. Highly
public Congressional hearings revealed that
numerous prominent corporations, including
Lockheed, Exxon and Gulf Oil, had engaged in
such illegal practices on a grand scale. The hear-
ings resulted in a call for legislation, as well as
public condemnation rooted in the moral and reli-
gious underpinnings on which America was foun-
ded. Corruption was seen as antithetical to the
concept of 'pure' competition underlying Amer-
ica's faith in capitalism and free-market enterprise.5
The resulting legislation, the Foreign Corrupt
Practices Act ('the Act'), signed into law by then-
President Jimmy Carter on 19th December, 1977,
and passed by both houses of Congress without a
single dissenting vote, was sweeping, yet appears to
be relatively ineffective in curbing the problem it
addresses. The details of the Act will be discussed
in a moment, but suffice it to say, it has not been
demonstrably effective in eradicating the problem
in American corporations or, more tellingly, in
enlisting foreign cooperation in joint efforts to
reform international business practices. It does not,
however, represent an imperialist extension of
unprecedented prohibitions solely to foreigners
but, instead, the extension of American domestic
rules to the foreign activities of American eco-
nomic participants.
THE AMERICAN DOMESTIC ANTI-
CORRUPTION RESPONSE
The law's prohibitions
America's shock was not confined to foreign signs;
increased scrutiny was primarily directed at
domestic offences. Throughout the years since, the
American response to domestic corruption has led
to a sweeping series of laws attempting to constrain
and punish politicians and government bureaucrats
and those who corruptly seek to influence them.
Punishments, in fact, vary — some swift, some
sure,
some illusory — but all are aimed at eradica-
tion of domestic corruption. A brief sketch is
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