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A Little Help From Our Friends, Part II

In Singapore circa 1994, Jeffrey Garten, who was then the Undersecretary of Commerce for International Trade, hosted a "breakfast briefing." The event was sponsored by the American Chamber of Commerce, and the invitations said it would be a chance to discuss the challenges Americans face when they do business overseas.

The turnout was light -- maybe a dozen or so early risers. After scrambled eggs and a few pleasantries, the room turned a bit hostile toward Mr. Garten. Why? Americans trying to do business then in Southeast Asia were constantly upset by the Foreign Corrupt Practices Act. The law put them at a disadvantage, they said. There wasn't anything close to a level playing field with the Europeans, Japanese and Koreans. Americans were being sacrificed economically for the sake of Washington's idealistic moral crusade. And on and on it went.

After listening for about a half hour, Mr. Garten lifted a hand to call for quiet. His exact words have faded, but we remember that he compared the FCPA to mom and apple pie. He said it is the non-negotiable policy of the United States to oppose public bribery anywhere, and that the U.S. government is totally committed to leveling the playing field for U.S. companies by working with the OECD and its member countries. He finished by telling the assembled complainers to get used to the FCPA because it was here to stay.

In the years since Mr. Garten threw cold water on his breakfast companions in Singapore, the OECD -- under Washington's lash -- has in fact enacted a comprehensive antibribery convention. Prosecutions by other OECD members still lag, but most Americans who follow the FCPA see real progress in the international anti-corruption effort. At the same time, the U.S. government has focused some FCPA-enforcement attention on foreign companies. That has raised compliance awareness globally and encouraged American business people to believe that Washington is serious about that long-promised level playing field.

On top of that, the Department of Commerce now lists foreign public bribery as a trade barrier -- similar to discriminatory tariffs, overly burdensome product testing guidelines, ridiculous labeling rules, and so on. Public corruption overseas remains a big issue. The U.S. government estimated that from May 2004 to April 2005, "competition for over 53 contracts valued at approximately $15 billion may have been affected by bribery involving foreign firms." In response, the Department of Commerce now has a "bribery hotline" accessible here. U.S. companies can use it to report bribes by their foreign competitors in international business transactions.

As the Commerce Department's Kathryn Nickerson has said, "We worked hard to negotiate the OECD and other international anticorruption conventions, and we'd like to know whether our trading partners are following through on enforcement. At a minimum," she continued, "we want to put countries on notice that we are watching and expect action. So if you think you are about to lose or have already lost business to a foreign competitor because of a bribe to a foreign public official, don't assume that your Government can't do anything about it. We firmly believe that informing other governments of bribery by persons falling within their jurisdiction is an effective way to ensure that cases will be brought against this pernicious practice that we have outlawed since 1977."

The U.S. government's strategies to level the playing field for American businesses overseas are working -- not all at once, but a step at a time. These days, we're fairly certain an Undersecretary of Commerce for International Trade could show up at a breakfast briefing in Southeast Asia and actually enjoy his or her eggs. Which makes us feel somewhat guilty about the treatment dished out to Mr. Garten back when he held the job. Fortunately, though, it appears he didn't lose his taste for the region. We noticed with some relief that in 2005 he joined the first Governing Board of The Lee Kuan Yew School of Public Policy at the National University of Singapore.

Full post as published by The FCPA Blog on February 26, 2008 (boomark / email).