In her remarks at Transparency International-USA’s Annual Integrity Award Dinner, where she accepted the award as an international leader in anti-corruption advocacy in government, business, and development assistance, Secretary Clinton said:
We are unequivocally opposed to weakening the Foreign Corrupt Practices Act. We don’t need to lower our standards. We need to work with other countries to raise theirs. I actually think a race to the bottom would probably disadvantage us. It would not give us the leverage and the credibility that we are seeking.
Her comments are a sharp rejoinder to the reforms proposed by the U.S. Chamber of Commerce. Those reforms would, among other things, limit companies’ liabilities for the corrupt acts of their subsidiaries and the prior corrupt acts of their acquirees.
The sentiment, if not the technicalities, behind the U.S. Chamber of Commerce proposal is aptly summed up in a recent Investor’s Watchdog article:
There is no law more unpopular with U.S. companies who make money overseas. That’s because bribery is an accepted and expected part of business deals in some parts of the world, and some of the international companies against whom the U.S. companies compete may not be prohibited from offering bribes by the laws of their own country. . . U.S. companies understand the lay of the land. They know that they cannot compete without paying bribes in cultures where the size of the bribe determines who gets the business.
In her speech, Secretary Clinton acknowledges these difficulties. She recognizes the unfairness that results when competitors pay bribes, the difficulties in conducting business without the “proverbial [level] playing field,” and the fact that business cultures do not change overnight. “Human nature is what it is,” she says. She then forcefully defends the U.S. role in battling corruption.
What is most notable about her speech is not that Secretary Clinton comes out so vocally against FCPA reform, it is how she chooses to describe the Administration’s positions. She casts the critics’ same complaints in a significantly different light.
1. Is the FCPA “bad for business”, or corruption? Proponents of scaling back the FCPA often argue that the law is bad for U.S. business. Secretary Clinton turns this “bad for business” argument on its head. She submits that the real way to spark economic growth in the global economy is not by out-bribing the competition and thereby encouraging more corrupt practices. She suggests, rather, that U.S. businesses should see economic opportunity in the battle against corruption: “Corruption and the lack of transparency eats away like a cancer at the trust people should have in their government . . . Corruption stifles entrepreneurship, siphons funding away from critical services, poor transparency makes it impossible to hold governments accountable.” These are all bad things for healthy economies, and therefore bad for business.
2. The FCPA is not alone in anti-corruption reform. Secretary Clinton explains that the FCPA is a key piece of a “global architecture.” She argues that there is a growing “anticorruption consensus”, evidenced by many efforts including the Open Government Partnership between the United States and Brazil, and the recent ratification of the OECD Anti-Bribery Convention by Colombia and Russia. She describes U.S. efforts to encourage other countries – including China, India, Indonesia, and Saudi Arabia – to join the OECD Convention. If all of these countries are taking action, where is corruption accepted?
She shows that government action is not the only place where momentum against corruption is evident. New technologies are helping to empower individuals to take action: “Anyone who doubts the power of frustrated citizens to rise up need not only look at the Middle East and North Africa, but increasingly across the globe because social media has given every citizen a tool in order to report and literally post in the matter of seconds the kind of abuses that have been, up until now, just taken for granted.”
3. The role of U.S. leadership. Secretary Clinton appeals to the notion of U.S. leadership in the global economy to make her case: “American workers and businesses remain the most innovat[ive] and productive anywhere in the world.” She speaks of our role in creating “beachheads for reform” for others to follow. She states that our country’s “strong stand” against the bribery of foreign officials is a continuation of the policies of the Bush Administration. Though she does not say it explicitly, her remarks imply a certain sentiment. Having invested significant time to achieve a position of leadership, should we now change course and lead a race to the bottom? Does it make any sense to do this just as an international anti-corruption movement is taking shape? And for what purpose – do we think we can beat the Chinese and the Russians at bribery even if we tried? Or should we lead a race to the top? Secretary Clinton’s remarks seem aimed to appeal to our better selves.
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