Corrupt Practices Act

Under heavy pressure from the business community and the Reagan administration, the U.S. Senate passed by voice vote on November 23 a bill which would make conviction for bribery by a U.S. company oversees virtually impossible.

Formally an amendment to the Foreign Corrupt Practices Act of 1977. The Senate bill dilutes the original bill from the title on down.

Apparently uneasy with the word "corrupt" in the original act, the Senate changed the title to the more innocuous "Business Practices and Records Act."

As for substance, the Senate bill significantly weakens the anti-bribery standards.

The original act stipulated that "knowing, or having reason to know" of a bribe to a foreign official by a U.S. company was sufficient grounds for convicting the company or its representative. In the Senate version, however, guilt can be proven only if a company or its representative "willingly violates" the bribery prohibition.

In other words, under the existing Foreign Corrupt Practices Act, if the chief executive officer of a multinational company knew that the company was bribing overseas, he would be guilty of violating the law. Under the Sensate bill, he would not be guilty unless he directed or authorized the bribe.

Furthermore, in five loopholes tacked on to the bill, the Senate alters the very definition of a bribe. The following would now be legal:

1. "Any facilitating or expediting payment to a foreign official;
2. "any payment, gift, offer, or promise of anything of value to a foreign official which is lawful under the law and regulations of the foreign official's country;
3. "any payment, gift, offer, or promise of anything of value which constitutes a courtesy, a token of regard or esteem, or in return for hospitality;
4. "any expenditures, including travel and lodging expenses, associated with the selling or purchasing of goods or services or with the demonstration or explanation of products; or
5. "any ordinary expenditures, including travel and lodging expenses, associated with the performance of a contract with a. foreign government or agency thereof."

Representative Timothy Wirth (D-Col), who chairs the House subcommittee which is considering legislation similar to the Senate bill, has pointed out the damage these loopholes would do to the anti-bribery law.

"How in the world could you ever convict somebody," Wirth asked assistant attorney general Jonathan Rose at hearings on November 18. A corporate official who "paid a $1 million bribe to the president of some country," Wirth explained, could "claim that the bribe was merely an expenditure associated with selling goods and services." Rose, who lobbied for the Senate bill, was at a loss to answer, saying only that the Foreign Corrupt Practices Act contained "equally hopeless language."

Wirth believes the Senate bill "left some gaping holes," says Marty Cochran, his congressional staffer. It "essentially rendered the bribery clause useless."

The House of Representatives will hold hearings on the issue in early 1982.