Suppose you've decided to move part of your business
overseas. You want to open a manufacturing plant in Southeast Asia,
but you need a permit from the local government. A government agent
there offers to get you the permit within a week-and, by the way,
his commission will be $1,000.
Watch your step. In many countries, kickbacks and bribes have
long been an expected cost of doing business. But the Foreign
Corrupt Practice Act (FCPA), enacted by Congress in 1977, prohibits
bribery of officials in other countries. It's illegal to make
payments, promises or offers of anything of value to foreign
officials to obtain or retain business, or to get an improper
advantage. It's also illegal to make such payments to a third
party (say, a government official's brother), knowing he's
just an intermediary.
For 20 years, the United States was the only country to try
prohibiting bribery of foreign officials, says San Diego attorney
John W. Brooks of Luce, Forward, Hamilton & Scripps. "U.S.
companies complained they faced either bribing foreign officials
and risking FCPA prosecution or refusing to engage in bribery and
losing the contract," says Brooks.
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Since then, with urging from the United States, international
organizations have enacted treaties and conventions aimed at
stamping out corruption. The European Union, the United Nations and
the World Bank have also adopted resolutions and policies against
corruption, all of which help level the playing field.
It's clear you don't want to get tangled up in bribery.
The problem is it's rarely easy to tell whether a proposed
payment is actually a bribe. For instance, the FCPA doesn't
prohibit "grease payments," which are fees paid to
foreign officials to expedite actions the government should do
eventually anyway, such as issuing a routine permit. (Some of the
other conventions forbid even these.)
But suppose you need a permit to build an oil pipeline, and a
government agent asks for a few thousand dollars for advising you
on environmental compliance and making sure you get the needed
permit. Would that be a "grease payment," or would it be
paying officials to look the other way?
In light of these new conventions and laws, people of authority
rarely ask for bribes. But they might ask for a commission or a
small payment for advice on doing business there. (In general, if a
government agency asks your company to build a park or pave a road
in exchange for approval, that wouldn't count as a bribe.)
This is further complicated by the layers of people it might
take to get a job done. So if you hire an agent to work with an
agent abroad, how do you know your agent isn't paying a bribe
and implicating your business in corruption? Know what the deal
should cost, so you can tell if money is leaking out.
And because complying with the many overlapping laws is tricky,
don't try it alone. Hire a lawyer with experience in
international business to help you through the minefield.
Jane Easter Bahls is a writer in Rock Island, Illinois,
specializing in business and legal topics.