Wal-Mart scandal makes case for tough bribery law
Late in the George W. Bush administration and early in the Obama administration, the Justice Department substantially stepped up enforcement of a 35-year-old law known as the Foreign Corrupt Practices Act. Too bad for Wal-Mart that the department didn't begin sooner.
Tougher enforcement of the law, which bars companies from paying bribes to foreign officials, has produced no shortage of griping from the multinational business lobby. But it has also introduced a healthy fear factor for executives who might otherwise be tempted to try to grease the skids of international commerce with a little payola.
Had the law been fully enforced sooner, perhaps Wal-Mart officials would have thought twice before rooting the company's Mexican expansion plans in a system of bribes, exposed recently by The New York Times. Or perhaps the company's U.S.-based leaders would have quickly cleaned up the situation once they learned about it.
Instead, Wal-Mart faces the embarrassment and financial fallout that accompany the potential violation of federal law, not to mention its own internal policies ("never cover up or ignore any ethical conduct problem").
And how is the wider business community reacting? Rather than standing up for honest commerce, it's engaged in an unseemly lobbying effort, led by the U.S. Chamber of Commerce's legal arm, to water down the anti-bribery law.
The only legitimate, if highly cynical, case against the law is that bribery in some parts of the world is customary, and that American companies will suffer if they don't pay to play.
That needs to be weighed, however, against the harm bribery does to U.S. business and foreign policy interests. The law passed in 1977 not as a morality play, but because a bribery scandal involving Lockheed Corp. and foreign governments damaged America's standing and almost caused Lockheed to fail.
The U.S. law has prompted other nations and economic organizations to adopt their own anti-bribery codes. And how can U.S. lecturing about endemic corruption in places such as Afghanistan be taken seriously if American multinationals have a green light to engage in graft?
Supporters of weakening the act argue that the Justice Department has become too powerful and arbitrary. Some Chamber proposals, such as clearer enforcement guidelines, are relatively non-controversial. But others would seriously undermine the law. The most troublesome would give companies an automatic defense merely for implementing internal compliance programs to prevent and police bribery.
The proposal would amount to giving companies a get-out-of-jail-free card. It's not hard to imagine corporations drawing up a set of cookie-cutter guidelines designed to meet the letter of the law, which might or might not reflect their commitment to thwarting corruption.
America, it is often said, is a nation of laws. The Foreign Corrupt Practices Act is one of them. It's time for Wal-Mart and other U.S. companies to see this useful act as an advantage, not a hindrance.
This story was published and distributed by USA Today.