Anti-Bribery Act "Shot Through the Heart," Says Proxmire

In late-May Senate hearings, Sen. William Proxmire (D-Wisconsin) characterized Reagan administration proposals to "clarify" the Foreign Corrupt Practices Act of 1977 (FCPA) as "a .45 slug through the heart of the Act." He predicted that if the Reagan proposals are made law, "bribery will flourish in overseas trade."

As it stands, the FCPA makes corporations liable for penalties by the U.S. Justice Department if they have "reason to know" that their agents are paying bribes to foreign officials. It requires firms to keep books and records of overseas transactions, and to maintain a system of internal controls to ensure that management knows how the firm's assets are being used.

These requirements are "unnecessary for the effective operation of the prohibitions against illicit payments overseas," according to Reagan's special trade representative William Brock, who presented the administration's proposals for modifying the Act at the Senate hearings. Brock said that sufficient deterrent to bribery would be provided by a replacement provision which would make it a criminal offense to "falsify company books for the purpose of concealing illegal payments.',' The changes, Brock said, would make the FCPA "more simplified in its enforcement and purpose."

Although only one indictment and two civil injunctions have been brought under the FCPA, Brock termed it an "impediment" to foreign trade, citing figures showing that the U.S. share of world trade declined from 15 percent to 12 percent between 1970 and 1980. The U.S. Chamber of Commerce also presented a study criticizing the FCPA for causing U.S. firms to lose business because they are "wary" of contravening the Act. U.S. exports have nearly doubled in the three years since the FCPA was passed, from $121.21 billion to $220.71 billion.

Proxmire labeled Brock's proposal a "pro-bribery bill," charging that it would invite U.S. businessmen to bribe by sharply reducing the government's authority to enforce the Act. Further hearings on the FCPA are scheduled for late June.