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September 17, 2008 

The Impact of Corruption on Global Business

National Foreign Trade Counsel President Bill Reinsch made a speech today on "The Impact of Corruption on Global Business" at a FCPA program held in Washington, DC. This speech is worth reading, since Mr. Reinsch made several interesting and important points regarding the dramatic increase in FCPA cases and fines and the use of outside compliance monitors. Here are some excerpts:

Despite a plethora of multilateral and U.S. based efforts, corruption remains a serious problem. Be assured that the NFTC fully supports vigorous and even-handed enforcement of anti-corruption measures. As I said at the beginning, we view corruption as a serious trade barrier. At the same time, however, we are concerned about the ambiguous scope of some enforcement trends, the significant amounts companies must spend on compliance with no assurance that even best efforts will prevent major fines or expenditures, the chilling effect that government action can have on bona fide corporate social responsibility, and finger pointing at the business community as the main source of the problem.

* * *

Our members and most members of the US business community want to comply with the law, but they have to know what it is before they can do that effectively. The deliberate expansion of the FCPA by Justice and SEC through targeting new areas such as charitable contributions and foreign company operations outside US jurisdiction may be warranted by public policy, but expansion driven by prosecutions and not by amendments to the law raises questions of basic process. Companies do not have notice of the expanded scope or changed policy and an opportunity to comment before they can be penalized. Finally, emphasizing draconian enforcement against corporations as the principal means of eradicating global corruption is not enough to put a meaningful dent in the [corruption] problem . . . .




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