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Why anti-bribery laws help global business

Shift in thought

A 1977 law against foreign corruption was long viewed as putting US firms at a disadvantage overseas. Perhaps its success in helping profits might convince President Trump to keep the law and enforce it.

Adriano Jucá, general counsel of the Brazilian construction firm Odebrecht, exits federal court in New York after it was agreed that Odebrecht and petrochemical company Braskem would pay a settlement with the Justice Department Dec. 21, 2016.
Reuters
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  • By the Monitor's Editorial Board

Just a decade ago, it was common to hear complaints in the United States against a strict anti-bribery law passed in 1977. The biggest complaint was that the Foreign Corrupt Practices Act (FCPA) hurts US companies operating overseas because they lose out to foreign firms willing to pay bribes to close a deal. Even Donald Trump said in 2012 that the law was “horrible” for allegedly putting US companies at a “huge” disadvantage.

It remains to be seen if President Trump’s Justice Department will try to weaken the law or ease off from the rigorous enforcement of the act under the Obama administration. His choice for attorney general, Sen. Jeff Sessions, is a former prosecutor who has asked in the past if the law has had a negative effect on American businesses.

But one thing has become clear in recent years. Not only has the FCPA helped spark a global campaign against corruption, it has steadily convinced more companies that honesty pays if they avoid payoffs to foreign officials.

The law, which is similar to a 2010 law in Britain, provides a shield of integrity that allows firms to navigate past difficult demands for bribes. And companies are more eager these days to create an ethical culture among their employees and contractors to not only operate with honesty but a desire to do so.

A survey of more than 800 companies in 2015 by the global consultancy Control Risks found that “anti-corruption laws are seen to be a force for good.” A majority of the companies said such laws improve the business environment, deter corrupt competitors, and make it easier for good companies to operate in highly corrupt markets.

“For many international companies, compliance with anti-corruption laws has become a competitive advantage,” the survey found. Over the past decade, fewer American companies say they have lost deals to corrupt competitors, a trend similar in Germany and Britain.

Corruption is still rife in many countries. More than $1 trillion is paid every year in bribes, according to the World Bank. That is about 3 percent of the world economy. But beefed-up efforts worldwide against corruption have helped to level the playing field for many businesses. They also work against corrupt regimes, terrorists, human traffickers, and other criminals.

“Never before have governments and multinational institutions cooperated so extensively in combating bribery and corruption,” states a 2016 study by Ernst & Young. In a survey of 2,800 executives in 62 countries, the accounting firm found that 83 percent say prosecution of individuals will help deter future bribery and corruption.

A good reason for this success is simply a shift in attitude. In today’s global business, honest dealings can be a source of strength, not weakness.