Harry Cassin Publisher and Editor

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Beyond Balance V: The Ethical Business Criterion

“A problem well stated is a problem half solved.” So said the American inventor Charles Kettering. In FCPA circles, we’re debating whether and how to fix assorted problems in our anti-bribery regime. But the first step in designing solutions is to state the problem well.  

As is so often the case, the two sides have defined the problem differently: to the business community, the FCPA’s severity deters investment in otherwise promising economies; to the anti-bribery advocates, the continued pervasiveness of global corruption shows that our laws must become more effective, not less.  

But perhaps, upon closer examination, these are not different problems. Maybe they're two ways of looking at exactly the same problem.And if they are, then maybe they call for exactly the same solution.

Like Kettering’s electric automobile ignition, statutes prohibiting the bribing of overseas government officials were invented to solve a well-stated problem. In our case, the problem was unethical business; the solution was a criminal legal regime that incentivized ethical business.

But notice that this solution has two components: 1) ethical; and 2) business. Our aim was to promote both, and to deter neither. We did not want business without ethics; nor did we want ethics without business.  Either one, without the other, fails to achieve the FCPA’s fundamental goal of encouraging political and commercial transparency overseas.  

Today, some complain of a lack of ethics, while others, a lack of business. But this dichotomy proves false -- not because both sides are wrong, but because both are right.  

Reforms, then, should lead to an increase in ethical business. To the extent that a proposed reform would permit companies under FCPA jurisdiction to engage in bribery, it fails this test. At the same time, to the extent that any feature of a current or proposed legal regime induces companies to withdraw from particular projects, or sectors, or countries, it decreases the amount of ethical business and thus also fails this test. And as explained in my prior post, when FCPA-bound companies withdraw, reckless bribe-payers from foreign jurisdictions fill the void. In other words, we cannot promote norms in places we aren’t.  

So I want to suggest that this is the principle criterion by which all reform proposals should be evaluated.  We’ll call it the ethical business criterion. If a proposed reform would increase ethical business, it is good; to the extent that it would deter such conduct, it is not.

Ultimately, we can all agree: the current problem with our anti-bribery regime is a deficiency of ethical overseas business. Kettering teaches that the problem is now half-solved. The remainder may be found -- invented? -- by evaluating various reform proposals by the ethical business criterion. That’s where we’re headed.


Andy Spalding teaches international business law at the Chicago-Kent College of Law; effective June 1, he’ll be an Assistant Professor at the University of Richmond School of Law. A former Fulbright Senior Research Scholar and lawyer at a major international firm, he has lectured and conducted research on anti-corruption law throughout the developing world. He can be contacted here.

We're grateful to Professor Spalding for allowing us to serialize 'Beyond Balance.'

Beyond Balance I can be viewed here, Beyond Balance II here, Beyond Balance III here, and Beyond Balance IV here.

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