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Monday
Apr162012

Global Infrastructure, Malnutrition, and the FCPA

We all know that the FCPA remains the most actively enforced bribery prohibition in the world by a long shot. So when we hear about a corruption-related problem overseas, we have to think about how the FCPA might affect it.  

The WSJ recently ran this disheartening article about corruption and malnutrition in India. India grows enough food to feed its population of 1.2 billion. But still, roughly half the world's malnourished children live there. Why? Because it lacks the infrastructure necessary to distribute its produce, and an unbelievable 40% rots before getting to market. Think about that. And why is Indian infrastructure so deficient? Many reasons, but as the WSJ reports, among the biggest is corruption.  

The Indian government has long recognized that it lacks the financial and managerial capacity to build the infrastructure necessary to alleviate rural poverty and achieve India's vast economic potential. So it has actively recruited foreign firms to come in and form public-private partnerships. But still, of all Indian requests for bids to build major road projects, about half of them receive no proposals. Zero. That is, no foreign firm is willing to do the work, at any price. And again, a big reason is corruption.

This is one of the reasons I support the contemporary movement to amend the FCPA. As is well-known by now, the FCPA is having the unintended effect of turning U.S. companies away from markets or sectors that are especially prone to corruption. And as the Indian example makes clear, we need to fix that. The goal of the FCPA is to require all companies within its jurisdictional reach to exemplify best practices overseas. But to exemplify best practices overseas, we've got to be there. Not to mention, the world's economic development depends on it.  

The FCPA should require ethical conduct without deterring investment. Let's now make it right.

__________________

Andy Spalding is a contributing editor of the FCPA Blog. He 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.

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