How Wal-Mart Torched FCPA Reform
Wednesday, June 20, 2012 at 3:51AM
Richard L. Cassin in Citigroup, Foreign Official, Johnson and Johnson, Koch Industries, Pfizer, Walmart

By late 2010, the campaign to weaken the FCPA looked like it might succeed.

During a hearing of the Senate Judiciary Committee in November that year, Senator Amy Klobuchar (D-MN) said she'd heard from company lawyers and executives who 'can't sleep at night' because of uncertainty about FCPA enforcement. 'What behavior will trigger an enforcement action?' she asked Greg Andres, the DOJ's Deputy Assistant Attorney General of the Criminal Division.

Senators Klobuchar and Chris Coons (D-DE) both indicated their intent to work on changes to the FCPA. One was clarification of the term instrumentality in the definition of 'foreign official,' to reduce the application of the FCPA to private businesses which are partially owned by foreign governments.

Behind the campaign to narrow the scope of the FCPA was the U.S. Chamber of Commerce. It hired former Attorney General Michael Mukasey. He urged Congress to act: '[E]xpansive interpretations of the statute,' he said, 'may ultimately punish corporations whose connection to improper acts is attenuated or, in some cases, nonexistent.'

But in April this year, everything changed. The New York Times published allegations of massive bribery in Mexico by Wal-Mart. First, the need for a robust FCPA appeared obvious. If a company like Wal-Mart, founded and supposedly run on ethical principles, could engage in intentional and systematic bribery overseas, what company wouldn't? Second, the story put the U.S. Chamber of Commerce under the investigative microscope.

A month after the initial New York Times report, two prominent Democratic Congressmen sent a letter to Thomas Donohue, the president and CEO of the Chamber of Commerce. It asked: Was the Chamber’s Institute for Legal Reform (ILR), which had been leading the push for changes to the FCPA, tainted by conflicts of interest? The ILR board, according to the letter, had included executives from companies that had settled FCPA cases or were under investigation.

The  authors of the letter -- Reps. Henry Waxman (D-Calif.) and Elijah Cummings (D-Md.), both ranking Democrats on important committees -- said ILR board members had come from Wal-Mart, Johnson & Johnson, Citigroup, Pfizer, and Koch Industries.

An analysis by Democratic Committee staff, Waxman and Cummings said, revealed that '14 of the 55 ILR board members between 2007 and 2010 – almost one in four – were affiliated with companies that were reportedly under investigation for violations or had settled allegations that they violated the Foreign Corrupt Practices Act.'

On the same day the Congressmen released their letter, the liberal-leaning Huffington Post -- 1.2 billion monthly page views -- carried a story by Dan Froomkin headlined: 'Dems Ask U.S. Chamber If Firms That Bribed Are Behind Its Push To Weaken Anti-Bribery Law.'

Froomkin's article said, 'The Huffington Post calculated last year that a mere eight members of the Chamber -- not all board members of its legal reform arm -- had altogether paid nearly $1 billion resolving FCPA charges in the last seven years.'

After Wal-Mart, after the Congressional letter to the Chamber of Commerce, and after the HuffPost's accusatory headline, who will push for FCPA reform now?

Probably no one who hopes to remain in public office.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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