A New Strategy for Preventing Bribery and Extortion in International Business Transactions

70 Pages Posted: 4 Aug 2012

See all articles by Bruce W. Klaw

Bruce W. Klaw

University of Denver, Daniels College of Business; University of Denver, Daniels College of Business, Dept. of Business Ethics and Legal Studies

Date Written: August 3, 2012

Abstract

Over the last thirty-five years, governments worldwide have been engaged in an important and laudable battle against bribery in international business transactions. The core of the U.S. anti bribery strategy is the Foreign Corrupt Practices Act, a federal law that imposes criminal penalties on those — and only those — who give bribes to foreign officials and that largely relies on voluntary disclosure to detect such corruption. This supply-side criminalization strategy, however, is ineffective, incomplete, inefficient, and inequitable. It punishes many extorted persons who do not deserve it and largely fails to punish the corrupt foreign officials who do. By punishing companies that voluntarily disclose their payments and denying them opportunities to recover their losses from extortion, it also establishes a perverse incentive structure that virtually ensures bribery will remain secret in most cases. The focus of the U.S. strategy should be shifted to prevention, not punishment. To this end, Congress should decriminalize the giving of bribes, replacing it with a robust mandatory disclosure regime that will enable foreign countries and business competitors to take action against willing bribe givers and allow victims of extortion to shield themselves from needless litigation, while obtaining meaningful restitution for the losses they have incurred. The U.S. government should then use the mandatory reports of unwilling payments to criminally prosecute the corrupt foreign officials who demand such payments, if foreign governments are unwilling or unable to do so.

Keywords: FCPA, Foreign Corrupt Practices Act, Corruption, Disclosure, Bribery, Extortion, International Business Transactions, White Collar Crime, International Criminal Law

Suggested Citation

Klaw, Bruce W., A New Strategy for Preventing Bribery and Extortion in International Business Transactions (August 3, 2012). Harvard Journal on Legislation, Vol. 49, No. 2, 2012, Available at SSRN: https://ssrn.com/abstract=2123715

Bruce W. Klaw (Contact Author)

University of Denver, Daniels College of Business ( email )

2101 S. University Blvd.
Denver, CO 80210
United States

University of Denver, Daniels College of Business, Dept. of Business Ethics and Legal Studies ( email )

2101 S. University Blvd
Denver, CO 80208-8921
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
554
Abstract Views
3,693
Rank
94,629
PlumX Metrics