Toward an Interest Group Theory of Foreign Anti-Corruption Laws

40 Pages Posted: 11 Sep 2019

See all articles by Sean J. Griffith

Sean J. Griffith

Fordham University School of Law; European Corporate Governance Institute (ECGI)

Thomas H. Lee

Fordham University School of Law

Date Written: August 10, 2019

Abstract

Foreign anti-corruption laws — laws that prohibit businesses from paying bribes abroad — present a puzzle. Why would the government of one country care to prevent corruption in other countries, especially when such laws harm domestic businesses? Unregulated foreign competitors can continue to pay bribes and win contracts while domestic companies suffer. Yet foreign anti-corruption laws now span the globe.

We offer an interest-group account of the spread of foreign anti-corruption laws. Our account is bottom-up and focused on private interest groups, rather than top-down and focused on state institutions. We look at domestic political interests in the United States and abroad to explain both the enactment and the enforcement of foreign anti-corruption laws. Our principal focus is on each country’s business lobby.

Our account explains observed patterns of enactment and enforcement of foreign anti-corruption laws and generates predictions concerning the efficacy of such laws based on the extraterritorial operations of multinational businesses. It also suggests a limitation on the spread of such laws into countries with few or no multinational corporations and, therefore, no realistic extraterritorial enforcement risk. The essential features of our account are: (1) after the Foreign Corrupt Practices Act (“FCPA”) was enacted in 1977, U.S. businesses pressured the government to urge foreign governments to ratify multilateral anti-corruption treaties to bind foreign companies to similar anti-bribery restrictions; (2) these treaties required all signatory nations to enact foreign anti-corruption laws, which, in the United States, led to statutory amendments to the FCPA that enabled government agencies to apply the FCPA to foreign companies doing business in the United States; (3) as foreign companies operating in the United States were subject to FCPA enforcement, they supported or acquiesced in home-country enforcement of foreign anti-corruption laws to “level the playing field” against companies that did not face FCPA enforcement risk; and (4) going forward, the proliferation of enforcement of foreign anti-corruption laws among a dominant, hegemonic group of capital-exporting countries (a “k-group”) may result in the global establishment of an anti-corruption norm, with China potentially playing the role of counter-hegemon.

Keywords: FCPA, anti-bribery, anti-corruption, bribery, corruption, Foreign Corrupt Practices Act, UK Bribery Act, interest group, political economy, K-group

JEL Classification: F53, K22, K33

Suggested Citation

Griffith, Sean J. and Lee, Thomas H., Toward an Interest Group Theory of Foreign Anti-Corruption Laws (August 10, 2019). University of Illinois Law Review, Vol. 2019, No. 4, 2019, Available at SSRN: https://ssrn.com/abstract=3451446

Sean J. Griffith (Contact Author)

Fordham University School of Law ( email )

150 West 62nd Street
New York, NY 10023
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Thomas H. Lee

Fordham University School of Law ( email )

150 West 62nd Street
New York, NY 10023
212.636.6728 (Phone)

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