The Man From FCPA has seen many arguments which demonstrate why the U.S. should continue to lead the worldwide fight against bribery and corruption, in the face of those who want to cut back on FCPA enforcement. One of the strongest arguments is the simplest economic argument, that corruption acerbates market inefficiencies by allowing a lesser product or service provider to win a contract through subterfuge. I was reminded of this axiom when reading a recent review of the book, The Inner Lives of Markets, in the Wall Street Journal in an article entitled, “Ethics vs. Efficiency” by Phillip Delves Broughton.
The author opens with the statement that “Efficient markets are the Holy Grail for anyone who aspires to build a fair society.” This is because such markets “reward value and merit” and exclude systems based on corruption. Bribery and corruption impede fair markets and allow those who could not compete on quality and price to unfairly win business. Simply put, bribery is not an efficient economic model or tool.
The FCPA supports the more efficient exercise of markets by raising the potential costs for violating the law. By making markets more efficient where the FCPA applies, outside the U.S., the law should help to allow countries who do business with U.S. companies or those subject to the FCPA, greater comfort that their money will go towards goods and services of American companies, not into the Swiss bank accounts of corrupt government officials.
Case in point: in his autobiography, Duty, former U.S. Secretary of Defense Robert Gates wrote of a military arms deal with Saudi Arabia. During the deal, Gates wrote that "[King Abdullah] wanted all of the Saudi money to go towards military equipment, not into Swiss bank accounts, and thus he wanted to buy from us.”
When there is greater market efficiency, more participants win; the buyer, the seller, the end user, and other stakeholders. The FCPA should be recognized for this role, in addition to leading the international fight against bribery and corruption.
Continue the conversation at Compliance Week Europe: 7-8 November at the Crowne Plaza Brussels. Join us as we look at changes in global anti-corruption regulations, slave labour risks in your supply chain, and how to detect fraud, to name just a few topics. Learn more