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Cadwalader partner Martin Weinstein recently authored "What Detractors Keep Getting Wrong About the FCPA" in Corporate Compliance Insights, arguing that the Foreign Corrupt Practices Act rewards companies rather than hamstrings them.
Martin pushes back on a common critique of the FCPA: that it puts U.S. companies at a competitive disadvantage overseas. He argues the opposite: playing by the rules gives U.S. companies a better chance to compete on their own merits. The FCPA rewards companies that compete on quality and reliability, strengthens trust in U.S. brands, protects workers and shareholders from corruption-driven fallout and reinforces that deals are won on merit rather than payoffs. Bribery is not an efficient competitive strategy, rather, it inflates costs, distorts competition and often turns "cheap" deals into expensive failures over time (corruption increases global business costs by up to 10%).
Martin notes the FCPA has also functioned as a check on U.S. firms' overseas rivals: 9 out of 10 of the largest FCPA enforcement actions have been against foreign companies, with an average resolution cost of $72M vs. $18M for domestic companies. The law emerged from Watergate-era scandals when nearly 400 U.S. companies were using slush funds for foreign bribes and it became the blueprint for global anti-corruption enforcement.
The strongest defense of the FCPA is economic, Martin writes. The law has helped protect the kind of competition U.S. companies are best positioned to win: competition based on quality, reliability and long-term value rather than payoffs and political favors. It has made it harder for rivals to buy their way to the front, harder for corruption to distort markets and easier for American companies to compete on the actual merits of what they build and sell. That is not harming U.S. business, it is one of the reasons U.S. business has remained worth trusting in the first place.
Read the full article here.
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