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Can business interests push foreign bribery laws?

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Previously I wrote about how Singapore is strengthening its foreign bribery regime by providing a jurisprudential basis. Foreign bribery is a bit of a mystery. Unlike local bribery, there is no clear motivating factor how a country gets on the bandwagon. The damage to foreign countries may be a distant concern for national governments. Not every country wants to be a global policeman or punish its own nationals for damaging other countries. Certainly not Singapore.

An Interest Group Theory to Foreign Bribery?#

I chanced upon an article on the FCPA Blog which provides an easy framework to understand why other countries are getting on the foreign bribery. The blog, which is a summary of an article written by the authors, says:

Once U.S. extraterritorial enforcement began in earnest, the incentives of foreign firms, at least those subject to material FCPA risk, came to mirror those of U.S. firms under the FCPA. They faced an uneven playing field vis-à-vis domestic competitors which, due to their domestic or regional reach, were subject to less risk of U.S. enforcement. Therefore, in order to level the playing field against such competitors, foreign multi-nationals came to favor the importation of a parallel regulatory regime into their own country. In this way, foreign anti-bribery laws spread around the world.

Sean J. Griffith and Thomas H. Lee, “How to get countries to enforce foreign anti-bribery and corruption laws

In Singapore, as mentioned, foreign bribery enforcement began to draw more attention after the FCPA case against Keppel Offshore and Marine. It was about this time that Singapore started the deferred prosecution agreement scheme for the first time. It did not apply to foreign bribery (Singapore’s Prevention of Corruption Act is pretty vintage compared to other OECD countries), but I thought DPA would definitely aim to apply in foreign bribery in due course.

So did our local MNCs want to level the playing field against other competitors? Maybe, but our local MNCs (which are often government linked) are in a world of their own in Singapore. They could bury this, move on and conduct business as usual.

My thoughts: Enacting Foreign Bribery laws to protect local MNCs?#

Here’s my alternative argument.

When the US exercises its extraterritorial jurisdiction, it takes the initiative in determining how such violations are treated.

However, if national governments take action, it would be more difficult for the US to determine the course by itself. If the national government is competent enough, the US and other countries wouldn’t even need to act.

Locals MNCs would prefer the national government to take action since they would have greater access and influence over the course of a local investigation and prosecution. However, in order for local MNCs to benefit, national laws must already have a similar framework, such as foreign bribery laws and deferred prosecution agreements.

This is intuitive to me. I was actually influenced when I read the parliamentary debates on the news breaking of Keppel Offshore and Marine (KOM) being subjected to such heavy fines. The key answers are buried in the middle of the text.

  • Unlike the US, the Singaporean government was able to give a conditional warning in lieu of prosecution to the company. As learned readers may note, a conditional warning imposes conditions, but its conditions are not as detailed as a deferred prosecution agreement.
  • The government admitted openly that the action under the FCPA would have achieved much more than under local laws. Besides the lack of ability to impose conditions like strengthening compliance programs, the maximum fine under local anti-corruption laws is $100,000. KOM was fined several million US Dollars.

Conclusion#

I do agree with the authors that the enactment of foreign bribery laws depend greatly on the actions of the US. If there is no enforcement of the FCPA overseas, there is no impetus anywhere else. I also agree that local business lobbies are probably more influential in pushing national governments to action. However pure market forces are not so influential in this side of the world, and I believe that national protection may be at work here.

Do you agree that market forces influence local MNCs to push for foreign bribery laws, or that national governments trying to protect their own businesses account for a push for foreign bribery laws? I would love to hear your comments!