6 September 2011 Congressman Jim Sensenbrenner 2449 Rayburn House Office Building Washington, D.C.

20515-4905

Dear Chairman Sensenbrenner;

I write with the support of many others to express alarm that an attempt might be forthcoming to reduce corporate liability under the U.S. Foreign Corrupt Practices Act. Some of my views on this issue appeared in the Huffington Post on December 9, 2010, and I continue to be seriously concerned about the potential harm that could be done to America by such legislative action. For 50 years I have been involved in business and research all over the developing world and know first-hand the evils of corruption and the advantages to our investment and commercial interests in rigorously avoiding bribery. The U.S. FCPA stood virtually alone on the global stage in the fight against corruption until the late 1990s, when the great majority of other nations began adopting similar prohibitions. Today, the FCPA is buttressed by the UN Convention Against Corruption, the OECD Anti-Bribery Convention, regional conventions, and a strong focus on the issue by the G20. With U.S. leadership, curtailing bribery has been a hugely successful effort across nearly 35 years. The United States Chamber of Commerce asserts in its paper Restoring Balance that the central aim of the FCPA is to prohibit the payment of bribes to foreign officials for the purpose of obtaining or retaining business. This narrow understanding misses the larger point of the FCPA, which is to promote efficiently functioning global markets where both American and foreign companies can compete on the merits of their products and services in stable business environments guided by the rule of law. The argument is made that subsidiaries of multinational companies should be given a loose rein on bribery. A parent companys control of the corporate actions of a foreign subsidiary should not expose the company to liability . . . where it neither directed, authorized, nor even knew about improper payments. In a world where so much of global business is done by companies via hundreds, even thousands, of subsidiaries, gutting the FCPA in this way would subject the United States to ridicule.
A Program of the Center for International Policy 1319 18th Street, NW, Suite 200 | Washington, DC | 20036 Tel. +1 (202) 293-0740 | Fax. +1 (202) 293-1720 | www.gfip.org
Director: Raymond Baker Managing Director: Tom Cardamone Advisory Board: Lord Daniel Brennan (Co-Chair), Krishen Mehta (Co-Chair), Jack Blum, John Heimann, Ken Jensen, Eva Joly, David Landes, Robert Morgenthau, Moiss Nam, Ngozi Okonjo-Iweala, Thomas Pogge, John Whitehead

The argument is also made that companies should not have successor liability in cases of mergers and acquisitions. The Chambers paper asserts that a corporation, irrespective of whether or not it conducts reasonable due diligence . . . should not be held criminally liable for historical violations of FCPA prohibitions. Aggressive due diligence might be a reasonable defense, but a free pass for acquired problems irrespective of due diligence is far too lax a standard. The paper goes on to complain that a company can face criminal penalties for a violation of the FCPA even if it (and its employees) did not know that its conduct was unlawful. In other words, ignorance of the law would be an excuse when bribing a foreign official. Corruption is an insidious force, undermining stability, security, and peace in many countries around the world. American military commanders in Afghanistan and Iraq with whom I have spoken cite corruption as one of the greatest problems confronting U.S. progress in these strife-torn countries. Is it now suggested that U.S. firms should be given greater leeway to bribe in order to gain business in these countries? Who will inform our service men and women risking their lives, their safety, of this double standard? The Arab Spring is in good part a testimony to the power of anti-corruption forces sweeping the world. Citizens in Egypt, Tunisia, Libya, and other countries are pursuing the proceeds of corruption obtained by their former leaders and officials. The U.S. State Department and the United States Agency for International Development support many efforts to repatriate the proceeds of corruption, and our foreign policy would be harmed by an attempt to gut or weaken the FCPA. I have seen corruption contribute to death and deprivation in many countries around the world. When bribery puts money into private hands it strips resources from the state, thereby limiting funds available for health and education. Who will persuade our friends in Brazil and Kenya and India and elsewhere that gutting or weakening the fight against corruption is in their best interest, or indeed in our best interest? Legislation prohibiting bribery of government officials in this country is clear and unequivocal. Why should our laws be different when we do business in other countries? What kind of example does that set to nations we are seeking to draw closer into the democratic-capitalist system? The notion that our laws lead to a loss of business overseas may on very rare occasions be correct, but that occasional loss is vastly offset by the additional business we gain through upholding high investment and commercial standards. I sincerely doubt that the major employers in your district and its greater environs, such as Johnson Controls, Allen Edmonds, Gehl, Quad-Graphics, Wal-Mart, Target, and others, wish to create jobs through contracts obtained by foreign bribery. I sincerely doubt that your local media, including The Milwaukee Journal-Sentinel, WISN, WMTU, WITI, WLIP, WRJN, WHAD, and others, would lend their editorial support to efforts to gut or weaken the FCPA.

A Program of the Center for International Policy 1319 18th Street, NW, Suite 200 | Washington, DC | 20036 Tel. +1 (202) 293-0740 | Fax. +1 (202) 293-1720 | www.gfip.org

I sincerely doubt that religious leaders in your district and its environs, including Archbishop Jerome Listecki, Reverend Jeff Barrow, Reverend Mark Schroeder, Reverend David Rutschow, Reverend John Wille, and others, would support efforts to ease the fight against corruption. I sincerely doubt that your major campaign contributors, such as Honeywell, Lockheed Martin, General Electric, Microsoft, and others would take a public position or perhaps even a private position in favor of you leading an effort to gut or weaken one of Americas proudest and most laudable achievements of recent decades. I cannot imagine that your next election campaign will be enhanced by advocacy of an issue so inimical to American interest. Having spoken with a great many people about this matter in recent months, I have no doubt that an effort to gut or weaken the FCPA will be vigorously opposed by business groups in this country and abroad, by civil society organizations in this country and abroad, and by foreign governments in Latin America, Europe, Africa, the Middle East, and Asia. Our stance against bribery and corruption is a testament to our American values, an example of our leadership on issues crucial to achieving peace and prosperity in our time. It is a stance that must be maintained. Quite simply, an effort to gut or weaken the U.S. Foreign Corrupt Practices Act will not succeed. I and others will be pleased to discuss with you measures by which the U.S. Department of Justice can clarify aspects of the Act as may benefit U.S. businesses seeking and obtaining legitimate business around the globe. Permit me to give you a copy of my book, Capitalisms Achilles Heel: Dirty Money and How to Renew the Free-Market System (John Wiley & Sons, 2005). Should you have an opportunity to read the sections on Pakistan, Indonesia, Congo, Russia, China, and other countries, I believe you will appreciate the devastating impact corruption has on our world and will share with me and others a determination to strengthen, not weaken, our nations fight against this global scourge.

Yours sincerely,

Raymond W. Baker Director

A Program of the Center for International Policy 1319 18th Street, NW, Suite 200 | Washington, DC | 20036 Tel. +1 (202) 293-0740 | Fax. +1 (202) 293-1720 | www.gfip.org