Pakistan, and the Foreign Corrupt Practices Act

Spencer Ackerman notes:

In fact, however, a considerable amount of the money the U.S. gives to Pakistan is administered not through U.S. agencies or joint U.S.-Pakistani programs. Instead, the U.S. gives Musharraf’s government about $200 million annually and his military $100 million monthly in the form of direct cash transfers. Once that money leaves the U.S. Treasury, Musharraf can do with it whatever he wants. He needs only promise in a secret annual meeting that he’ll use it to invest in the Pakistani people. And whatever happens as the result of Rice’s review, few Pakistan watchers expect the cash transfers to end.

Hand someone $100 million a month, in cash, with no strings attached. Gee, sounds like a bribe to me.

Apropos of nothing, on the Department of Justice site I found a lay-person’s guide to the Foreign Corrupt Practices Act:

In general, the FCPA prohibits corrupt payments to foreign officials for the purpose of obtaining or keeping business.

As a result of SEC investigations in the mid-1970’s, over 400 U.S. companies admitted making questionable or illegal payments in excess of $300 million to foreign government officials, politicians, and political parties. The abuses ran the gamut from bribery of high foreign officials to secure some type of favorable action by a foreign government to so-called facilitating payments that allegedly were made to ensure that government functionaries discharged certain ministerial or clerical duties. Congress enacted the FCPA to bring a halt to the bribery of foreign officials and to restore public confidence in the integrity of the American business system.

The FCPA was intended to have and has had an enormous impact on the way American firms do business. Several firms that paid bribes to foreign officials have been the subject of criminal and civil enforcement actions, resulting in large fines and suspension and debarment from federal procurement contracting, and their employees and officers have gone to jail. To avoid such consequences, many firms have implemented detailed compliance programs intended to prevent and to detect any improper payments by employees and agents.

Following the passage of the FCPA, the Congress became concerned that American companies were operating at a disadvantage compared to foreign companies who routinely paid bribes and, in some countries, were permitted to deduct the cost of such bribes as business expenses on their taxes. Accordingly, in 1988, the Congress directed the Executive Branch to commence negotiations in the Organization of Economic Cooperation and Development (OECD) to obtain the agreement of the United States’ major trading partners to enact legislation similar to the FCPA. In 1997, almost ten years later, the United States and thirty-three other countries signed the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The United States ratified this Convention and enacted implementing legislation in 1998. See Convention and Commentaries on the DOJ web site.

The antibribery provisions of the FCPA make it unlawful for a U.S. person, and certain foreign issuers of securities, to make a corrupt payment to a foreign official for the purpose of obtaining or retaining business for or with, or directing business to, any person. Since 1998, they also apply to foreign firms and persons who take any act in furtherance of such a corrupt payment while in the United States.

I realize the FCPA doesn’t apply here… the gubmint is doing the bribing, after all. But still, it makes for an interesting contrast. And I can only imagine how this will play out should a company with which GW or the Dark Lord or Condi or any of the other wonderful cast of characters in today’s White House is associated want to do business with Pakistan in the future. Or should a company associated with their family members want to do business with Pakistan today.