FCPA: Higher Prices for Oil, Food, Mean Big Bucks for the Corrupt, Lawyers

There is a really interesting theory over at the FCPA blog as to why we may be seeing a spike a FCPA actions:

"We've noticed that when prices for energy and other commodities climb, there's more public corruption. Spiking prices, after all, mean fatter margins for producers and proportionately more insecurity for consumers. Meanwhile, middlemen see nothing but opportunities. All these inject an extra dose of fear and greed into the markets -- the perfect fertilizer for public bribery. For us, that means times of economic dislocation are also times of high-alert for Foreign Corrupt Practices Act compliance."

And he lends an example to his findings:

"We were reminded of all this yesterday when we read the following news report: 'Speaking in Detroit at the ninth World Energy Conference, the [U.S.] president said that in the face of clear danger, he was optimistic that oil-producing and consuming nations would cooperate to find a solution, and the United States would reach its goal of energy independence.'

In a gloomy speech to the United Nations General Assembly, meanwhile, the secretary [of state] said the 'early warning signs of a major economic crisis are evident."'Rates of inflation unprecedented in the past quarter century are sweeping developing and developed nations . . . . The world's financial institutions are staggering under the most massive movements of reserves in history. And profound questions have arisen about meeting man's fundamental needs for energy and food.'"

That report, you might have guessed, isn't recent. It appears on page 1085 of the 20th Century Day by Day, and it's dated September 23, 1974. The president in question was Gerald Ford, and his secretary of state was Henry Kissinger.When they issued their warnings in 1974, there was no FCPA. Just two years later, however, in a post-Watergate investigation, the Securities and Exchange Commission found that "over 400 U.S. companies admitted making questionable or illegal payments in excess of $300 million [$2.5 billion in today's dollars] 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 . . . . Congress enacted the FCPA [in 1977] to bring a halt to the bribery of foreign officials and to restore public confidence in the integrity of the American business system."

The blog also has a link for the Justice Department's "Lay-Person's Guide to the FCPA." You can also access that here.