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State Hypocrisy on Anti-Bribery Laws (2011)

From the Mises blog:


In 1977 the US enacted the Foreign Corrupt Practices Act (FCPA), which makes it a crime for American citizens and businesses to bribe foreign public officials for business purposes. It also imposes certain accounting standards on public US companies, which I wrote about in a 1994 legal article, “The Accounting Provisions of the Foreign Corrupt Practices Act.” The hypocrisy of the law is blinding: it’s okay for the state to bribe (and extort and coerce) private business by means of threats, subsidies, tax breaks, and protectionist legislation; it’s okay for businesses to bribe elected officials (campaign contributions); and it’s okay for the US central state to bribe foreign governments; and it’s okay for US companies to be forced to pay bribes in the form of taxes, that are less than the amount of bribes they would have to pay to foreign officials. But it’s not okay for US companies to bribe foreign officials–even if this is customary and essential to “doing business” in that country, and even if this puts American businesses at a competitive disadvantage with companies from other countries that do not prohibit such bribery–some countries even permit such bribes to be reported as an expense for tax purposes.

As Lew Rockwell notes in Extortion, Private and Public: The Case of Chiquita Banana,

Paying bribes and being subject to this kind of extortion is just part of what it takes to do business in many countries. This might sound awful, but the truth is that such payments are often less than the companies would be paying to the tax man in the US, which runs a similar kind of extortion scam but with legal cover.

In fact, it was the Bananagate scandal (in which Chiquita Brands had bribed the President of Honduras to lower taxes) which helped to spur passage of the FCPA.

Naturally American businesses squealed at the competitive disadvantage this law imposed on them. So of course, instead of repealing this ghastly law, the US used its legislative imperialism to force other countries to adopt similar laws (it also twists the arms of other countries in a number of areas, including IP (see my post Intellectual Property Imperialism), antitrust law, central banking policies, oil & gas ownership by the state, environmental standards, labor standards, tax levels and policy, and so on). It did this mainly by pushing the OECD Anti-Bribery Convention, now ratified by 38 states which are required by the Convention to implement FCPA style laws nationally. The UK has just done so in The UK Bribery Act, which just came into force this month. According to this Freshfields release, the UK Bribery Act is “the most far-reaching bribery legislation in the world.” The spread of such laws prove the Whig Theory of History is wrong…

{ 3 comments… read them below or add one }

David C July 10, 2011 at 11:03 am

US bureaucrats amaze me. So many of them apparently have the moral dignity to refuse a direct bribe, but when it comes to attacking and imposing a frivolous and useless burdens on otherwise honest citizens, they think nothing of it. Not to mention their elected bosses, take regular publicly documented campaign contributions.

Makes me wonder if Mexico isn’t more free than the USA is. Even though they take bribes, it’s almost sure to cost less than the US regulations and taxes, and their official government spending is less than 20% of GDP.


J. Murray July 11, 2011 at 12:49 pm

You should see the gift rules for federal workers. Uncle Sam will throw a hissy fit if a worker accepts a $21 shirt, but allowing Congressmen to collect $5,000 per donor is no big deal.


Walt D. July 10, 2011 at 12:10 pm

Excellent article Stephan.
The hypocrisy of the US Government in this area is so brazen.
I watched “Frontline Season 27, Ep. 11 “Black Money”” (on Amazon Instant Video).
They were complaining about a Saudi Prince who was using a government plane for personal use! His major “crime” was to paint the plane in Dallas Cowboy colors! (I don’t think he used it to play golf or visit people to collect bribes – err “campaign contributions”.)

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