A new global center for clean government
Two years ago, a report by the European Parliament estimated that strengthening the rule of law and trust in public institutions would reduce corruption and boost Europe’s economic output by more than $61 billion a year. Now the European Union, which loses an estimated $1 trillion a year to corruption, is finalizing a new directive to impose stiffer penalties on individuals and companies that engage in fraud, money laundering, tax evasion, and other forms of corruption.
These actions are worth highlighting because leadership of a decadeslong global struggle against graft may be shifting to Europe from the United States. In just one month, the Trump administration has rolled back long-standing measures to counter fraud and promote transparency. Notably, it suspended a historic measure that inspired much of the world to tackle corruption: the Foreign Corrupt Practices Act, or FCPA.
That 1977 law bars U.S. citizens and companies from bribing foreign officials. When the law was enacted, the U.S. became the only country with a foreign bribery offense. It became a template for similar laws elsewhere, such as the United Kingdom’s Bribery Act.
The 2010 British law added a novel provision holding companies liable if they are presented with an attempted act of corruption and fail to stop it. The requirement “transformed the corporate foreign bribery landscape in the UK,” a Global Anticorruption Blog post noted recently, in part by encouraging companies to adopt higher standards of transparency and lawfulness.
The White House claims the 1977 law “actively harms American economic competitiveness and, therefore, national security.” Yet that runs counter to a global trend toward greater honesty and transparency in corporate affairs and governments. In 1997, the Organisation for Economic Co-operation and Development, a 38-member group of democracies, adopted an antibribery convention. A United Nations anti-corruption convention followed in 2003.
These collective steps have shown that enforcement against corruption can lead to a self-regulating enforcement by companies and officials.
The world’s first antibribery law is now on pause pending review of how it has been and could in the future be applied. Many other nations, meanwhile, still see both the economic and moral benefits of public trust and the rule of law. “Foreign governments appear to have the appetite to fill that enforcement void left by the U.S.,” observed Drew Meyer, special counsel at Buchalter, a law firm specializing in global corporate law. “Indeed, corruption is widely known to be bad for a company’s bottom line.”
