Stephen Foley: When is a bribe not a bribe? Wal-Mart feels the heat down Mexico way
It would only take a tweak or two to legitimise corruption
Stephen Foley is a former Associate Business Editor of The Independent, based in New York. He left in August 2012. In a decade at the paper, he covered personal finance, the UK stock market and the pharmaceuticals industry, and had also been the Business section's share tipster. Between arriving with three suitcases in Manhattan in January 2006 and his departure, he witnessed and reported on a great economic boom turning spectacularly to bust. In March 2009, he was named Business and Finance Journalist of the Year at the British Press Awards.
Saturday 28 April 2012
US Outlook The Foreign Corrupt Practices Act here, ferocious though it is, was not designed to make it impossible for American companies to expand in countries that are further down the international corruption league tables than the US.
Because the FCPA is rarely tested in court – companies preferring to settle with the Department of Justice, rather than face a trial – it is not clear exactly what the law does and does not allow in the way of "facilitating payments" to officials for obtaining foreign building permits and business licences – a class of payment that is excluded from its thunderous prohibitions on overseas bribery.
Small facilitating payments are exactly the kind Wal-Mart appears to have been handing out like candy in Mexico, as it turned its nascent business there into its second-largest profit centre in the last decade. The accusations, which surfaced in The New York Times a week ago and are being investigated by the US Department of Justice, amount to systematic local corruption, even if they do not technically breach US law, and the failure of Wal-Mart's board to act when it found out has opened the company up to serious legal risks.
But would it have been unreasonable for Wal-Mart to take a view that, "that's just the way they do business down there?" The payments used to speed planning approval for new big-box stores were so widespread – hundreds of them, totalling $24m – that it looks institutionalised.
That isn't to call it acceptable. Far from it. But it would only take a tweak or two to legitimise the corruption. You just need to write down some definitions of what is an acceptable bit of corporate hospitality and what is a bribe, which is of course one of the favourite tasks of the US Congress.
You can pay extra to "fast track" all sorts of bureaucratic processes in this country, too, you know, from immigration applications on down. And lobbyist friends tell me it is quite astonishing how helpful being a donor to a politician's campaign can be to help you get that important meeting to discuss a new project. I'm just saying.
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