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Private Commercial Bribery: The Next Anti-corruption Wave?

2019-01-29 14:48 Tuesday

It is morally reprehensible for government officials to accept bribes. Bribery leads to a misallocation of economic resources and  the provision of inferior goods and services at specified prices. This logic also applies to bribery in the commercial sector.

Private Commercial Bribery

In fact, anti-bribery enforcement from American  authorities and the growing international consensus against private commercial bribery suggest that companies should expand their international compliance programs and vigorously prohibit commercial bribery alongside bribery of government officials.

Commercial bribery is defined as corrupt dealings with agents or employees of potential business partners to ensure an advantage over commercial competitors. Private commercial bribery is illegal under most U.S. state laws.

Since the Foreign Corrupt Practices Act (FCPA) was passed in 1977, commercial bribery involving foreign government officials has been illegal under federal law, but federal law does not explicitly prohibit private commercial bribery. However, the Department of Justice has used state law, combined with wire fraud statutes and the Travel Act, to prosecute private commercial bribery in the U.S.

Even in countries where corruption is known to be prevalent, commercial bribery is prohibited. China, for example, has banned commercial bribery since 1996 and has stepped up enforcement in recent years. Furthermore, the internationalization of anti-corruption enforcement will pose major challenges for companies doing business overseas.

Faced with these challenges, companies have no choice but to start preparing for the possibility of enforcement of commercial bribery overseas, either from U.S. government or the countries in which they do business. Only by establishing a genuine compliance culture can a company mitigate against commercial bribery risk.

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