Political Corruption: Afflicting America and Affairs Abroad


The Fordham Journal of Corporate and Financial Law held its annual symposium titled, “Political Corruption: Afflicting America and Affairs Abroad” on October 21, 2016. Zachary Brez of Ropes & Gray, Michael J. Cohn of Fortress Investment Group, Professor Sean J. Griffith of Fordham University School of Law, Professor Susan Rose-Ackerman of Yale University, and Timothy Treanor of Sidley Austin came together to address the immense and odious problem affecting our global economy today – political corruption. Defined as the use of power by government officials for private gain, political corruption has a tremendous effect on individuals, businesses, and local economies across the globe. While the United States has taken the lead in regulating certain activities of US entities in order to reduce the levels of corruption in business transactions, the Symposium’s speakers suggested that further analysis and reform are part of the ideal prescription to effectively regulate this area.

Two in-depth panel discussions titled “Political Economy of Corruption” and “Government Investigations into Corruption” delved into some of the present concerns surrounding political corruption, and analyzed the potential implications of recent U.S. and international corruption rulings and investigations for corporate practices. The Symposium’s panelists, hailing from academia and the legal practitioner community, offered unique and sometimes differing perspectives on the far-reaching issue of political corruption.

Professor Griffith and Professor Thomas H. Lee of Fordham University School of Law are also writing a paper titled, “The Political Economy of Foreign Anti-Corruption Law,” which analyzes corruption through an economic lens. The paper underscores the conflict between existing laws such as the Foreign Corrupt Practices Act of 1977 (“FCPA”) and the practical reality where bribery is merely a cost of conducting business. The FCPA is a US federal law that prohibits and regulates bribery of foreign officials. Given the negative impact political corruption can have on foreign countries, it may seem that the FCPA is a right-based approach to regulation. However, it is difficult to conclude that the motivation for such anti-corruption regulation is altruism when 97% of the monies collected from foreign bribery cases have been paid to the enforcing country, not the country whose officials were bribed. This seems to advance the more realist account of foreign bribery laws, portraying regulators as “rent-seeking” enforcement authorities acting in national interests.

Professor Rose-Ackerman provided interesting insights into the different nodes of corruption in the procurement process. Corruption can take place at the project identification and design stage, pre-bid stage, bid-evaluation stage, or post-bid stage. Possible structural reform would entail an independent judiciary and professionalized regulator who would be tasked with preventing bribery at each stage. Privatization is a more comprehensive reform that would involve creating and fostering competitive conditions in privatized markets to avoid private monopolies. Also, competitive awarding of ownership rights would provide incentives for increasing the quality of business performance. Lastly, Professor Rose-Ackerman proposed the concept of the corporation as a moral person, which posits that the corporation has certain rights and duties. This view holds the corporation to a similar sort of ethical standard to which we hold individuals. Thus, this concept raises important questions, such as what sort of obligations the corporation might owe to other corporations and what role ethics would play in monitoring a corporation’s behavior.

Mr. Treanor spoke of his role as counsel to clients allegedly in violation of the FCPA, especially his work on the very high-profile Department of Justice investigation into corruption involving the Fédération Internationale de Football Association (“FIFA”). Mr. Brez discussed the evolution of bribery schemes and the quantification of corruption through Transparency International indices, which are widely used, even as sentencing guidelines for violations of corruption and bribery laws. Further, Mr. Brez spoke briefly on his representation of whistleblowers in the corporate space.

Mr. Cohn highlighted the importance of in-house compliance with respect to the FCPA and overall bribery and corruption concerns. Specifically, Mr. Cohn shared his experiences in grappling with ensuring compliance with anti-corruption laws and the often unforeseen burdens this presses on the business. The regulatory and reporting requirements for business are complex and confusing and this often makes developing an anti-corruption plan onerous and costly for businesses. When dealing in globalized operating environments, it is important to have clear guidelines to make sure businesses are able to effectively implement plans and comply with anti-corruption laws. Mr. Cohn suggested that training and monitoring are integral aspects of a compliance program.

The real losers in corruption schemes are always the people. Outlining a hypothetical example, Professor Griffith demonstrated that when corporations gain cost-savings by bribing foreign officials, there is a direct loss to that nation’s treasury. Considering that the most corrupt countries also tend to be economically disadvantaged, the income loss can be devastating to the individuals living in that nation. Regardless of the motivation for anti-bribery laws, a clear take-home message from the panel was the need for the global community’s involvement. It will take more than just the United States acting as the international police against corruption. Other countries will have to create their own laws and enforcement schemes to level the playing field. This will require more domestic foreign corruption legislation and enforcement as well as more regional treaties and enforcement. A major reduction in the number and size of bribes can be expected once there is a no-bribe coalition formed that will make it more difficult to conceal bribery and award contracts to bribing firms. It is evident that more needs to be done from a multinational perspective to eradicate this problem and its harmful impact on communities and economies around the world.





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Fordham Journal of Corporate & Financial Law