The Double Damn

In the wake of the Lockheed and Gulf Oil scandals, there has been a growing outcry in Washington for a new law that would prohibit U.S. corporations from engaging in bribery and political payoffs abroad. In the Senate, Wisconsin Democrat William Proxmire has introduced a bill that would make it a crime, under U.S. law, for American companies to engage in such activities in foreign countries whose own laws forbid political payoff and bribery. Last week the Ford Administration presented the outlines of the antibribery bill that it intends to present to Congress soon.

At a Washington press conference, Secretary of Commerce Elliot Richardson, who headed the Administration's task force on questionable corporate payments abroad, objected that Proxmire's bill was unworkable. Said he: "If you make it illegal to commit acts that occur in another country, you create problems of investigation and enforcement." The Administration's proposal, by contrast, seeks to apply penalties only where they could be made to stick. In effect, the bill consists of two catches that exemplify the old cliche, "Damned if you do and damned if you don't."

CATCH 1: U.S. corporations operating abroad would be required to report to the Federal Government any sizable payments that were intended "directly or indirectly to influence the conduct of foreign governments." The exact reporting method has not yet been worked out. By confessing its misdeed, the U.S. corporation would gain immunity from prosecution at home. However, the U.S. State Department would be authorized to forward the company's admission to the concerned country, which could then use the confession as grounds for prosecution under its own laws.

CATCH 2: If the U.S. company does engage in payoffs abroad and its misdeeds are uncovered, then it would face prosecution in the U.S. for failure to disclose its illegal behavior.

Senator Proxmire immediately labeled the White House plan "a bureaucratic copout" and declared his intention to press ahead with his own bill. In reality, both approaches have grave flaws. As Richardson pointed out, Proxmire's legislation is probably unenforceable. The White House approach, on the other hand, suffers the weakness of expecting companies to report their own misdeeds.

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