UNITED STATES: Corporate bribery legalised

May 15, 2002

A federal judge in Houston in April ruled that, under the Foreign Corrupt Practices Act, it is legal for an executive from a US company to bribe a foreign official to reduce the company's tax burden or customs duties in another country.

The case involved American Rice, the largest rice miller and marketer of branded rice products in the United States. David Kay, the company's vice president for marketing, and Douglas Murphy, the company's chief executive officer, had been charged with bribing customs officials in Haiti.

Lawyers for Kay and Murphy argued that a bribe paid to reduce customs duties and taxes is not covered by the anti-bribery law, only bribes with the object of "obtaining or retaining business". The judge agreed and threw out the indictment.

Since 1977, the Department of Justice has prosecuted only 30 or so executives under the anti-bribery law. Congress weakened the already tepid law in 1988, when it pushed through the "grease payment" exception.

According to corporate law attorney Reid Weingarten, bribes paid "to get the machinery of government in a foreign country to take routine governmental action" were no longer a violation of the law.

From Green Left Weekly, May 15, 2002.
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