Reinsch seeks global anticorruption measures to protect commerce
National Foreign Trade Council President Bill Reinsch said in a speech Wednesday that corruption remains an unresolved scourge on global commerce.
Speaking at a one-day conference hosted by international law firm McKenna Long & Aldridge LLP, themed “Combating Corruption,” which focused on the transatlantic anticorruption legal framework and compliance issues facing multinational companies, Reinsch noted the NFTC has increasingly become engaged on the issue.
“There is no doubt that corruption, endemic in emerging economies around the world and not unknown in more developed countries, throws economic development into chaos and discourages foreign investment,” he said. “When corruption is endemic, the people, the country’s infrastructure, its government institutions and companies that strive to comply with good business practices all lose out.”
Reinsch added that in countries where corruption exists there are no assurances for investors seeking to comply with rules.
“Any ethical prospective investor in these countries must expend significant resources to avoid corruption with no guarantee that perfect compliance can be achieved, given the ambiguities and moving goalposts that frequently characterize enforcement today,” he said.
The United States has taken a leadership role in the development and implementation of various international anticorruption agreements, including the UN Convention Against Corruption adopted by the General Assembly in 2003, with Reinsch saying that 140 member nations have signed and 122 have ratified the agreement to date. But Vietnam, Saudi Arabia, India, Malaysia, Japan, Germany and others have yet to ratify it.
“The efficacy of the convention depends upon the strength of the signatories’ implementing legislation, relevant legal infrastructure of the member states and most importantly, enforcement against corrupt officials,” he said.
Reinsch pointed to a recent report by TRACE International, a non-profit organization that tracks anticorruption efforts, that documented bribe demands in 136 countries over a five-month period. He also cited a five-fold increase in enforcement actions by the Department of Justice and Securities Exchange Commission in cases brought under the Foreign Corrupt Practices Act.
“Unfortunately, the scope of FCPA enforcement is such that financial burdens generated by corruption in international trade are not borne solely by the guilty,' he said. 'Reputable companies in the course of proposed acquisitions have uncovered problems in the company being acquired, leading to the expenditure of millions of dollars of legal fees to resolve them and/or the termination of the acquistion.”
He closed by saying that the United States may have to consider WTO intervention if a trading partners' regulations don't adequately address corruption.
“If the (Organization for Economic Cooperation and Development) and UN Conventions do not raise the overall level of global compliance, then the United States may have to seriously consider whether a government’s failure to enforce its own laws or multilateral obligations it has undertaken against endemic corruption should be actionable under either WTO rules or U.S. trade law,” he said. ' Chris Gillis