FCPA Reforms Efforts in Light of the Walmart Mexico Bribery Case

Gus J. Bourgeois, III

June 7, 2012

Reform of the Foreign Corrupt Practices Act has been a hot topic recently, both in legal compliance circles and in the broader business community. World events had seemingly aligned to spur the reform effort forward – notably, the persistence of the Great Recession and its effect on U.S. businesses doing business globally. The argument in favor of government taking steps to enhance the ability of such businesses to effectively compete abroad by reforming the FCPA was publicly made by the U.S Chamber of Commerce’s Institute for Legal Reform, which, with the backing of many  prominent names in the business community, proposed several FCPA reforms for consideration, including the addition of a compliance defense (which would require prosecutors to give consideration to whether, and to what extent, a company had in place an FCPA compliance program, in making enforcement decisions) and clarification of the definition of “foreign official”.

The concept of reforming – or at least providing clarification to – the FCPA should not, on the surface, be controversial. The FCPA is more than 30 years old, and yet there have been comparatively few cases interpreting its provisions. The reason is simple – since the effects of a successful FCPA prosecution against a corporate defendant could be disastrous, most cases settle.  But that fact has left businesses with little guidance as to compliance.

But any reform effort would certainly require an expenditure of political capital by lawmakers backing the effort, in the face of claims by opponents that such reforms represented at best an effort to weaken the FCPA, and at worst an attempt to decriminalize bribery. Serious lobbying efforts in favor of the Institute for Legal Reform’s proposals quickly commenced, and for a time reception on Capitol Hill seemed almost favorable.

And then came Walmart. Headline: “Vast Mexico Bribery Case Hushed Up By Walmart After Top-Level Struggle” (New York Times, online edition, April 21, 2012).

Opponents of FCPA reform were quick to pounce. On April 25, 2012, two members of the House of Representatives (Rep. Elijah E. Cummings, D-Maryland, and Rep. Henry A. Waxman, D-California) not only launched a Congressional inquiry into Walmart’s role in the bribery case, but openly questioned Walmart’s involvement in the Institute for Legal Reform’s FCPA reform efforts, writing, in a letter to Chamber President Thomas A. Donohue: “[w]e are concerned about the role that Walmart  officials may have played  in the Chamber’s Institute for Legal Reform. It would appear to be a conflict of interest for Walmart officials to advise on ways to weaken the Foreign Corrupt Practices Act at a time when the leadership of the company was apparently aware of corporate conduct that may have violated the law.”

The Walmart matter will likely spell the end of any serious efforts at reforming the FCPA in 2012.  Nevertheless, proponents note that reform of any major legislation usually takes time, and are continuing to press their case – although in the current U.S. political climate, “time” may be an understatement indeed.