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Entries in Stephanie Connor (2)

Thursday
Mar182010

More On Graft Is Good, Sometimes

Last week we heard from Washington, D.C. lawyer and former aid worker Stephanie Connor. She disagreed with some comments Andy Spalding, left, has made in this space. Andy's a lawyer on a year-long Fulbright Research Grant in Mumbai, India.

He's questioned whether bribery is always bad and enforcement of the Foreign Corrupt Practices Act always good. (His concepts were discussed without attribution to him in a recent WSJ Law Blog post "Is the FCPA Standing in the Way of Haiti’s Recovery?" here.)

Here's his response:

Hi Stephanie,

First, nice to meet you and thanks for your comments. They have forced me to examine my assumptions in some unexpectedly difficult ways.

I understand the crux of your comment to be that we should not treat the FCPA as if it were primarily designed as a poverty reduction tool. I agree.

Rather, the statute is primarily designed to be a bribery reduction tool, and we should not evaluate its success in the first instance by the extent to which it reduces poverty. But to say that it is not designed to be a poverty reduction tool is very different from saying that we should enforce it without regard to its impact on poverty.

As strongly as I agree with the former statement, I disagree with the latter. Indeed, many believed in 1977 and still believe today that proper enforcement of the FCPA will have the collateral effect of mitigating poverty -- through reducing corruption, we will eventually improve economic productivity. I am among those who subscribe to this theory, when thinking about the very long term.

But what if FCPA enforcement has the more immediate effect, quite unwittingly, of exacerbating already severe social problems, including but not limited to poverty? Should we take notice? Should we modify our approach to enforcement? Can the FCPA be enforced in such a way that it can deter bribery without deterring investment in developing countries? I certainly believe that it can, and that it should. Is there a reason why it should not?

I would truly love to hear your response.

All the best,
Andy Spalding

Views from other readers are also welcome.

Editor's Note: For the record, Andy has never said graft is good. Our over-zealous headline writers came up with that phrase. Andy himself says: " I certainly don't believe that 'graft is good' . . . I do believe, though, that our efforts to reduce bribery can, quite unintentionally, sometimes produce bad results.  But fortunately, we need not choose between enforcing the FCPA or not.  Rather, we should develop an approach to enforcement that is more sensitive to the reality of collateral damage in economically desperate countries, one that punishes bribery without punishing the citizens, for example, of Haiti."

Tuesday
Mar092010

Not-So-Great Expectations, Please

We like hearing from readers. Here's a note from Washington, D.C. lawyer Stephanie Connor, left:

Dear FCPA Blog,

I'm grateful for the insights this blog, and its many contributors, have provided throughout the years. This includes the admirable work of Andy Spalding, Art Carden and Lisa Verdon – academics who cast doubt upon the ultimate utility of the FCPA as a means of combating corruption and reducing poverty in the developing world. As a lawyer and a former aid worker, I don’t always agree.

While I believe anti-corruption enforcement is necessary, I am troubled by the tenor of the recent dialogue surrounding that enforcement. This has nothing to do with the quality of the analyses that Spalding, Carden and Verdon are providing, and everything to do with the fact that expectations for what the FCPA can and should accomplish have grown completely out of hand.

The works of Spalding, Carden, and Verdon are important. Poverty reduction strategies need to be evaluated, measured, and critically assessed. But the FCPA is not a poverty reduction strategy. We cannot mistake supply-side anti-corruption enforcement for the wider effort to reduce corruption in the developing world -– a project that will require significant advancements in health, education, and the rule of law, for starters. The FCPA simply aims to ensure that U.S. actors do not provide monetary lifelines to the autocrats and oligarchs who will be threatened by the advancement of their people. It will not solve the underlying problems of poverty.

Holding the FCPA up as the magic bullet for poverty reduction is unfair to those who have foregone lucrative opportunities in order to comply with the law. By framing the anti-corruption effort as a means of vanquishing poverty, we risk handing an early victory to opponents of the Act. When the FCPA is inevitably unsuccessful, the enthusiasm for anti-corruption may dissipate, the resources for FCPA enforcement may quietly disappear, and those companies that have sacrificed so much to act within the confines and spirit of the law would be left at an even greater disadvantage. 

I admire the business people and aid workers who refuse to pay bribes. They often make that choice because they realize that paying one official will lead to a torrent of other requests. The FCPA supports them. The law allows them to tell a soldier with a greedy glint in his eye that they would pay him but cannot do so without risking their company and their job. This is much easier than telling him that they could pay him but just don’t feel like it. 

A successful anti-corruption effort will take more than a few years, or even a few dozen years, of enforcement. Maintaining that effort over a prolonged period requires that we also manage our expectations. It should be enough that the FCPA reduces some high-level corruption. We need not, and should not, ask it to do more.

Best Regards,

Stephanie Connor

The views expressed in this post belong to the author and do not necessarily reflect the views of her employer.