Dissertation Spotlight: Legal and Illegal Bribery: What’s the Difference?

In 1976, the Foreign Corrupt Practices Act (FCPA) outlawed US firms’ ability to bribe foreign officials, which put US firms at a disadvantage in the growing global market. FCPA stated that no United States firms or firms established by a US citizen were allowed to bribe foreign officials to maintain or seal their business. US firms felt that this bill was unfair since no other foreign nation had this restriction in place. As the trade deficit increased, firms started pushing bills into the House of Representatives and the Senate to lessen or overrule FCPA’s guidelines. Members of Congress were split between Republican and Democrat identification, which made it difficult to pass any bills or laws that would fix FCPA’s unclear limitations. It was clear through the congressional record that the United States was at a disadvantage for the competitive market because FCPA was liberalizing the US while other countries had trade restrictions. 

Only until the Uruguay Rounds of the General Agreement on Tariffs and Trade (GATT) did the US pass the Omnibus Foreign Trade and Competitiveness Act (OFTCA). OFTCA would help decrease the restrictions on businesses as placed by FCPA. The most crucial part of the OFTCA is Title V, which states that the President of the United States could pose an international agreement if there is bribery for business advantages with foreign officials. Title V helped settle anti-corruption ideology among US voters and fixed the business disadvantage in the international market. This caused the pressure to be placed on the international market rather than the US market.  

One of the main issues with the passing of these bills is the involvement of interest groups. Moneyed interests have an impact on legislative processes through their interest groups, and according to the Procedural Cartel Theory, interest groups maintain power by controlling what bills are allowed onto the congressional floor. For instance, the research found that legislators that receive more PAC (Political Action Committee) contributions were more likely to be involved with the bill than those who did not receive as much financial support. This research also found that democratic states have higher non-tariff restrictions to trade than non-democratic states. Moneyed interest happens in the committee process where it is easier to hide how PACs are influencing individual committee members. PACs are also more likely to support candidates that already have power and to help maintain that power in Congress. 

As argued, money interest with states that have a larger market can manipulate their political organizations to affect other states’ legal systems. Researchers have found that corporations are donating more money to political parties or committees to gain access to congressional rules and bills. One should look into how an individual legislator with PAC support acts during consideration of a bill that has an international business concern. The researcher hypothesizes that a legislator with more support will be more active in overturning FCPA’s restrictions due to their financial backing. This shows that money in national politics has the potential to influence global commerce and exchange. Moneyed interest has a way of influencing how government officials make decisions and what is voted upon.

Dr. Jeffrey Mistich is a graduate of the College of Social Sciences and Public Policy at Florida State University. This post was based on Jeffrey’s dissertation, written by COSSPP Blog Intern, Lindsey Anderson.

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