Drawing of cupped hand reaching toward man with head turned away (State Dept./D. Thompson)
(State Dept./D. Thompson)

Forty years ago, the United States enacted a law forbidding companies from paying bribes to earn business in other countries. For a long while it was the only country with such a prohibition.

Eventually much of the world followed suit. The Organization for Economic Cooperation and Development adopted its Anti-Bribery Convention in 1997, and the United Nations in 2003 approved its own compact, now signed by 181 states.

Their enforcement agencies have teamed with the U.S. Department of Justice and the U.S. Securities and Exchange Commission to wrest hundreds of millions of dollars from companies that flouted international bans. In the U.S., domestic bribery violates other laws.

Leaders of major U.S. companies say refusing to pay bribes or kickbacks is good for their overseas business, not a hindrance to sales or drag on profits.

Honesty pays

Obeying the Foreign Corrupt Practices Act has been good for Raytheon Company, says Thomas Kennedy, its chairman. He rejects the notion that businesses can’t be ethical and grow globally. Last year the aerospace and defense company racked up a third of sales in more than 80 countries overseas.

“Our customers like doing business with an honest company,” says Frank Jimenez, a Raytheon vice president and general counsel.

Fighting corruption is a cornerstone of U.S. national security policy, not only for the obvious moral reasons, but also because countries rife with corruption invariably suffer a host of other problems. Corruption saps economic growth, hinders development, destabilizes governments, undermines democracy, and provides openings for criminals, traffickers and terrorists.

Paying a steep price

U.S. enforcers have imposed nearly $11 billion in fines under the anti-bribery law. It applies to both U.S. companies and foreign companies listed on U.S. stock exchanges.

The German conglomerate Siemens paid $1.6 billion to U.S. and German authorities in 2008 for bribing officials on five continents.

Last September the Swedish telecommunications company Telia reached a $965 million settlement with U.S. and Dutch authorities for a massive bribery scheme in Uzbekistan.

Virtually every major U.S. company has a code of conduct that forbids bribery and requires suppliers and intermediaries to pay heed. Raytheon publishes its guide in 15 languages.

Google’s code states, “The rule for us at Google is simple: Don’t bribe anybody, anytime, for any reason.”

But corruption still remains an enormous problem in some places, from rigging contract awards to bribing customs officers. The World Bank estimates businesses and individuals pay $1.5 trillion in bribes each year.