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Many individuals in the American corporate world ardently defend foreign bribery. They argue that if it is customary in foreign countries to give bribes, then it is also necessary for U.S. corporations to give bribes when an essential contract is at stake. As they see it, bribes translate into greater business, higher profits, and more jobs for American workers. They maintain that fortunes of big corporations and hundreds of millions of dollars in contracts depend on the strong desire of foreign officials to skim off some of the money that passes through their hands. Some people in corporate businesses also maintain that the prohibition  of bribery has led to a decrease in U.S. exports, as their hands are tied when they have to compete with countries that have no anti-bribery laws.

Until 1977, it was not illegal for corporations to bribe foreign officials. Corporations violated the law, however, only if they had concealed the payments, which they generally did in their financial reports to the Securities and Exchange Commission or the Internal Revenue Service. The Foreign Corrupt Practices Act provided for the imposition of fines of up to $1 million on a corporation, and for jail terms of up to five years for corporate officers who bribed foreign officials. This act had the overwhelming support of both houses of Congress and the public as well, and it passed the Senate by a unanimous vote of 86 to 0. However, the Reagan administration made a concerted attempt, in strong support of corporate interests, to emasculate the Foreign Corrupt Practices Act on grounds that U.S. corporations were suffering losses because they could not compete fairly, and also because the criminal penalty was too severe. Following extensive hearings, in 1988 Congress essentially retained the original legislation, but with some changes that weakened it and made convictions more difficult. The more important amendments provided that the government would have to show that the corporation "knew" or had "reason to know" that their foreign sales agent would use the payments made to him or her to make bribes. Gifts of a "reasonable" value and based on "local custom" to foreign officials are no longer illegal. Nonetheless, the amended law raised criminal fines against a corporation from $1 million to $2 million, increased individual fines from $10,000 to $100,000, and provided a new civil fine of $10,000. Maximum potential imprisonment for an individual remained at 5 years.

In 1981, the General Accounting Office surveyed 250 U.S. firms on the effects of the Foreign Corrupt Practices Act. It found that any serious loss of business had affected less than 1 percent of the surveyed firms. A 1984 study at the University of Southern California concluded that there had been no severe negative effects on U.S. exports, either in terms of total trade with each country or in the sales of individual product categories. In fact, in the three years following the law's passage, U.S. trade with "bribe-prone" countries actually had outpaced trade with "non-bribe-prone" countries.

It is also important to note that U.S. corporations compete against each other. A Justice Department report to Congress on 35 bribery cases it was investigating in 1982 indicated that more than 40 percent of the bribes had been made to secure a contract for which only U.S. corporations were competing. (Multinational Monitor, 1982: 35) In fact, in only three instances did U.S. corporations make bribes for contracts where there was only foreign competition. Bribes made to gain advantage over other U.S. competitors constitute a violation of U.S. anti-trust laws.

Foreign bribes paid by U.S. corporations provide ample ammunition to political extremists in most countries. For example, large-scale U.S. corporate bribery practiced in Iran under Shah Reza Pahlavi contributed substantially to the extreme anti-American sentiments in that country and the subsequent taking of U.S. embassy hostages in 1979. The shah of Iran was a technology buff who was in a great hurry to modernize his country, and, with Iran's increasing oil money, almost any piece of equipment could be sold there given the right set of agents paying the right bribes to the right people. Under the shah, U.S. exports to Iran totaled billions of dollars; in 1978 alone, non-military exports were $3.4 billion and armaments $2 billion. Rockwell International, for example, paid a bribe of $260,000 to General Khatemi, commander of the Iranian air force, for obtaining his assistance in pushing sales of their aircraft. Grumman paid $2.9 million to various Iranian officials to obtain an order for 80 Grumman F-14 Tomcat fighter planes.

Bribes made by American corporations to Iranian generals and others in high positions -- even to the shah himself -- became well known in Iran. The shah was overthrown because corruption had become rampant; he had rushed the country into a Western secular industrial age without regard for the strong religious values in Islamic Iran; the royal family and their friends were living in great luxury, and the shah had fallen prey to Western influences, particularly the United States. The large bribes given by American corporations, however, contributed in no small way to the shah's overthrow as they fueled growing political dissent, particularly among the young, and helped fire the wrath of religious fundamentalists led by the Ayatollah Khomeni. The failure on the part of the United States to show more corporate restraint in foreign bribery in Iran and to encourage other industrial countries to show similar restraint carried a fearsome price tag. All these factors contributed to the extreme hatred of the United States that continues today in Iran, a hatred that Iran has exported to Middle Eastern countries. What the U.S. transnationals have sown for their own profit, they have often reaped to the detriment of the American people.

In the long run, an international agreement is needed to curb the use of bribes by transnational corporations. The Draft International Agreement on Illicit Payments drawn up by the UN's Economic and Social Council makes it a crime, under the laws of subscribing countries, for corporations, or their officials, to offer or to accept such payments in international business. It would also require corporations to keep records of their overseas business transactions that would be open to review by designated government agencies. Moving in this direction, in the 1988 Omnibus Trade Act, Congress directed the president to seek an agreement with member governments of the Organization for Economic Cooperation and Development (OECD) to ban the use of bribery by corporations in international dealings. . .

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