The Fcpa and the OECD Convention : Some Lessons from the U.S. Experience

Although corruption is ubiquitous, attitudes toward it differ among countries. The U.S. had been the only country, until 1997 OECD Convention, with an explicit extraterritorial anti-bribery law. The Foreign Corrupt Practices Act of 1977 employs a two-pronged approach to control the supply side of corruption: (1) anti-bribery provisions and (2) accounting (internal control) provisions. I offer indirect evidence that shows that the FCPA had limited success. The OECD Convention adopts the same two-pronged approach, but is likely to be more successful since it is a multilateral treaty: the signatory nations can effectively form a cartel to reduce the cost of doing business. As with any cartel, however, each multinational corporation has an incentive to deviate. I argue that the main lesson to be drawn from the U.S. experience is that we need, in addition to internal controls, stronger and more effective corporate governance within an appropriate regulatory framework