Legal News

Is the FCPA Standing in the Way of Haiti?s Recovery?

By Ashby Jones

The Wall Street Journal editorial board member Mary Anastasia O’Grady on Monday wrote this piece on a 1999 deal between a company called Fusion Telecommunications and Haiti’s state-run telecom enterprise, Haiti Telecom.

At the end of the article, O’Grady writes:

An American entrepreneur who does business in the Caribbean recently explained the Haitian landscape to me this way: “We did not bother with Haiti as the Foreign Corrupt Practices Act precludes legitimate U.S. entities from entering the Haitian market. Haiti is pure pay to play. The benefit of competitive submarine cables would be transformative for the Haitians. Instead, they were stuck with Clinton cronies taxing the poor.

That excerpt from O’Grady’s article has quickly made its way around the blogosphere.

Over at the Marginal Revolution blog, economist and George Mason professor Tyler Cowen titled this post: “One of the best ways to help Haiti: modify FCPA.” He wrote:

Pass a law stating that the Foreign Corrupt Practices Act does not apply to dealings in Haiti.

As it stands right now, U.S. businesses are unwilling to take on this legal risk and the result is similar to an embargo. You can’t do business in Haiti without paying bribes.

Cowan’s post then got picked up by Eric Lipman at Legal Blog Watch. Lipman asks:

The devastating earthquake clearly presents an opportunity of sorts for many American businesses. And some seem to have wasted no time getting down to Haiti to hawk their wares. It should not be necessary to suspend enforcement of an anti-corruption law to enable U.S. companies to participate, but, realistically speaking, is it justified in this case to look the other way for a time?

It’s an interesting question posed by Lipman, we think. Let’s assume, for now, that suspension of the FCPA would, in fact, lead to more badly needed U.S. investment in Haiti — a country in desperate need of every last dollar. Would it make sense to pull back on the law for the time being — say 1-2 years? Or would this send a counterproductive message from the Justice Department — that foreign bribery is okay in some countries but not in others? And is that any way to get a country like Haiti back on its feet — by perpetuating a culture of corruption?

LBers, any thoughts?

Full post as published by Law Blog - WSJ.com on March 16, 2010 (boomark / email).