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Wednesday, September 14, 2011

Can I Flip Your Deontological Switch? Part II.

I want to spend one more post challenging our assumptions about corporate bribery of overseas officials.  I mentioned last post that many of us, including our beloved DOJ, seem to assume that because bribery is severely harmful, we should punish it as severely as due process allows, end of discussion.  I've come to think of this as a deontological switch that, once flipped, keeps us from engaging the question with more nuance and sophistication.  Let me run one more case study by you from my field research, this one from India.

Two of India's most pressing social problems are child malnutrition and the low profitability of agriculture.  So farmers need to sell more food, and kids need to eat it.  And yet, the percentage of produce raised in India that perishes before it gets to market?  40.  The principal reason?  Bad roads -- they can't move the produce fast enough, and it rots in the trucks.  But unlike China, India lacks the financial and administrative (or authoritarian?) capacity to build the needed roads, so it has aggressively solicited outside investors.  Nonetheless, of all public requests for road construction proposals in India, almost half receive absolutely no bids.  No one is willing to build these roads, at any price.  Why aren't more U.S. construction companies seizing this profit opportunity?  Answer:  corruption.  The infrastructure sector is notoriously corrupt; the FCPA risks are far too high.

Query:  if the criminal penalties now associated with FCPA enforcement have made the costs of building roads in developing countries prohibitive, such that roads aren't built, farmers can't sell, and kids can't eat, have we done the right thing?  Not to be too sentimental here, but this is percisely the kind of trade-off inherent in international anti-bribery law today, although enforcement officials won't admit it.  Moreover, where is India now looking for infrastructure investment?  China.  And as I mentioned last post, they don't penalize corporate overseas bribery.

So this is the problem, and it's serious.  What might the law, and the legal academy, have to say about it?  We're going there next.

Posted by Andy Spalding on September 14, 2011 at 01:43 PM | Permalink


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Those interested in the corruption issue might like Kim Scheppele's very useful article, "The Inevitable Corruption of Transition", 14 U. CONN. J. INTL L. 509 (1999)

I'm not sure I buy the "deontological switch" idea (or sure that I don't) but the question of how to deal with corruption in these sorts of cases is a complex and interesting one, and Scheppele's paper has useful things to say about it.

Posted by: Matt | Sep 14, 2011 9:27:13 PM

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