Origins of the FCPA: A Look Back at the Start of the Modern Anti-Corruption Era

May 1, 2025.

Remarks as Prepared for Presentation by Frank Vogl

It is an honor for me, a non-lawyer, to join the discussion on the origins of the Foreign Corrupt Practices Act, its evolution and the challenges that confront us as the Trump Administration has “paused” its enforcement

Would the FCPA have had a chance of becoming law had the political and business values and norms of today prevailed in the mid-1970s? Absolutely not.

As the U.S. Economics Correspondent for The Times of London, based in Washington DC, from 1974 to1981, my focus when it came to the FCPA was on the crimes perpetrated by some of the largest U.S. multinational corporations. The bribery stories were sensational and made headlines across the world.

Consider the environment back then. The Vietnam War was finally ending; Richard Nixon had resigned and been pardoned; several of the top officials of his administration had been prosecuted and sentenced; New York City faced bankruptcy; Chrysler for all intense and purposes was bankrupt; the economy was in recession; inflation was soaring, fueled in part Arab oil producers creating the OPEC cartel.

Amid this turmoil, Stanley Sporkin, a small and slight man with his glasses often balancing at the tip of his nose, was unsure how to deal with the fact that many of the largest corporations in the country were paying foreign bribes. The sums were material. They should at least be disclosed to shareholders, he reasoned. Sporkin headed the Enforcement Division of the SEC. He was tough and he was honest.

Sporkin was a reformer - so too were many others in Washington back then, such as Senators Church, Case and Proxmire, and Congressman Les Aspin, who wanted to wipe the dirty Nixon era slate clean. In fact, on November 17, 1975, I reported that Les Aspin, a Congressman from Wisconsin, stated that he had received a report from the Library of Congress that showed that a total of $305 million had been spent abroad in recent years by 20 large U.S. corporations on “questionable and illicit business practices.” He said he is preparing legislation to make it a crime for “any American corporation or official to offer a bribe or demand a kickback from a foreigner in the course of doing business.” Aspin was ahead of the game.

Partisan divisions abounded, but they were parlor games compared to today. The Democrats held the Senate, the Republicans held the White House. In February 1976, following new revelations of corporate bribery, White House press spokesman Ron Nessen said President Ford was considering establishing a Cabinet committee to look into foreign payments to officials by U.S. companies. He said President Ford “condemned the practice in the strongest terms.”

Just imagine Donald Trump saying that!

Watergate had profoundly influenced public understanding of corruption in the highest political office in the land. The SEC and investigations headed by Senator Proxmire and Senator Church pursued investigations that broadened understanding. Some of the largest corporations, from Exxon to United Brands, from Gulf Oil to Lockheed, saw bribe-paying as part of their business strategies. I reported on each new stunning case of U.S. corporations bribing foreign government officials to win business. Republican Senator Charles Percy, who had run a major corporation, once asserted: “Corruption is the dry rot of the capitalistic system or any other system for that matter.”

I wonder which Republican senator today has the courage to say something like that in the face of the vast corruption across now unfolding within the Trump Administration.

While some argued that bribe-paying is what everyone does, arch-conservative Treasury Secretary William Simon asserted in late 1975 at a Senate Banking Committee hearing: “To argue that bribes to foreign officials are necessary for effective competition is contrary to every principle under the free market system.”

As news emerged of bribe-paying to the government of Italy and even the Italian Communist party, to Dutch royalty, and even to the Prime Minister of Japan, so few holding political power back then argued with Senator Frank Church that: “A cancer is eating away at the vitals of Western society and that cancer is corruption.”

I interviewed Dan Haughton, the Chairman of Lockheed who defended bribe-paying, stressing that it was vital to be competitive. The truth was that the Lockheed TriStar was inferior to its rivals, Boeing’s new 747 and the McDonnel Douglas DC10. Lockheed faced financial difficulties – so it resorted to bribery.

The Boards of Directors, for example, of Gulf Oil and Lockheed investigated the foreign bribery disclosures before Church’s committee and concluded not only that it was wrong, but that the chairmen and CEOs of their companies had to resign. Which U.S. Board in recent times has fired the Chairman and CEO when the corporation violated the FCPA? Not a single one.

Was what Houghton did at Lockheed worse than the vast illicit engagement of Goldman, Sachs with Malaysia’s national development fund (1MDB)? No. The then prime Minister of Malaysia was sentenced to 12 years in prison. The top brass have remained at Goldman, Sachs.

Corporate reputations seemed to matter back then to a greater degree than today, as did the idea of just doing the right thing. After all, Charles Percy maintained that good businesses did not have to bribe to succeed. I believe, decency, doing right, meaningful business ethics have largely been replaced by greed, short-term profit boosting at all costs, with fines just a cost of doing business.

Today we have an environment where Trump extorts and business caves. The culture that saw reckless banking that brought the global economy to its knees in 2008-09, has got worse. Public trust in business and government has been eroded. The current leadership in Washington, whose massive irresponsibility is not publicly criticized by the nation’s business leaders, and some very big law firms, underscores the different values now and back in the post-Nixon mid-1970s.

The Watergate scandals may have triggered the determination of some national leaders to promote reform legislation in the mid-1970s. But, more profoundly, I believe it was the determination by many business and political leaders, who were aghast at the disclosures of corporate bribery, to do the right thing and be seen to do the right thing that produced the FCPA.

As President Carter noted in late 1977 on signing the FCPA into law: “I share Congress’s belief that bribery is ethically repugnant and competitively unnecessary. Corrupt practices between corporations and public officials overseas undermine the integrity and stability of governments and harm our relations with other countries. Recent revelations of widespread overseas bribery have eroded public confidence in our basic institutions.”

Towards the OECD Anti-Bribery Convention

Others here at this conference know far more than I do about the enforcement of the FCPA in the 20 years after its enactment. It was clear that the U.S. investigations suffered from the inability to collect evidence abroad. The U.S. was alone in having a law that made the corporate payment of foreign government officials a crime. German companies, for example, could actually deduct their foreign bribe payments from their taxes.

In 1988, Congress passed the Omnibus Trade Act which, in part, amended the FCPA, affirming continued Congressional support. At that time, Congress called on the executive branch to negotiate -- with the U.S. trading partners in the Organization for Economic Cooperation and Development (OECD) -- an international agreement based on the FCPA so that U.S. businesses would not be at a competitive disadvantage doing business abroad.

When corporate lawyer Warren Christopher became Bill Clinton’s Secretary of State he determined that the FCPA should go global. He called in 1993 for all countries that were part of the OECD to join an anti-bribery convention that mirrored the FCPA.

In 1993, some friends came together to create the first global, non-for-profit, anti-corruption organizations: Transparency International. One of those founders was Fritz Heimann – a man on a mission. Fritz, then Associate General Counsel at GE wanted to use Transparency International as a vehicle to lobby across Europe in support of Christopher’s goal. GE Chairman Jack Welch was furious that some of GE’s foreign rivals paid bribes. Heimann, was under orders from Welch, to change that.

As Fritz pushed the Paris-based International Chamber of Commerce to lobby for an OECD Convention, so Peter Eigen, the chairman of TI, lobbied German industry with great impact. The then head of Siemens publicly announced support – while his company in following years would pay foreign bribes. Many people can claim credit for the eventual agreement, but some of the credit is clearly due to Heimann and Eigen. On December 17, 1997, Christopher’s successor, Secretary of State Madeleine Albright signed the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, as did 32 other countries.

As Fritz told a Senate committee in 1998: “This Convention is very much in our national interest. Bribery damages economic development and hinders the growth of democracy. It hurts U.S. exporters and suppliers -- in every state and district in the U.S. -- and impedes international trade. The U.S. government is aware of allegations of bribery by foreign firms in the last year affecting international contracts worth almost $30 billion, which is not currently prohibited by criminal laws in their home jurisdictions.”

A footnote: it is one thing to sign a convention, another to enforce it. Prime Minister Tony Blair quashed investigations into massive bribe-paying by British Aerospace to Saudi Arabia. The brilliant Marc Pierth, then head of the OECD anti-bribery working group, went public to decry Blair’s action, to demand the UK enforce the Convention and even rewrite and update its domestic legislation. Marc kept pushing and he succeeded.

Marc, you may recall, joined together with South Africa’s Judge Goldstone and with Paul Volcker, the former Federal Reserve Chairman, to investigate illicit UN payments to Saddam Hussein’s Iraq. Volcker was an extraordinary advocate for anti-corruption. He is sorely missed at a time like today. It took individuals, notably Christopher, to change the legal landscape on corporate bribery. It will today take men of similar courage and determination to change the landscape once more.

The Current Challenge

Where do we stand today and where shall we stand tomorrow?

First, we have learned that West European countries follow the American lead. They enforce anti-corruption laws with reluctance and they have never gone ahead of the U.S.

And second, do not look at the “pause” in FCPA action in isolation. This White House started by firing 18 Inspectors General, it reduced the Justice Department’s priority on every aspect of anti-corruption, it largely set aside the enforcement of the Corporate Transparency Act, it is pushing ahead with all manner of corporate deregulation, including in the crypto sector, and the result will be increased corruption and money laundering.

We have seen the President extort law firms, universities, corporations and media organizations – and he seems to be just starting. Not a single major American business leader has had the courage to publicly decry what is happening.

While we hail those law firms and universities who appear to be resisting President Trump’s pressure – where are the powerful voices at the helm of the legal fraternity that are decrying the across-the-board terrorism that is being waged on the pillars of integrity that are vital to our democracy, our freedom and our prosperity?

I would be delighted to suggest that, just as in the immediate post-Nixon era, so quite soon in Washington, there will be a return to doing what is right; there will be a return to norms and standards that all of us can applaud. I lack that confidence right now.

I fear that even if there is an eventual backlash, so much damage will have been done that it will take many years to return to a situation where anti-corruption enforcement is meaningful.

Scholar Laura S. Underkuffler once wrote that: “Looking for the essence of corruption in the violation of law, breach of duty, betrayal of trust, poor economic outcomes, and the like will be viscerally unsatisfactory if, at the same time, corruption’s explicitly moral core is not recognized. …Furthermore, corruption – under this understanding – carries more than the threat of an individual transgression; it presents a vital threat to the larger social fabric of which it is a part.”[1]

Look at the issues we have been discussing here this morning not only in legal terms, but also in term of integrity, morality and the costs to the social fabric of our country.

Thank you.