The Foreign Corrupt Practices Act prevents many Americans from doing business around the world according to a widespread local practice called bribery. The Los Angeles Times tells the story of Avery Dennison, a California business, that is under investigation for allegedly passing bribes onto Chinese officials as part of a road construction deal he landed a few years ago.
When Pasadena-based Avery Dennison wanted to build its road and traffic business in China a few years ago, it hired people like Lily Tang. The Beijing homemaker had an asset the company craved: political connections.
Tang’s husband, Chen Qi, is a senior official at the China Communications and Transportation Assn., a quasi-governmental group led by former ministers. That connection, said current and former Avery managers in China, helped the company win contracts for thousands of dollars’ worth of government projects.
In one case, according to interviews and a copy of a signed contract reviewed by The Times, Avery received an order to supply $375,000 worth of reflective safety products for highway jobs in Tianjin, east of Beijing, and paid a commission of about 8% to an enterprise operated by a friend of Chen’s.
Chen’s friend, Guo Longjun of Beijing, said he had passed the money on to “experts,” whom he wouldn’t identify.
Such payments may be part of an ongoing federal investigation into whether Avery violated the Foreign Corrupt Practices Act, which prohibits U.S. businesses from bribing foreign officials.
Avery reported possible violations on its own in 2005. It characterised them as relatively minor and said it had taken corrective measures. Though it is by no means the only U.S. company involved in a corruption investigation of its business dealings in China, its experience provides a case study of the pitfalls American firms face as they try to capture a piece of the Chinese market.
Well, that FCPA sure sounds like a fine thing to have around. But isn’t it a bit of a luxury we can’t afford right now?
Steve Sailer, a former marketing expert turned political columnist, thinks that we could be exporting a lot more if we just stopped enforcing this law.
“The U.S. needs to export more, especially to China, since they are going to be an ever larger part of the world marketplace. The Chinese like doing business based on “relationships” forged over a lot of expensive food, drink, and whatever,” Sailer writes. “The U.S. government could get out of the way of American business reducing the trade deficit just by cutting the funding for investigating Federal Corrupt Practices Act violations.”