Extortion, Part II

I recently discussed Peter Schweizer’s book, Extortion: How Politicians Extract Your Money, Buy Votes, and Line Their Own Pockets.  I want to mention one example from Schweizer’s book, to give a better idea of how this extortion occurs.

The Foreign Corrupt Practices Act (FCPA), passed in 1977, prohibits US companies from bribing foreign government officials, but Schweizer notes that the law is ambiguously written and inconsistently enforced.  This opens the door for extortion, and Schweizer (p. 130) argues that companies that help politicians with fund-raising are less likely to find themselves investigated and prosecuted for FCPA violations.

Schweizer quotes a Duke University law professor (p. 147) who says, “The nature of contemporary federal criminal law magnifies the potential for mischief, because the definitions of the relevant offenses are both broad and vague, giving the prosecutors extraordinarily wide discretion on which there are few checks.”

Schweizer notes that while FCPA applies to payments to foreign governments, members of the US Congress ask firms for financial contributions all the time, as a condition for either getting legislation to pass, or stopping the passage of legislation that would harm the firms.  That is a main theme of his book.

Schweizer (p. 149) quotes a former president of Shell Oil who says, “The Foreign Corrupt Practices Act basically says you can’t give gifts to foreign government officials — which includes campaign contributions and donations to certain charities.  Of course, that’s what we get asked to do all the time from Washington.  Why doesn’t the FCPA cover Washington?”

The obvious answer is that these corrupt practices that are illegal for US corporations to engage in overseas benefit the Permanent Political Class when they take place in Washington.  What’s illegal overseas is almost mandatory in Washington because the people who write the laws benefit from that arrangement.

Randall G. Holcombe is Research Fellow at the Independent Institute and DeVoe Moore Professor of Economics at Florida State University. His Independent books include Housing America: Building Out of a Crisis (edited with Benjamin Powell); and Writing Off Ideas: Taxation, Foundations, and Philanthropy in America .
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