CAPITALISM'S ACHILLES HEEL Dirty Money and How to

Dirty Money at Work 53
In terms of financial flows, the decade of the 1990s was the most corrupt
in the past half century and probably the most corrupt in history. And
despite all the attention being given to stemming corruption, it is not clear
that the current or next decade will be any better. Even the Economist said as
recently as 2002, “Most half-reliable measures of bribery around the world
show it to be growing, not fading away.” 3
The United States passed the Foreign Corrupt Practices Act (FCPA) in
1977, after 400 U.S. firms were reportedly found using bribery of foreign
government officials as a primary negotiating tactic in overseas sales. The act
barred bribery for the purpose of “obtaining or retaining business.” It was
amended in 1988 in order to clarify that “bribery” was not intended to include
minor “facilitating payments,” a point that will become important in a
few pages. It was further amended in 1998 to bring the FCPA into line with
the Organisation for Economic Cooperation and Development (OECD)
convention against bribery, adding that payments to secure an “improper
advantage” are likewise barred. Nearly three decades after the act was first
passed, U.S. courts are still interpreting whether bribes to avoid foreign taxes
and duties come under the act. 4 European Union countries began adopting
antibribery laws only in the late 1990s and will go through years of legal
wrangling before what is barred becomes clear. Meanwhile, there are legions
of lawyers who advise on how to get around anticorruption laws and win
coveted contracts.
While the FCPA made bribes by Americans illegal, handling the proceeds
of foreign bribery was not illegal, and U.S. banks continued their
pursuit of these billions from countless despots, tyrants, and corrupt government
officials for the next quarter century. Not only U.S. banks but
also banks in every European and many Asian countries went after looted
funds.
A few years ago I called on the regulatory compliance officers of two
Swiss banks. Each tried to convince me that his institution refused to handle
the proceeds of bribery and corruption or any other forms of illegal flight
capital. They both showed me their lengthy policy declarations demonstrating
how aggressively their banks fight the scourge of dirty money. I saw
through these elaborate statements, finally wringing confessions from the
two compliance enforcers that the only thing meant by their legal obfuscations
was that bank officers themselves should not physically carry cash,
gold, or negotiable instruments across borders on behalf of their clients.