Foreign Corrupt Practices Act

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.

Metromedia International Group Inc. said it informed the Justice Department and the Securities and Exchange Commission that some personnel engaged in conduct that may have violated U.S. and foreign laws. Metromedia, a telephone and cable system operator, said the conduct involved former states of the former Soviet Union. The activity may have violated the Foreign Corrupt Practices Act, Metromedia said, without providing details.

What do former prime ministers Charles Haughey of Ireland, Morihiro Hosokawa of Japan and Silvio Berlusconi of Italy have in common? Here's a clue: Former South Korean presidents Chun Doo Hwan and Roh Tae Woo are in their company. No, none of these men won a Nobel Prize for his efforts to stamp out corruption. Quite the contrary. Payment scandals or corruption charges booted Haughey and Berlusconi from office. Hosokawa resigned.

When it comes to bribes, it takes two to tango. But many American companies doing business abroad had to sit out the dance starting in 1977, when the Foreign Corrupt Practices Act was enacted, prohibiting business bribes to foreign officials. It was the right thing to do, but it came with a cost: Private companies in other industrialized nations could not only bribe their way into foreign contracts but in some countries, like Germany, such bribes were tax-deductible. Things are finally changing.