By Thomas W. Welch, J.D., Admitted in New York, D.C., and Texas
Despite decades and many billions of dollars spent on many U.N. and other Agencies, chronic poverty, disease, political violence and corruption persists in many countries around the world. While another World War has possibly been averted due, in part, to greater global economic integration and trade, many countries are now also struggling to adapt to the rapid pace of globalization. In many cases, outdated and confused legal structures at the Local, State, National and International levels have not yet kept pace.
Many opportunists are now exploiting regulatory vacuums that currently exist in international trade. Dangerously substandard and counterfeit products are appearing in many poorer countries, particularly in Africa and Asia. Some Governments are exploiting loopholes in trade agreements for competitive advantage. Some experts argue that wealthy business people are evading taxation, constraining many governmental budgets for consistent legal enforcement. The control of many diseases, such as finally eradicating the tragic global scourge of polio, or controlling deadly Tuberculosis, require global enforcement resources that do not yet exist.
Obviously, it is necessary to hire and train adequately compensated officials to do this work. Moreover, as raised previously here, a fundamental precept of ‘good governance’ is that legal norms are clearly defined, so that they can be transparent, easily followed and consistently enforced. Maximum legal clarity also incentivizes broad compliance and minimizes abusive, selective, opportunistic prosecution and corruption, which also undermines human rights.
Near-universal enforcement is particularly key, but vesting exclusive authority in government officials is sometimes counterproductive. Too much authority and discretion in any one sector, particularly if they are under-resourced, breeds secrecy, suspicion, invites evasion, and increases incentives for corruption. The private sectors must be also be engaged and informed to achieve broader compliance.
Although some domestic regulators and UN Agencies have begun to address some international business corruption, they also have been hampered by inadequate resources, accused of selective prioritization, and inconsistent prosecution. Just last year, for example, Smith & Nephew, Inc. reached large settlements with the U.S. Securities and Exchange Commission (SEC) and U.S. Department of Justice (DOJ) in connection with a U.S., Foreign Corrupt Practices Act (FCPA) investigation of improper payments to government-employed doctors. At the same time, however, U.S. domestic corruption is the medical sector is still overwhelming available enforcement resources.
Selective enforcement also sometimes occurs for diplomatic convenience. More recently, the Southern District of New York also imposed the second highest penalty ever under the FCPA, after the U.S. Securities and Exchange Commission (SEC) alleged that several high-end Siemens company executives paid 100 million dollars to several Argentine officials from 1996 until 2007 in order to secure a 1 billion dollar government contract. Moreover, Ralph Lauren Corp., the internationally renowned clothing retailer, became the first company to enter a FCPA non-prosecution agreement with the SEC on April 22, 2013, after the SEC alleged that an executive RLC’s subsidiary located in Argentina paid customs officials over $500,000 to prevent inspection of goods.
Some international and national regulators have also sought to stem an international tide of potentially dangerous, substandard counterfeit medical products across borders, but enforcement efforts have been resisted by an odd coalition of vested economic interests (some in organized crime) and international patient advocacy groups. In the aggregate, however, coordinated extraterritorial regulatory enforcement efforts have actually been relatively rare, primarily because many governments lack the necessary legal and other resources.
Turf battles between competing states and vested interests are partially to blame, but legal confusion from ambiguous and outdated laws and systems tools are also at fault. Even in the U.S., for example, which may have one of the most expensive legal systems in the world, there are still inadequate resources and lingering confusion about the domestic enforcement of international treaties. See, e.g., the curious case of Carol Anne Bond. Perhaps it is time to eliminate jurisdictional confusion, and enable more effective private enforcement remedies?