POINT: Regulation Requires Global Business Standards
Better to create a level playing field first, then talk about who exactly is out of bounds.
By Dan Reynolds is managing editor of Risk & Insurance®
Those who would enforce U.S. laws against U.S.-based companies operating overseas without taking the same measures against their global competitors are creating an uneven playing field, one that is stacked against domestic businesses.
In an ideal world, every company that participates in this global economy would be subject to the same rules. But anyone with business experience knows this isn't the case.
Environmental and human rights regulations that are respected and followed in this country aren't even in place in others. Think about the cost of compliance U.S.-based companies face but which many of their competitors don't. Do we really want to add to this burden?
The U.S. steel and auto industries have had to fight fiercely against protectionism and product dumping from government and manufacturing alliances in other countries. In those industries, it takes ongoing diplomatic help from our government just to keep the markets remotely fair.
The same diplomatic safeguards should be in place for directors and officers accused of wrongdoing in foreign lands, whether the allegations involve the Foreign Corrupt Practices Act of 1977 or the Dodd-Frank regulations of 2010. Enforcement activity for the Foreign Corrupt Practices Act is at an all-time high, according to a recent report. Enforcement actions initiated by the Department of Justice and the SEC in 2011 were "the second most prolific year in the history of FCPA enforcement."
In light of the fact that our businesses and executives are already playing on a mismatched field, is this sort of aggressiveness on the part of our government really an appropriate measure? I say it's too much and is overtly anti-business.
Businesses create jobs, and pay taxes. You'd think Washington, D.C., writhing in its own budget misery, would see the wisdom in not overly curtailing business.
Whistleblower provisions of Dodd-Frank are going make things hot for directors and officers for some time. I say some measure of realism is in order and that regulators back off.
Fair and ethical business practices are in everyone's interest.
But until everyone's playing by the same rules, it is destructive for the U.S. government to be so heatedly aggressive in the enforcement area, especially on U.S. business practices overseas.
March 1, 2013
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