Issue 8
An Empirical Analysis of the Foreign Corrupt Practices Act
This Note undertakes an empirical analysis of the effects of the Foreign Corrupt Practices Act on corruption and U.S. investment abroad. It also examines macroeconomic variables to analyze the law’s distributional effects across countries. To date, no quantitative research has been conducted on the effect of the FCPA in combatting corruption. Using multiple linear regression models, this Note uses a dataset comprised of up to 118 countries and focuses on the 2000 to 2011 time period. The results of this research find a negative correlation between the growth rate of perceptions of corruption and the incidence of prosecuted FCPA violations in a given country. This finding may provide some support for, and is at least consistent with, the idea that the FCPA has been effective in reducing corruption. The data, however, do not show a significant relationship between the growth of U.S. investment and the frequency of FCPA violations. Therefore, the empirical results of this Note do not appear to provide support for the idea that the FCPA has been an impediment to U.S. investment abroad. Finally, the results also find that firms operating in overseas markets with certain characteristics are more exposed to FCPA enforcement actions than others. Even after controlling for initial levels of corruption and U.S. investment, violations are more likely to occur in fuel-exporting economies, manufacturing economies, and economies with relatively small governments. This insight is useful for firms in creating risk-based compliance programs.
Supreme Court Review of Misconstructions of Sister State Law
When the Constitution requires a state court to apply sister state law to a case before it, how faithfully must the state court interpret that law? By declining to review a state high court’s apparent misconstruction of sister state law, the Supreme Court has given state courts nearly unlimited freedom to construe sister state laws however they wish to. As a consequence, the constitutional constraints on choice of law mean little: a state court compelled to apply sister state law can simply interpret that law to match its own state’s law.
This Note argues that the Supreme Court should not be so deferential to state court misconstructions of sister state law when application of that law is required by the Constitution. Three changes in the legal landscape since the Court first held it had no power to review such misconstructions support this conclusion: first, the Court no longer exercises mandatory review via the writ of error; second, courts now treat issues of sister state law as issues of law, not issues of fact; and third, the Court now recognizes a constitutional right to the application of sister state law in certain circumstances. When state high courts misconstrue state laws in ways that threaten other constitutionally-protected rights, such as those protected by the Contracts Clause and the Due Process Clause, the Supreme Court has long held that it can review those misconstructions. The same should be true for misconstructions that undermine the constitutional constraints on choice of law.