The lure of the perfect deal is hard to resist. Whatever the financial requirements, it's difficult to ignore the appeal of negotiations that seem to run smoothly, without a glitch. But, while the perfect partner and the smooth as silk negotiations may be enticing, those negotiations may come with strings attached. What may be presented as a discreet payment in support of a cultural accommodation may well translate into a violation of US law: the dreaded Foreign Corrupt Practices Act.

Controversy and business opposition has swirled around the Foreign Corrupt Practices Act (FCPA). Many argue in favor of fair and effective enforcement of the provisions of the FCPA, as the right thing to do. After all, it is the law of the land. Others have opposed FCPA enforcement, often from a strictly practical point of view, on the premise that it hamstrings US business interests competing abroad. This is a particularly common complaint in the frontier world of developing economies, where the line between the public and private sectors is blurred or the government bureaucracy is simply confusing, muddled and ineffective.

US businesses have long been the isolated carriers of the anti-corruption standard in the international business arena with the decades-old adoption of the FCPA (in 1977). Without parallel legislation in other countries, many US firms have felt that they could ignore the FCPA provisions with some impunity. That is no longer true, with the drafting of anti-bribery and anti-corruption standards in the Convention on Combating the Bribery of Foreign Public Officials in International Business Transactions formulated by the 29- member Organization for Economic Cooperation and Development (OECD). The Convention has been signed by all 29 OECD members, as well as non-OECD members such as Argentina, Brazil and Chile (as of 1998).

But the best reason for the application of the FCPA and its expansion through similar legislation before the OECD: Corruption is not efficient. It does not get the job done. It serves no interest well.

Corruption has many faces, and goes by many names. But among its most common manifestations is the common bribe: an illicit payment or similar provision made to a government official (whether the conduit is a business agent or associate, a friend, or a family member) for a concession that is not granted in the normal course of business, for the benefit of the paying party. It may be recorded as a commission for services rendered. It may be dismissed, winked at, or suffered with a casual shrug. It may be considered a commonly accepted business practice in a culture where survival, it is claimed, depends on it. It may be seen as the incidental function of an intermediary, business agent or other associate, where the "don't ask; don't tell" rule is blithely applied in specific countries or regions.

But a bribe is a bribe is a bribe.

In the capitalist world where payment is made for goods and services according to commonly accepted market standards, the standard generally is "what the market will bear." But there is a striking lack of controlling factors or standards in the netherworld inhabited by the corrupt and the corruptible:

* Lack of quality control. There is no quality control on the services that are rendered: how can anyone complain about a government official who is performing services - poorly - outside his job function? There are no applicable regulations or a designated hierarchy for complaints or for enforcement of sanctions based on non-compliance in performing the agreed upon function.

* Lack of price controls. There is no system of price controls in place to compare, for example, the standard fees for a specific service. (Is it $ 50,000 for priority consideration of an energy contract? Is it a mere $ 1,500 for smaller government contracts that require repetitive submission?) There is also no way to ensure that escalating demands are kept in check; there is no way to assess whether personal influence of a competitor isn't valued more highly than the fees (bribes) paid to the official.

Other fairly standard complaints might be made about the environment associated with the payment of bribes:

* There is vast room for misunderstanding, a lack of meeting of minds, in the shadow world of negotiating bribes.

* Was payment made to the right person?

* Is this a single payment, or will subsequent payments be required? There is no assurance of fixed payments, or the lack of escalating amounts.

* The mechanics associated with bribery payments invite disaster, as cash is the coin of the realm; and cash is difficult to account for and dangerous to traffic in (both personally and professionally).

* Exposure is an ever-present danger, ensuring a damaged reputation in the professional sector, among competitors and in the eyes of consumers. Even for an otherwise anonymous multinational energy company or a construction company, the business world has become a rich source for negative publicity on issues that smack of illicit activities, and bribery certainly fits the bill.

* Among the media-compulsive or Internet-savvy, the taint of bribery never goes away. A pending contract may turn on an ancient (20th Century), distant (foreign locale) account of corruption that convinces the decision-maker that a corrupt partner, or one that tolerates corruption, is an inferior substitute for an honest, respectable, square-shooting partner who can be relied on to play fair.

The shadow world of briber and bribed exists that is a caricature of honest dealings. Agreements must be reached in secluded settings, with a minimum of witnesses and total discretion, if not secrecy, in the consummation. The illicit transaction may result in a dual set of documentation: 1) to provide the appearance of propriety, and 2) to deal with the actual (corrupt) transaction or bribe. The payment itself must be handled securely, but not through normal, secure business channels. The entire transaction risks - or requires - multi-tiered allotments to anonymous parties up the chain of authority. The more parties aware of the transaction, the more the likelihood of escalating demands and the greater the potential for disclosure.

The money itself, if of any consequence, cannot remain in country, subject to scrutiny, likely subject to taxation and certainly subject to demand for some plausible explanation. An extremely discreet, separate financial network of financial safeguards must be established, typically out of country. Just as the financial accounting cannot be handled in an open and notorious manner, so the funds themselves cannot be treated as the result of overt, honest dealings. Thus, the need arises for foreign travel to manage funds, to permit the consumption of ill-gotten gains in a more open manner than in the country of origin. Finally, the very position that brought about the bribe is neglected because of the bribe. Dereliction of duty is not the commonly viewed result of bribery, but it is a direct result that should be presumed. A major, predictable consequence of bribery is not just malfeasance, or misfeasance, but simple non-performance of duties ascribed to a government official.

Corruption may seem to have a veneer of glamour. There's the sense that only the inner circle can pull it off, that only those sufficiently high in the corporate structure or with sufficient power, with the proper level of sophistication, can recognize the ritual and exit without taint or unsolicited notoriety. But this scenario doesn't allow for the predictable errors or mis-steps that occur now and again, generally due to the disclosure of what was never meant to be revealed. A common, and often highly publicized, incident is the untimely suicide that punctuates the disclosure of a secret political slush fund, or the death of a major investor now aware of an investment gone bad despite the meticulous arrangements made. Less attention is generated by the abrupt, but on occasion complete, disappearance from the business world of a prominent and talented business figure.

How is it best to deal with the situations that the FCPA addresses, and that demand even more attention and consideration with the development of the OECD anti-bribery Convention?

* Define the type of payment. Some payments to government officials are permitted, e.g., to expedite a typical government function, such as obtaining a visa more quickly from a government agency. In fact, a fee is accepted by the US Passport Office for the rapid processing and issuance of a US passport under emergency circumstances.

* Counter it. Get all the pertinent details on a situation. When a demand is made by the less experienced and the less entrenched, it may be enough to make clear that bribery is unacceptable, with or without calling it by name. A clear company policy can benefit both the corporation and the individual, and eliminate the opportunity.

* Quantify the costs and the benefits. Alert those potentially targeted: The cost is always too high; the long-term liability is incalculable, for the bribe itself and the ever-looming costs of future cover-up. The benefits are never, ever guaranteed.

* Consider legal ramifications. Inform all parties that responsibility may be diverse, with accountability extended to the actual (known) parties to an illicit transaction, those who knew and/or approved of the transaction, the corporation itself (or its agents), and possibly even the individual who presumed there was an impenetrable corporate shield to prevent any personal liability. There is nowhere sufficient insurance against criminal liability.

Bribery and corruption thrive in a clandestine environment. With the US as the sole standard-bearer of the anti-bribery and anti-corruption banner for many years, there seemed to be some shelter from enforcement of the FCPA on foreign turf. But such shelter has virtually evaporated with the arrival of the OECD anti-bribery Convention and similar international standards.

The choice is fairly simple: a compliance program can be put in place to monitor the threat of possible corruption and a record-keeping system that would at least help to deter its incidence, or develop mechanisms to review the evidence developed by outside authorities after the fact. Under any circumstances, an objective, fact-finding body - an external resource - may be critical to fighting an insidious phenomenon that serves no one and harms all of us.

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Smith Brandon International, Inc. conducts international investigations and provides actionable business intelligence and risk avoidance counsel to assist companies in their overseas operations. The firm's principals are grounded in investigative, analytical, and intelligence gathering techniques, drawing on decades of experience in the FBI, State Department, intelligence circles and the private sector. For more information, please call 202-887-9363, or visit our website at http://www.smithbrandon.com/.