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«The Good Bribe Philip M. Nichols* Bribery is justifiably condemned, and is the object of a global legal campaign. This article asks whether payment ...»

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The Supreme Court of the United States has acknowledged “the right of a citizen of the United States to engage in business.”118 This “right,” however, was recognized in the context of limits imposed by one State on citizens of another State, which the Court found to be in violation of the Fourteenth Amendment.119 Arguably, the right created by the Fourteenth Amendment extends to businesses in the form of corporations.120 The “rights” at issue in these cases are rights conferred within the United States with respect to the balance of powers between the Federal and State governments, and do not necessarily imply a universal right to engage in business.121 With 115 See Richard D. Horan, Erwin Bulte & Jason F. Shogren, How Trade Saved Humanity from Biological Exclusion: An Economic Theory of Neanderthal Extinction, 58 J. ECON. BEHAV. & ORG. 1, 5-6 (2005). Horan, Bulte and Shogren, in fact, argue that early homo sapiens’ trade activities gave them such an advantage over competing homo neanderthalis that it contributed to the demise of Neanderthals. Id. at 21.

116 See Denise Schmandt-Besserat, Decipherment of the Earliest Tablets, 211 SCI. 283, 283-84 (1981) (interpreting early writings as types of business records).

117 RICHARD L. SMITH, PREMODERN TRADE IN WORLD HISTORY, at viii (2009).

118 Colgate v. Harvey, 296 U.S. 404, 430 (1935), overruled on other grounds by Madden v. Kentucky, 309 U.S. 83, 93 (1940).

119 Colgate, 296 U.S. at 430-31 (“A state law prohibiting the exercise of any of these rights in another state would, therefore, be invalid under the Fourteenth Amendment.”).

120 See Stephen A. Siegel, Understanding the Nineteenth Century Contract Clause: The Role of the Property-Privilege Distinction and “Takings” Clause Jurisprudence, 60 S. CAL.

L. REV. 1, 69 n.350 (1986) (“Consider, for example, Daniel Webster’s argument, as counsel in Bank of Augusta v. Earle, 38 U.S. (13 Pet.) 519, 551-55 (1839), that since the federal privileges and immunities clause guaranteed citizens of any state the right to engage in business in all the states, and since corporations were mere aggregates of citizens, a corporation chartered by any state had a federal constitutional right to engage in business in any state.”).

121 Similarly, the Court invalidated a law enacted in Massachusetts that prohibited state agencies from buying goods or services from any persons doing business with Burma, not on the grounds of a universal right to conduct business, but instead on the grounds of the Supremacy Clause of the United States Constitution because it University of California, Davis 670 [Vol. 49:647 respect to persons outside of the United States who wish to engage in business within the United States, the United States frequently limits or prohibits such business relationships.122 The power of the Federal government to impose these restrictions on business entry into the United States probably lies in the allocations of power in the United States Constitution.123 The United States is not alone; many countries impose some restriction on foreign investment into their territory.124 International law supports the abilities of countries to do so.125 Even if such a right existed, it could easily be subordinate to another right that would have priority.126 Ronald Dworkin illustrates this using

the right of free speech:

Someone who claims that citizens have a right against the Government need not go so far as to say that the State is never justified in overriding that right. He might say, for example, that although citizens have a right to free speech, the Government may override that right when necessary to protect the rights of others, or to prevent a catastrophe...127 Dworkin goes on to suggest that some rights are more important than others and that the government can limit the less important right if it conflicts with a right of more importance. “The individual rights that our society acknowledges often conflict in this way, and when they do conflicted with Federal strategies to deal with Burma. Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 388 (2000).

122 See, e.g., MICHAEL V. SEITZINGER, CONG. RESEARCH SERV., RL33103, FOREIGN

INVESTMENT IN THE UNITED STATES: MAJOR FEDERAL STATUTORY RESTRICTIONS 8-13

(2013) (describing limits on or prohibitions of foreign investment in the shipping industry, the aircraft industry, mining, energy, mass media, banking, and government contracting in the United States).

123 See id. at 3-4 (finding power for such laws in “the federal powers over immigration and naturalization, the federal power to regulate interstate and foreign commerce, and the power to provide for the national defense” (citations omitted)).

124 See Anupam Chander, Diaspora Bonds, 76 N.Y.U. L. REV. 1005, 1094 (2001) (“Most, and perhaps all, countries impose special restrictions on certain categories of foreign investment.”).

125 See Julien Chaisse, The Treaty Shopping Practice: Corporate Structuring and Restructuring to Gain Access to Investment Treaties and Arbitration, 11 HASTINGS BUS.

L.J. 225, 264 (2015) (“Under international law, the usual rule that derives from the principle of territorial sovereignty allows a state to prohibit the admission of foreigners and to deny the right to settle within its territory.... In other words,...





the host country has the exclusive authority to decide whether the investment may be allowed on its territory.”).

126 See generally RONALD DWORKIN, IS DEMOCRACY POSSIBLE HERE?: PRINCIPLES FOR A NEW POLITICAL DEBATE (2006) (discussing rights).

127 RONALD DWORKIN, TAKING RIGHTS SERIOUSLY 191 (1977).

The Good Bribe 2015] 671 it is the job of government to discriminate... So we must acknowledge that the Government has a reason for limiting rights if it plausibly believes that a competing right is more important.”128 There is ample reason to believe that the inchoate right of a person to conduct business through corruption should be subordinate to the articulated right of peoples to have governments free of corruption. A growing body of literature suggests that corruption interferes with the fulfillment of numerous human rights, and that corruption itself violates rights. This literature springs from scholars and policymakers around the world and certainly is not limited to a Western European or North American perspective.

Julio Bacio-Terracino, an Argentinian legal scholar who works for the Organisation for Economic Co-operation and Development, has comprehensively catalogued the ways in which corruption interferes with the fulfillment of human rights.129 He finds that corruption interferes with rights to education, health, adequate housing, water, food, and work.130 He also finds that corruption interferes with special rights accorded to children.131 Bacio-Terracino is hardly alone. Navil Pillay, a South African judge who served as the United Nations High Commissioner for Human Rights, unequivocally states, “‘[C]orruption is an enormous obstacle to the realization of all human rights — civil, political, economic, social and cultural, as well as the right to development.’”132 Nigerian legal scholar Kolawole Olaniyan makes the same argument for Africa, adding the rights to be free of slavery and the right to be free of torture and inhumane treatment to the list of rights interfered with by corruption.133 Corruption, and particularly bribery of government officials, itself constitutes a violation of human rights. Bribery violates the rights of all people to fair and equitable governance. Pillay again summarizes 128 Id. at 193-94.

129 See, e.g., Julio Bacio-Terracino, Corruption as a Violation of Human Rights, INT’L COUNCIL ON HUM. RTS. POL’Y (forthcoming), available at http://papers.ssrn.com/sol3/ papers.cfm?abstract_id=1107918.

130 Id. (manuscript at 16-30).

131 Id. (manuscript at 14-15).

132 Navi Pillay, High Comm’r for Human Rights, United Nations Office of the High Comm’r, Opening Statement at the 22nd Session of the Human Rights Counsel, Thematic Panel on “The Negative Impact of Corruption on Human Rights,” (Mar. 13, 2013), in THE HUMAN RIGHTS CASE AGAINST CORRUPTION at 8, available at http://www.ohchr.org/Documents/Issues/Development/GoodGovernance/Corruption/ HRCaseAgainstCorruption.pdf.

133 KOLAWOLE OLANIYAN, CORRUPTION AND HUMAN RIGHTS LAW IN AFRICA 263-65 (2014).

University of California, Davis 672 [Vol. 49:647 the extent of the violation: “Corruption... exacerbates inequality, weakens governance and institutions, erodes public trust, fuels impunity and undermines the rule of law — in particular the right to a fair trial, the right to due process, and the victim’s right to effective redress.”134 Kolawole Olaniyan similarly emphasizes corruption’s violation of the rights of people to participate in the governance of their own countries.135 Indonesian legal scholar Nadirsyah Hosen supports this analysis, and argues that the collapse of the venal Soeharto regime in Indonesia underscored the violative nature of corruption.136 A justification of bribery based on a claim that one has a right to engage in business clearly fails. Bribery in many cases is not necessary but is instead simply expedient. Even if bribery is necessary, an inchoate right to engage in business should be subordinate to a plethora of other rights that would be violated by the payment of that bribe. Bribery cannot be justified simply because someone would like to engage in business.

B. Optimal Levels of Corruption Both Susan Rose-Ackerman and Robert Klitgaard suggest that “the optimal level of corruption is not zero.”137 This, they argue, is because the marginal costs of detecting and removing corruption increase as incidents of corruption become less frequent, and the costs of removing the last remnants of corruption might surpass the social benefits to be gained by doing so.138 Social costs include not just time and money but also the diversion of the attention of the government from other socially-desirable objectives.139 Two observations must be made regarding this argument. The first is that although presented as a quantitative statement, the difficulty — if not impossibility — of measurement renders the argument 134 Pillay, supra note 132, at 8.

135 See OLANIYAN, supra note 133, at 270.

136 NADIRSYAH HOSEN, HUMAN RIGHTS, POLITICS AND CORRUPTION IN INDONESIA: A

CRITICAL REFLECTION ON THE POST SOEHARTO ERA 3 (2010).

137 KLITGAARD, supra note 54, at 24; see ROSE-ACKERMAN, CORRUPTION AND GOVERNMENT, supra note 69, at 52.

138 KLITGAARD, supra note 54, at 26; see also ROSE-ACKERMAN, CORRUPTION AND GOVERNMENT, supra note 69, at 52.

139 See KLITGAARD, supra note 54, at 25-27; see also MELANIE MANION, CORRUPTION

BY DESIGN: BUILDING CLEAN GOVERNMENT IN MAINLAND CHINA AND HONG KONG 4-5

(2004) (“[T]he ‘pursuit of absolute integrity’ is quite dysfunctional, distorting the purpose of government and its agencies.” (citation omitted)).

The Good Bribe 2015] 673 theoretical rather than definite.140 Among other things, measuring the nonmonetary costs imposed by corruption, as well as indirect benefits accrued by reducing corruption, is difficult.141 With measurement so difficult determining the “optimal” level of corruption is equally difficult, and therefore no particular bribe can be identified as somehow allowed under this theory.



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