April 01, 2004 | By Keith Martin in Washington, DC

Bribes paid by an American company to avoid sales taxes and customs duties in Haiti may be a crime under the US Foreign Corrupt Practices Act, a US appeals court ruled in February.

The decision reverses a ruling by a lower court that such bribes are not the type of payments at which the Foreign Corrupt Practices Act is aimed. 

Officials of American Rice — a rice exporting company in the US — paid monthly retainers to Haitian government officials in exchange for letting the company underreport by a third the amount of rice it brought into Haiti.  The Foreign Corrupt Practices Act makes it a crime for a US company or US person to give anything of value to a foreign government official in an effort to win or retain business.  The lower court said bribes paid to reduce sales taxes or customs duties have nothing to do with winning or retaining business.

The appeals court disagreed.  It said the lower costs could help the company to win more sales, but it was unwilling to find that this would occur automatically and sent the case back for a closer look at whether the officials paying the bribes intended to reduce costs in order to obtain or retain business.  The case is United States v. Kay.

Keith Martin