new york times" first reports the bribery allegations over the weekend calling himself "very indignant" about the case during a meeting with mexican my grants in houston on wednesday evening. mr. calderon said it wasn't right to do business based on mordidas, using the common expression for the pretty bribes mexicans pay to smooth from traffic offenses and legal scrapes. avon sees another exit, avon executive left the company in connection with a probe into possible bribery overseas. people familiar with the matter say they are looking into possible violations of the corrupt practices act. two household names in the united states, both have allegations for violating this law. what's the history of this law and what's the accident that congress had in passing it? >> it's actually a law that's been on the books for a while.

it was passed in 1977 in the wake of the watergate scandal. it came out that corporate treasuries had been giving money directly to the committee to reelect president nixon and the s.e.c. started wondering they have the funds going right to the president, where else are these funds going and they basically discovered that the slush funds were being used to pay foreign officials overseas as well. that's the background. carter pushed through the foreign corrupt practices act in '77. it basically makes it illegal for a company or a person to pay anything of value to a foreign official, of a foreign government and also has provisions that require companies to keep accurate books and records is athey can't mask these bribe payments and there are some minor exceptions for what are called facilitation payments which are basically small payments to officials for routine business services, so.

>> the mordidas in other words. >> right, getting electricity, getting the water going. that's the law. it's a fairly simple law on its face but in application and enforcement, it can be somewhat complicated. >> so a question really at the heart of it, why would the american justice system care if a company was making bribes in another sovereign country? >> yeah, i think that's a fair question to ask. i think the, i think there's a cup things. one, bribery is not a victimless crime. i think the world bank estimated that $1 trillion was lost to bribery in the last year, and so while the victims aren't in the u.s., these bribes do affect people in the countries where they're being paid and i think congress recognizes that. i think they also recognized that it's bad for america's image abroad to be running around the world paying bribes. >> i'd like to show our audience

this chart from the fcpa blog of trace international which looks at the largest penalties under the foreign corrupt practices act, the largest so far being siemens in germany in 2008. "the new york times" said the foreign corrupt practices act was rarely enforced or discussed for much of its history and today it strikes fear throughout the executive offices of companies with overseas operations. so would you tell us a little of the enforcement history? >> sure, right after it was passed there were some big cases against major companies, lockheed martin, general electric, and then the law kind of remained dormant for about 30 years. few things happened around 2006-2007 that got enforcement ramped up. the justice department made a priority, a guy named mark mendelssohn, head of the fpa, he

came in, beat the drum for more resources and also had some winds at his act. the sarbanes-oxley act really required companies to take a look at their internal controls and accounting practices and when they started taking a look they saw there were some unaccounted for funds that might have been going to foreign officials. so really in the past four or five years, enforcement has ramped up to unprecedented levels. >> and we're going to open up our phone lines for a discussion with you. certainly walmart is in the headlines and has been in the past week since the "new york times" wrote the story. the charlie savage piece story "with walmart claims, greater attention on the law." we'll get your questions and comments. if you want to comment on the walmart story you're welcome to do that or the avon story we just showed you. if you'd like to learn more about the lie and how it's applied over time, join us in the conversation here. here's a quote from twitter from

someone who is named freelancer who writes "we have laws that govern these type of issues. the problem is the gop enfor enforcement of the laws, the gop didn't apply itself to its buds," meaning buddies. the republicans have a different track record about this particular law that you've been able to determine? >> i actually don't think that's a fair criticism. the uptick really started on president bush's watch and it's continued unabated into president obama's administration. so it's actually in terms of enforcement at the justice department a fairly nonpartisan issue. >> our first question comes from baton rouge, louisiana, tyrone is an independent. you're on for christopher matthews, good morning. >> caller: thank you. i want to thank mr. matthews for his honesty about saying that it's bipartisan. i think both parties engage and i have two questions. first, the penalties they pay a

fine, but once they're entrenched in the countries, do they keep on doing what they're doing and progressing the business and the second question is, are you familiar, is there any way we can find out, and i don't know if this has anything to do with anything but we're discussing this morning about the federal reserve. i always wondered who these people, they fine the companies and they pay a penalty but the federal reserve does criminal things all the time and you being with the dow jones, i thought you might -- who are these people and can you put a fingertip on them? and thank you for taking my question. >> sure, happy to. first part of your question, yes, they do pay fines. lot of times, well, almost always, when a corporation settles, the justice department also requires a lot of remedial steps they have to go through and check their internal controls. they have to fire people who are involved with this, and really clean house, and if they don't,

and the justice department finds out they don't, then the next time around it's going to be even more severe, so it's not just pay a fine and business back to usual in principle. the second question, i can't speak to that. the fcpa doesn't really deal with the fed, but an interesting question. >> so let's listen to walmart vice president david tovar, who released a statement about walmart's handling of its internal investigation into bribery in its mexican division. >> we believe it's also important to keep a few things in context. number one, the allegations in the "new york times" story about the decisions made in bentonville are more than 6 years old. secondly, six months ago, we launched an aggressive investigation under the auspices and supervision of the audit committee of the board of directors into the issues contained in the article. we are working quickly to determine what happened and are committed to getting to the bot

with tom of this matter. number three, we are continuing to cooperate with federal law enforcement authorities. the audit committee of the board is overseeing the investigation comprised entirely of independent directors who are assisted by outside legal advisers and forensic accountants. the audit committee is being briefed on this matter on a regular basis and they have instructed the company to use whatever resources necessary to conduct an independent investigation. >> that is walmart's reaction. so here's a viewer, bill king, on twiter who writes, "does it really matter? walmart officials have as much chance to be prosecuted as bush-cheney did for war crimes." that's his point of view. where will the investigation and charges actually lead? is there a possibility of a criminal prosecution? >> there is a possibility. i actually think that one of the bigger criticisms of enforcement is they haven't gone after high-level executives at some of

these major companies. seimens payed $800 million to settle bribery charges and none of their executives are in jail. i think the justice department has said they've gotten more serious going after individuals and they've shown that to a degree. there are some statute of limitations here. it's a five-year statute of limitation, and looks like this was going on before that. there are ways that prosecutors can get around that but they're going to be looking hard at the executives and will be thinking strongly about charging them. >> in addition to criminal proceedings what are some of the other enforcement mechanisms or tools the federal government has to enforce the act? >> so the law is jointly enforced by the justice department and the s.e.c. justice department handles obviously the criminal side. s.e.c. is civil side. the s.e.c. enforces pretty large penalties. they require companies to sort

of disgorge is what they call it, large amounts of profits they earn from the illegal deals. you also see tag-along security suits that's not the federal government but a huge liability for these companies when these things come along so it's not just the justice department. there's a lot of risk involved when one of these investigations gets going. >> so roy lehman on twitter, "if those first two cases you speak of was there find involved?" >> people have gone to jail for violating the fcpa. just last year the longest sentence handed down was about eight years, to a gentleman in florida. i guess the biggest name prosecution was the former head of kbr, a guy named jack stanley. he was recently sentenced to jail, but for the most part, a lot of people who are being sentenced to jail time are not executives at major companies,

and you know, there's reasons for that. it's very hard to prosecute executives at these major companies. they have lots of resources. they will lawyer up and make it difficult. it would be really interesting to see whether they pursue executives at walmart because from the time story it looks like there could be some liability for these guys. >> next question for chris matthews comes from chicago, this is bernie, a democrat there. >> caller: can you hear me? >> yes, i can. >> yes. >> caller: i just want to say, you know, this is really a comedy act you've got going right now. what you have to do is go look and see how walmart got in chicago, how they paid off every black minister they had money falling out of their pockets. they paid off the radio stations in chicago. there's no difference. and i understand this is going on in new york right now. what they did is they eliminated union paid grocery stores, they

didn't create jobs. they lowered the living standard of the people, and it's no different. i just don't understand how you don't cover that. >> thank you. >> well, the fcpa only applies to bribes paid to foreign officials. obviously there are domestic bribery laws that are enforced. actually one of the larger criticisms of the u.s. sort of anti-corruption apparatus is that maybe we don't do enough to go after domestic bribery. we actually fell in transparency international, anti-corruption group, they rank countries on perceived corruption and we actually dropped in the rankings last year and a large part of that was because of domestic enforcement, so some would say that's a fair criticism. >> while we're talking about enforcement this is from the "wall street journal" and its financial blogs, "doj sees turnover on the financial corrupt practices team.

the department of justice reshuffled the ranks of its bribery team bringing in new blood as mainstays on the team depart. since january the unit responsible for enforcing the act has seen an influx of four new hires while two long time team members have left." what would this mean, if you're watching the justice department? >> i'm not sure you can take too much from that. it's interesting the foreign corrupt practices act is enforced solely out of the headquarters at washington, and there's a dedicated team of about 20 prosecutors there. it used to be about five prosecutors five years ago. it's expanded. what's happened is the fcpa turned into a big business for law firms, and there's become somewhat of a revolving door. lot of guys are making money representing people who are dealing with enforcement actions. >> here is a point of view from gary, dr. duncan on twitter

"it's ridiculous to send people to jail for bribing foreign governments. u.s. companies must compete with china, who you can bet it doing it, too." >> that's another criticism you hear fairly frequently. if we don't do t the chinese or the russians will. china and russia have recently put similar laws on the books. it will remain to be seen how they enforce them. but i think one argument that would be made to counter that is that bribery is not good for business. i was at the world bank last week, and the representatives from siemens and ge, siemens had the famous scandal, paid $800 million, cleaned house, got rid of briberies practice and posted their strongest earnings in recent history. bribery is inefficient. you're losing money down the supply chain and when someone comes they hand out, you pay a bribe seems like five more people pop up. that's not to say you know certainly the russians and the

chinese and others may fill that void we are stepping out of. >> another skeptic, michelle tweets "isn't foreign bribery equal to domestic lobbying? no real difference" she says. >> that's a fair criticism i suppose. i think the difference is that you are paying directly for a business advantage, a contract, whereas lobbying perhaps is more difficult to make that connection, but that is another criticism that is out there. >> ft. lauderdale, florida, jason, democrat, on for christopher matthews. good morning, jason. >> caller: good morning. you know, i guess i have a question and a comment. my first question is, what does it direct -- or how does it directly affect americans if companies like walmart are making bribes in foreign countries? and then my comment is, are you

basically just answered it earlier you said if we don't do it, the chinese and russians will. it just puts us on a level playing field and i can understand where you say that bribes are bad for business, because one person pops up and then ten more do, but i mean, i guess if you can answer that question, thank you. >> sure. i think that that's a difficult question for the justice department to answer sometimes. you know, when they go to trial, they often have to prove there's a victim, and the victim is frequently overseas. i think congress's intent was to project a good image of america abroad and that's one of the large reasons for the law. the other thing i would say in terms of the level playing field is that something like nine out of ten of the biggest fcpa enforcement actions have been against foreign companies. so the law actually applies to companies that are listed on u.s. stock exchanges.

so the justice department would say it's not just u.s. companies we're going after. we go after foreign companies and we are leveling the playing field. >> question from joseph ramirez on twitter. "mr. matthews my guess is the fpca was originally lobbied for by business. is that true?" back in 1977 it was passed, what was the business community's view of it? >> i wasn't around in 1977. i don't think that's the case. like i said, this kind of came out of the watergate scandal after it was revealed the funds were going to the committee, the s.e.c. started investigating a guy named stanley sporkin, federal judge did this and realized the treasuries and corporations were being used as slush funds around the world and i can't imagine that companies were happy for their way of doing business to have been changed. >> birmingham, alabama, kathy, a democrat, you're on. hi. >> caller: hi, i'm so glad you

brought this up. walmart has been a thorn in my side for years. i saw a show on msnbc that tons and tons of manufacturing plants that they have in china. they're also hiring, i saw this woman, her 10-year-old brother is working at one of these plants in china, and they also, when i came down here from al -- from new jersey, alabama, i couldn't believe this so-called union they have down here. they start their workers at $7 an hour. what kind of union is that? you know? and walmart is supposed to be such an american institution, but what really, really irks me now is that i'm on social security, and i have to shop at

walmart because they're the cheapest place around, and they're not doing right by the people of this country, and by the people of china. >> thank you, kathy. >> i think one of the reasons walmart and this investigation has gotten so much attention is that it is walmart. there have obviously been labor and environmental issues surrounding the company, and it's gotten a lot of attention because of that. i think, to be honest, i talked to formal and federal prosecutor this is week and this case isn't all that different than any other cases the justice department sees all the time. the reason this generated so much attention is that it's walmart and because of the extensive documentation of the "new york times" story. you don't often see these schemes spelled out, alleged schemes spelled out in such detail. >> we want to talk to you about congress and the foreign corrupt practices act, harkening back to

a february article in the "wall street journal," coons, klobuchar press holder on fcpa guidance." in this story cpa guidance. the chamber of commerce, in the midst of the expensive lobbying push to amend the statute, arguing that the law which prevails foreign affairs is detrimental to u.s. businesses. some on capitol hill are receptive to the changes, including democrats. give us more. >> that's the case. the chamber lobbied extensively on this for going on two years now. they've spent hundreds of thousands of dollars on it. it is a serious issue for them. they argue as some of the viewers have that it is bad for american business and is hurting u.s. companies. they would argue that they are not trying to weaken the law, hay just want clarification or specific issues they are addressing. for example, what is the definition of a foreign official.

the foreign official is an official at a state-owned company and want more clarification on that. and they have been well-received on this, to a certain extent. the senators said they would work on legislation. representative cessenbrunner put something forward. it will be interesting to see how this affects the push. it can't be good for the chamber's push. >> it helped us understand what would be behind this. amending the fcpa, says the wall street journal story, is potentially a delicate undertaking. more than 30 non-governmental organizations sent a letter to every member in congress in january urging them not to amend the statute. the groups warned lawmakers that supporting amendments to change it would be bad for their public image. >> the committee is up in arms over this. they have been very vocal about their objection to the chambers.

and the justice department has sort of been not as receptive as well. the democrats face a lot of pressure here. they are trying to appease, perhaps the business constituencies without angering people who are generally democratic supporters. >> american hero on twitter has this thought write, the bribery actually harms the nation that lets the bribery go on. for example, mexico is the one losing in the bribery ways. >> yeah, i think that that's accurate. the real victims are the people in these countries. it is interesting some of these countries where the bribes are being paid have picked up their enforcement as well, so companies are facing not only prosecution in the u.s., but they are also being investigated in the place where they play the bribe, so sort of a double whammy. >> next is summers, new york, a

democrat there. michael, you're on. >> caller: how are you doing? i think the company that everyone models their sales after is apple. apple has to be the worst offender. the only thing is they know they won't get caught. they do business in china, for the last nine years. the company is the largest company in the world now. the stock went from a few dollars a share to $600 a share. it is owned by the wealthiest institutions and the wealthiest people in america. and these companies see apple make all their products in china, a communist country run by a dozen individuals. and the worst part is that in america where they should be making the products and where they have to follow laws, they don't make anything. and there are millions of americans out of work. tens of thousands of veterans are coming home from afghanistan

and iraq out of work. and they continue to do business this way. and it's a shame and someone should say something. and there's complete silence about apple. what do you think of that situation? >> apple has not disclosed any scpa investigation. i'm certain they have a policy on the books about complying with the law. china is a big risk. a lot of the business there are state-controlled, so officials at the businesses could be considered foreign officials under the fcpa, but there are investigations of tech companies, silicon valley is getting a look, hp is under investigation, so i'm sure that they are aware of the law and that doj is looking at their competitors. >> and with that story, you just underscore the chamber's

argument about defining what a foreign official is, who falls under that category, but how do you so do that with so many changes in cull hurt from country to country? >> it is difficult. the hold-up is a piece of, perhaps, ambiguous language in the statute that says that a foreign official or instrumentality of a foreign government. and the instrumentality of the phrase is the hold-up. what the chamber wants, for example, is certainly in some of the countries when a company takes control, the government is truly controlling it and foreign officials there should be considered foreign officials. but what the chamber wants is, well, what percentage owner ship of the company is required? do they have to have power on the board? the justice department doesn't want that limitation. prosecutors like flexibility. they like to be able to charge people for a wide range of

things. it would be interesting to see how that shakes out. the justice department is working on guidance right now on the fcpa, which should be out in the next few months. and it will be interesting to see if they touch on that issue. >> emma on twitter asked, isn't domestic bribery also called incentives and done by states and corporations every day? >> it is. you know, again, there are domestic bribery laws on the books. they are enforced. but the u.s. has taken some criticism for perhaps not enforcing them as much as they are enforcing the fcpa. >> and next is a call from point pleasant, new jersey. gary, independent there. good morning. >> caller: good morning. i noticed the word law mentioned many times. and they passed these laws but they don't enforce half of them, or 90% of them, because the people who write the laws are abandoned rich by the 90 kt. why don't the people get a

little smart and vote all the incumbents out. once we have the elected officials voted out every time they run for election, maybe we'll get somebody to represent us. this is ridiculous. i can't understand how we put up with all this corruption. and it stems right from your representatives, whether it is the house or the senate, they are all the same. they are completely corrupt. vote them all out. that's all i have to say. thank you. >> thank you very much. a question for you on competitiveness. do other countries that we would do business with, western european countries, have similar laws on their books? >> yeah. europe is a success story on this front. the organization for economic cooperation development has an anti-bribery treaty on the books.

and in order to join the ocd which carries a lot of weight, you have to sign up for this. europe what gotten serious about it. the u.k. passed a very string gent anti-bribery law that went into effect last year. we are waiting to see how it is enforced. the germans have gotten very serious about investigating this stuff. and a lot of this has come from the international community and the u.s. driving and getting into serious about it. yes, there is enforcement in europe. >> there's this view from epwvlaw who writes on twitter, so, bottom line, walmart bribes officials in mexico and pays so little there that illegal immigration is still a better prospect. we are talking about the foreign corrupt practices act. just a little bit of time left. next is a call from essex junction, vermont, ron is a democrat there. >> caller: good morning. try to follow me on this. you know, corruption eliminates the competition, basically. so for the biggest guys in the

industry, it would be wrong of them to start corruption and have all the little guys become corrupt also. and the thinking behind that is congress or world bodies will legislate and make tighter and tighter regulations and rules, and what happens, and this happened in the banking industry, was all these rules strangled the little guys. so then what happens is the big guys just gobble them up because they can't make it. it is a wise investment for the big guy to have this corruption because it puts the little guy out of business. >> yeah, i think that's an interesting point. it's one that the justice department makes that bribery is really anti-theft call to the free market system, right? you're not