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Of course, many American companies do succeed overseas without making extraordinary payments—beyond, perhaps, a tip to a customs official to get an executive's household furniture cleared for delivery. Indeed, most American businessmen overseas run their operations pretty much as they do in the U.S.: they work through commission merchants and sell their goods to private concerns on the basis of price and efficiency. Such firms come in all sizes, from tiny to giant. IBM, Xerox, W.R. Grace and Phelps Dodge, among others, are widely known for refusing to make payoffs.
Yet for many U.S. companies, the pressure to pay bribes overseas is intense. For one thing, the stakes are enormous. Foreign sales—by export or overseas manufacturing—account for around 20% of U.S. corporate profits and support roughly 8 million jobs at home. For many companies, foreign business is both crucial and vulnerable. The most flagrant payoffs have been made by oil companies and aircraft and weapons makers. The oil companies are especially vulnerable to unfavorable government action—expropriation, revocation of drilling concessions, tax increases, price control. The aircraft makers do not have a steady flow of sales for standard products; their prosperity for years to come may depend on bagging a single big contract for new planes.
In negotiating those contracts, American companies are in a bruising competition with foreign corporations that have no inhibitions about bribery. British Labor M.P. John Stonehouse, a former Minister of Aviation, asserts: "There is not a single British company selling capital equipment, military or civilian, to areas like the Middle East and Latin America that has not made payments of special commissions over and above the ordinary commercial limit. These sums range from 2½% to 10% of the purchase price." Although Stonehouse is currently awaiting trial on charges of fraud, he has long experience assisting in the sale of British weapons, and his observations are widely believed.
In testimony before the Church subcommittee, Lockheed's Carl Kotchian reported that the company had lost a contract in The Netherlands (of all places) to a French concern. Republican Senator Charles Percy from Illinois asked: "Was the French plane superior or did they pay more [in bribes]?" Kotchian's answer: "In my opinion, it was the latter." That, Kotchian indicated, was one reason why Lockheed paid some $2 million in Italy in 1970 to land a contract for C-130 transports: the company was determined not to lose out in that country too.