"(3) any person, while knowing or having reason to know that all or a portion of such money or thing of value will be offered, given, or promised, directly or indirectly, to any foreign official, to any foreign political party or official thereof, or to any candidate for foreign political office, for purposes of

"(A) influencing any act or decision of such foreign official, political party, party official, or candidate in his or its official capacity, including a decision to fail to perform his or its official functions; or

"(B) inducing such foreign official, political party, party official, or candidate to use his or its influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality,

in order to assist such issuer in obtaining or retaining business for or with, or directing business to, any person.

"(b) As used in this section, the term 'foreign official' means any officer or employee of a foreign government or any department, agency, or instrumentality thereof, or any person acting in an official capacity for or on behalf of such government or department, agency, or instrumentality. Such term does not include any employee of a foreign government or any department, agency, or instrumentality thereof whose duties are essentially ministerial or clerical."

(b) (1) Section 32(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78ff (a)) is amended by inserting "(other than section 30A)" immediately after "title" the first place it appears.

(2) Section 32 of the Securities Exchange Act of 1934 (15 U.S.C. 78ff) is amended by adding at the end thereof the following new subsection:

"(c) (1) Any issuer which violates section 30A (a) of this title shall, upon conviction, be fined not more than $1,000,000.

"(2) Any officer or director of an issuer, or any stockholder acting on behalf of such issuer, who willfully violates section 30A (a) of this title shall, upon conviction, be fined not more than $10,000, or imprisoned not more than five years, or both.

"(3) Whenever an issuer is found to have violated section 30A (a) of this title, any employee or agent of such issuer who is a United States citizen, national, or resident or is otherwise subject to the jurisdiction of the United States (other than an officer, director, or stockholder of such issuer), and who willfully carried out the act or practice constituting such violation shall, upon conviction, be fined not more than $10,000, or imprisoned not more than five years, or both.

"(4) Whenever a fine is imposed under paragraph (2) or (3) of this subsection upon any officer, director, stockholder, employee, or agent of an issuer, such fine shall not be paid, directly or indirectly, by such issuer."

FOREIGN CORRUPT PRACTICES BY DOMESTIC CONCERNS

SEC. 104. (a) It shall be unlawful for any domestic concern, other than an issuer which is subject to section 30A of the Securities Exchange Act of 1934, or any officer, director, employee, or agent of such domestic concern or any stockholder thereof acting on behalf of such domestic concern, to make use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to

(1) any foreign official for purposes of

(A) influencing any act or decision of such foreign official in his official capacity, including a decision to fail to perform his official functions; or

(B) inducing such foreign official to use his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality,

in order to assist such domestic concern in obtaining or retaining business for or with, or directing business to, any person;

(2) any foreign political party or official thereof or any candidate for foreign political office for purposes of—

(A) influencing any act or decision of such party, official or candidate in its or his official capacity, including a decision to fail to perform its or his official functions; or

(B) inducing such party, official, or candidate to use its or his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality,

in order to assist such domestic concern in obtaining or retaining business for or with, or directing business to, any person; or

(3) any person, while knowing or having reason to know that all or a portion of such money or thing of value will be offered, given, or promised. directly or indirectly, to any foreign official, to any foreign political party or official thereof, or to any candidate for foreign political office, for purposes of

(A) influencing any act or decision of such foreign official, political party, party official, or candidate in his or its official capacity, including a decision to fail to perform his or its official functions; or

(B) inducing such foreign official, political party, party official, or candidate to use his or its influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality,

in order to assist such domestic concern in obtaining or retaining business for or with, or directing business to, any person.

(b) (1) (A) Except as provided in subparagraph (B), any domestic concern which violates subsection (a) shall, upon conviction, be fined not more than $1,000,000.

(B) Any individual who is a domestic concern and who willfully violates subsection (a) shall, upon conviction, be fined not more than $10,000, or imprisoned not more than five years, or both.

(2) Any officer or director of a domestic concern, or stockholder acting on behalf of such domestic concern, who willfully violates subsection (a) shall, upon conviction, be fined not more than $10,000, or imprisoned not more than five years, or both.

(3) Whenever a domestic concern is found to have violated subsection (a) of this section, any employee or agent of such domestic concern who is a United States citizen, national, or resident or is otherwise subject to the jurisdiction of the United States (other than an officer, director, or stockholder acting on behalf of such domestic concern), and who willfully carried out the act or practice constituting such violation shall, upon conviction, be fined not more than $10,000, or imprisoned not more than five years, or both.

(4) Whenever a fine is imposed under paragraph (2) or (3) of this subsection upon any officer, director, stockholder, employee, or agent of a domestic concern, such fine shall not be paid, directly or indirectly, by such domestic

concern.

(c) Whenever it appears to the Attorney General that any domestic concern. or officer, director, employee, agent, or stockholder thereof, is engaged, or is about to engage, in any act or practice constituting a violation of subsection (a) of this section, the Attorney General may, in his discretion, bring a civil action in an appropriate district court of the United States to enjoin such act or practice, and upon a proper showing a permanent or temporary injunction or a temporary restraining order shall be granted without bond. (d) As used in this section:

(1) The term "domestic concern" means (A) any individual who is a citizen, national, or resident of the United States; or (B) any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship which has its principal place of business in the United States, or which is organized under the laws of a State of the United States or a territory, possession, or commonwealth of the United States.

(2) The term "foreign official" means any officer or employee of a foreign government or any department, agency, or instrumentality thereof, or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality. Such term does not include any employee of a foreign government or any department, agency, or instrumentality thereof whose duties are essentially ministerial or clerical.

(3) The term "interstate commerce" means trade, commerce, transportation. or communication among the several States, or between any foreign country and any State or between any State and any place or ship outside thereof. Such term includes the intrastate use of (A) a telephone or other interstate means of communication, or (B) any other interstate instrumentality.

91 Stat. 1495-1498.

U.S. Policy

Foreign Investment

On August 6, 1977, the Department of State sent to all U.S. diplomatic and consular posts a statement on administration policy concerning direct international investment. The statement, entitled "U.S. Government Policy on Direct International Investment," was approved by the Economic Policy Group and was provided for the information of the posts. The text of the statement reads as follows:

The fundamental policy of the U.S. Government toward international investment is to neither promote nor discourage inward or outward investment flows or activities. This policy is consistent with and reaffirms our longstanding commitment to a generally open international economic system.

The Government, therefore, should normally avoid measures which would give special incentives or disincentives to investment flows or activities and should not normally intervene in the activities of individual companies regarding international investment. Whenever such measures are under consideration, the burden of proof is on those advocating intervention to demonstrate that it would be beneficial to the national interest.

Investment flows to developing countries are a matter of particular concern, and it is not the intent of U.S. policy to preclude appropriate assistance to those developing countries wishing to attract foreign direct investment. Private capital transfers are an important supplement to other forms of resource transfers.

We respect the right of each country to determine the environment in which foreign investment takes place in that country. Once foreign investments have been made on this basis, governments should not discriminate against established firms on the basis of nationality or deprive such firms of their rights under international law, such as adequate compensation for expropriated property.

We reaffirm our support for the OECD Investment Declaration and related decisions of June 21, 1976.

Our investment policy is based on four premises:

-First, international investment will generally result in the most efficient allocation of economic resources if it is allowed to flow according to market forces.

-Second, there is no basis for concluding that a general policy of actively promoting or discouraging international investment would further the U.S. national interest.

-Third, unilateral U.S. Government intervention in the international investment process could prompt counteractions by other governments with adverse effects on the U.S. economy and U.S. foreign policy.

-Fourth, the United States has an important interest in seeking to assure that established investors receive equitable and nondiscriminatory treatment from host governments.

Accordingly, the U.S. Government should seek to:

-Strengthen multilateral discipline and restraint over government actions which affect investment decisions, when such actions might adversely affect other countries;

-Obtain equitable treatment for investors consistent with such principles as national treatment of established firms and compliance with international law;

-Foster international cooperation in dealing with problems arising from international investment.

Dept. of State telegram No. 185216 to all diplomatic and consular posts (Aug. 6, 1977).

For further information on this subject, see the address of Richard N. Cooper, Under Secretary of State for Economic Affairs, before the Council of the Americas on June 27, 1977, reprinted in the 77 Dept. of State Bulletin 127–131 (1977). For the text of the Declaration on International Investment and Multinational Enterprises adopted by the Organization for Economic Cooperation and Development on June 21, 1976, and related information, see the 1976 Digest Ch. 10, § 4, pp. 517–527.

Tax Treaties and Agreements

U.S.-Philippines

On January 19, 1977, President Gerald R. Ford transmitted to the Senate for advice and consent to ratification the Convention signed on October 1, 1976, between the United States and the Philippines with Respect to Taxes on Income, and an exchange of notes between Secretary of the Treasury William E. Simon and Secretary of Finance Cesar Virata interpreting article 23 (2) of the Convention, done on November 24, 1976. President Ford's letter of transmittal explained the general purposes of the Convention and note as follows:

The Convention follows generally the form and content of most conventions of this type recently concluded by this government. Its primary purpose is to identify clearly the tax interests of the two countries so as to avoid double taxation and make difficult the illegal evasion of taxation. The exchange of notes confirms that certain provisions of the Philippines tax system comply with the Convention. S. Ex. C, 95th Cong., 1st Sess., III.

For the information of the Senate, President Ford transmitted as well the report concerning this Convention submitted to him on January 12, 1977, by Acting Secretary of State Charles W. Robinson. Set forth below are portions of the report describing the provisions of the Convention dealing with maximum rates of withholding tax on certain income payments flowing abroad and certain exceptions to the principle of nondiscriminatory tax treatment with respect to all taxes:

The Convention establishes maximum rates of withholding tax in the source country on income payments flowing to residents of the other country. It reduces the statutory rates of 30 percent in the United States and 35 percent in the Philippines, so that the maximum rate of withholding tax under the treaty is 25 percent on portfolio dividends and 20 percent on dividends paid to a parent corporation owning 10 percent or more of the voting shares.

The Convention affirms the principle of nondiscriminatory tax treatment with respect to all taxes, but allows the Philippines to reserve to Philippine nationals incentives granted under specific provisions of existing law. These exceptions in brief permit: (1) a deduction for certain amounts invested in new shares of pioneer industries and a shorter holding period to qualify for capital gains treatment on the sale of such shares; (2) a deduction for certain local costs of export production to firms which are 60 percent Philippine owned; and (3) limited incentives to investment in tourist facilities.

Id. V-VI.

For further information concerning this U.S.-Philippine Tax Treaty, see the 1976 Digest, Ch. 10, § 4, p. 531.

U.S.-United Kingdom

On June 6, 1977, President Carter transmitted to the Senate for advice and consent to ratification the Protocol signed on March 31, 1977, amending the Convention between the United States and the United Kingdom for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, signed at London on December 31, 1975, as amended by Notes exchanged on April 13, 1976, and by the Protocols signed on August 26, 1976. The President also transmitted the report concerning this 1977 Protocol submitted to him by Acting Secretary of State Warren Christopher on May 10, 1977. The report describes the way in which the 1977 protocol modifies the provisions of the previously amended Convention with respect to the treatment of certain U.S. female citizens married to domiciliaries of the United Kingdom, discretionary and accumulation trusts, and some of the provisions concerning the date the Convention enters into force. A portion of the report appears below:

The modifications effected by this Protocol are designed to correct the anomalous treatment of some United States female citizens married to United Kingdom domiciliaries which would otherwise have resulted under the terms of the Convention, and to clarify the tax treatment to be accorded discretionary and accumulation trusts.