StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Analysis of the Foreign Corrupt Practices Act - Research Paper Example

Cite this document
Summary
The paper "Analysis of the Foreign Corrupt Practices Act " states that intentional violation of the Act by companies may end up in a fine of up to an amount of $25 million-plus a $5 million in criminal offence in addition to the 20-year imprisonment for the culprit individuals…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER96.2% of users find it useful
Analysis of the Foreign Corrupt Practices Act
Read Text Preview

Extract of sample "Analysis of the Foreign Corrupt Practices Act"

?Foreign Corrupt Practices Act Introduction The Foreign Corrupt Practices Act was enacted in 1977 in United s to regulate the trade and commercefor tight monitoring and transparency in accounting practices adopted by the commerce agents i.e. businesses and corporate concerns which are engaged in carrying out business with foreign countries (Gatti, Clive & Ogrady 1). This act strictly prohibits any act of bribery from or to any person to get things accomplished in an unlawful manner. The law was enacted because there was a serious concern for corrupt practices among American traders. These trading activities had a profound impact on the image of USA among other major trading partners. In the mid of 1970s, more than 400 companies of US origin having international footprints of were paying almost more than $300 million to different groups and individuals such as political parties, major politicians, ministers and the authorities that were holding power (Weiss 6). The renowned company, manufacturer of the world renowned fighter jet F-16 had paid personnel of foreign countries to show a tendency and preference for their product. In another investigation, it was reported that a famous company actually bribed the president of a foreign country, Honduras, to offer them discounted tax policy for their operations in that country. They give $2.5 million to the country’s president for a tax saving of around $7.5 million and another $750,000 to Italian official for allowing the import of the company’s products. When the president of Honduras raised the taxes, the chairman of the company was so depressed that he committed suicide. These were some important reasons which led to the making of this famous law which is now an essential for good corporate governance for any company. The act which was enacted by President Jimmy Carter was further amended in 1988 as the international anti-bribery law. Ethical Standing: Ethical behavior is strictly not a global standard at all. In some of the regions of the world, paying a bribe in terms of cash kickbacks and/or other tangible favours is still not considered an ethical or moral issue that can be termed as unlawful; rather it is just the ‘cost of doing business’ (Howell 1). The question here arises that should the bribe be paid or not. However, with globalization and emerging trade relationships ethics and corporate governance are gaining strong grounds. In most of the business schools, the faculty might be educating their future generations with adaptability and ways of working out with the situation. Mostly the reason they give of doing so is as they believe that the entire motive is the bottom line. So the fact that whether any particular business’s ethics should become accustomed to the local environment or become as a standard for its operations around the whole globe becomes a question mark in terms of ethics. Many of the business graduates and young managers give the argument, "When in Rome, do as the Romans do." In simple words, we should follow local/host country’s practices and assimilate according to their businesses customs if we have to build a successful and sustainable business environment. In Harvard Business School, a termed coined by two leading faculty members of business ethics, Joseph Fletcher and James Adams, was "situational ethics," which was based on bendable and realistic approaches towards such complex business dilemmas (George 1). Perhaps, most business tycoons do follow it as well and that is why they have been very successful. The corrupt systems and politicians with big wide open mouths are ready to swallow dollars for each tiny task they can control. Foreign corrupt practices are an umbrella to guide the businesses when they start operating globally. When businessmen talk about the “business ethics” they typically refer to one of three aspects: Keep away from breach the ‘criminal law’ in their work-related activities Stay away from actions that might result in civil law suits against them or their businesses Avoid any procedures or activities that are not in favour of the company’s image. Such is the case with the standards of ethics, which make it inevitable to set a framework of rules to guide the businesses to avoid corruption when going international. Impact on Businesses: Foreign Corrupt Practices Act had significant repercussions on US companies doing businesses abroad. The frequent dilemma, as discussed above is of how to efficiently operate versus maximizing the bottom line. Companies therefore must establish a reliable policy for business ethics regardless of the fact that if they are buying coffee from Brazil or selling guns to an Asian country. And it is also up to the chairman/president or the high ranking officials such as the top management of the company to drive the same practice back to their home country, support debates and workshops on training their employees and other executives not to engage in corrupt practices while facing real-world issues. They should openly embrace good corporate governance by complying with Foreign Corrupt Practices Act. This goal can be accomplished by strictly holding violators to be accountable and responsible for any means of unethical business practice. It is said that good ethics with corruption avoidance has a direct correlation with good business and ultimately leads to enhancement in shareholders’ value in the long-term. Compliance with the FCPA is itself an additional cost for most of the businesses. This includes the cost of employing the techniques and doing the necessary staffing which cross-checks for any violations, the cost of loosing good business opportunities to other competitors who were not seriously abiding by the Act, the cost of facing a loss after having made huge investments into a given project.. Regulator & Penalties: Securities & Exchange Commission was marked to be the regulator of this Act. The Act covers investors, individuals and enterprises and therefore isn’t restricted to public companies only. It includes any of the U.S. or even foreign corporation that has a class of securities registered or that are required to file any reports under the ‘Securities and Exchange Act of 1934’. Violations of the FCPA can actually result in significant penalties and fines. The penalties may be monetary plus criminal charges such as imprisonment of the violator, i.e. all parties allegedly involved in the transaction violating the Act. Individuals violating the Act may be fined an amount up to $250,000 and/or 5 years of imprisonment. Intentional violation of the Act by companies may end up in a fine of up to an amount of $25 million plus a $5 million in criminal offense in addition to the 20 year imprisonment for the culprit individuals. Apart from the fines and imprisonment, cancellation of government licenses and barring from any government contract services comes along with all of the above. SEC, the regulatory body, has the authority to take hold of any profits that were obtained via the illegal activities that resulted into violation of the FCPA. Conclusion: FCPA is no doubt essential for today’s business environment and if followed closely can be a source of fair competition and good corporate governance. The recent activities against its violation have been significantly successful, for example the case of the Virginian Business Executive, who was allegedly involved and was uncovered by an FBI agent for violating the Act in a transaction involving arms and weapons for an African Country (France 1). However, the dilemma of Business Ethics Vs Bottom Line still needs clarification and until it is made very difficult and costly by strict penalties and laws worldwide; to violate the FCPA, businesses and individuals will continue to make a way out for their lust and greed. Works Cited David C. Weiss. The Foreign Corrupt Practices Act, SEC Disgorgement of Profits, and the Evolving International Bribery Regime. Michigan Journal of International Law. 2009. 9 Feb. 2011 www.ssrn.com George Bill. Ethics Must Be Global, Not Local. 2008. 9 Feb. 2011 www.billgeorge.com Howell, Llewellyn D. Corruption and crisis in the global economy. 1998. 9 Feb. 2011 www.bnet.com France, Angela. Virginia Business Executive Arrested in Foreign Corrupt Practices Act Bribery Case. 2010. 9 Feb. 2011 http://www.virginiabusinesslawupdate.com Margaret M. Gatti, Clive R. G. Ogrady & O. Forrest Morgan. Foreign Corrupt Practices Act. 1997. 9 Feb. 2011 http://library.findlaw.com Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Business Law Research Paper Example | Topics and Well Written Essays - 1250 words”, n.d.)
Retrieved from https://studentshare.org/family-consumer-science/1407158-business-law
(Business Law Research Paper Example | Topics and Well Written Essays - 1250 Words)
https://studentshare.org/family-consumer-science/1407158-business-law.
“Business Law Research Paper Example | Topics and Well Written Essays - 1250 Words”, n.d. https://studentshare.org/family-consumer-science/1407158-business-law.
  • Cited: 0 times

CHECK THESE SAMPLES OF Analysis of the Foreign Corrupt Practices Act

TO WHAT EXTENT CAN CORRUPTION BE BLAMED FOR UNDERDEVELOPMENT IN AFRICA, A CASE STUDY OF NIGERIA

According to Auyo (1999), corruption is the termination or demolition of a disposition or a perverted act relative to changing anything from its initial status of purity.... Although the words corruption and fraud are mostly used in referring to such practices, it is important to understand the differences amongst the two terms.... The aim of this paper is to give an analytical perspective in order to understand why African countries have been unable to develop and to understand why sub-Saharan Africa has the reputation of being the most corrupt area in the world....
26 Pages (6500 words) Dissertation

The Problem of Corruption in International Mediation

etting standards of conduct, however, does not by itself ensure that international arbitration and mediation are free of corrupt practices.... nbsp; In this regard, international conventions have established laws that indirectly identify corrupt practices and provide for enforcement techniques for corruption....
8 Pages (2000 words) Essay

Foreign Aid and Dictatorship

hellip; Despite the lack of solid empirical evidence, foreign aid improves the economic growth of a country through indirect channels, which are not evident by the analysis of direct effect of foreign aid on economic growth.... foreign Aid and Dictatorship The policy of foreign aid has been a feature of Western relations with developing and non-western countries, usually with the aim of assisting development and modernization.... foreign aid was a geopolitical and military during the Cold War, especially to countries like the US (Bealinger 2006: 4)....
6 Pages (1500 words) Research Paper

International Payments and Settlements Currency Transactions

A discussion on this issue including an assessment of the impact of the foreign corrupt practices act and the Organisation of Economic Cooperation and Development Convention forms 'Section-2' of this paper.... Utilitarian analysis of bribery serves no purpose at all since there is no ground for choosing an option that allows for bribery....
11 Pages (2750 words) Essay

Business Ethics is Not an Option

analysis leads to the conclusion that observance of business ethics is not optional.... Corporate Social Responsibility is becoming popular in the business field.... Aside from moral concerns on the part of the businessmen, various factors that translate to financial gains are driving companies to be more conscious of its treatment of its employees and to be more generous to the public....
4 Pages (1000 words) Essay

LEGAL ENVIRONMENT 4

nalysis : According to the provisions of the foreign corrupt practices act it is unlawful for any U.... Prohibited foreign trade practices by domestic concerns).... citizen / company, to bribe or to make a corrupt payment to a foreign official of any govt.... Also the person who makes or authorizes of making the payment should have a corrupt intention, and the payment must be directed to induce the recipient to misuse his official position to direct business wrongfully to the payer or to any other person....
5 Pages (1250 words) Essay

Critical thinking and application paper Ethics

ccording to John Stuart Mill (1832), rule-utilitarianism determines the rightness of an act by a unique style.... his article is pertinent to the situation of Danny Briar as it attempts to take a proactive stance in dealing with corrupt officials.... I argue that it is not right for Danny Briar to lose his job due to his expose on the corruption involving contracts for Iraq....
11 Pages (2750 words) Case Study

Legal Risks of Business Activity

On the other hand, conspiracy to hinder fair competition, according to the provisions of the foreign corrupt practices act of 1977, prevents the government from earning the right returns from taxes, since the conspiracy hinders other business performance in the market.... District Court for the Northern District of Ohio ruled that Bridgestone Corporation engaged in a conspiracy to allocate sales, rig bids and assign and maintain prices for AVP contrary to the provisions of both the Sherman Act and the foreign corrupt practices act (Department of Justice, 2014)....
2 Pages (500 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us