The Foreign Corrupt Practices Act, or FCPA, is an act that was put into place in 1977 to control the dealings US persons or entities would have with foreign officials. The act make it unlawful for any US party to pay, whether it is directly or indirectly, with money or anything else of value, to a foreign official in exchange for obtaining or retaining a business (FCPA Enforcement). In addition to this, any company that trades securities in the US is required to file periodic report to the Securities and Exchange Commission to have record of any business transactions in order to maintain effective internal controls (Department of Justice).
In the US, most contracts are formed privately allowing entities to control their business effectively preventing the problem the FCPA tries to resolve. No party is going to take a bribe that is not in their benefit and most of entities do not have jurisdiction over the contracts of others to be able to take any control. In many other countries, however, it is quite the opposite. It is the government that controls the contracts for major construction and manufacturing. Because of this, many entities in these countries will pay or bribe officials in order to get business contracts in their favor. Since this type of policy also applies to foreign entities doing business in these countries, many US businesses would follow this practice even though in the US this was not the norm (Miller & Hollowell, 2011, p. 22). For this reason the FCPA was created. It allowed the US to keep entities from using foreign business as a way to pay their way into beneficial contracts which they could not in the US. It also prevents foreign entities from having this advantage if doing business in the US.
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...mber 15, 2011, from FindLaw: http://library.findlaw.com/1997/Jan/1/126234.html
Miller, R. L., & Hollowell, W. E. (2011). Business Law: Text & Exercises 6th Edition. In R. L. Miller, & W. E. Hollowell, Business Law: Text & Exercises 6th Edition (pp. 22-23). Mason: South-Western Cengage Learning.
Smith, Gambrell& Russell, LLP. (n.d.). The Foreign Corrupt Practices Act. Retrieved September 15, 2011, from Smith, Gambrell& Russell, LLP: http://www.sgrlaw.com/resources/trust_the_leaders/leaders_issues/ttl15/836/
Stackhouse, D. (1993, April 21). Retrieved September 13, 2011, from IceMiller LLP: http://www.icemiller.com/publication_detail/id/45/index.aspx
Steskal, C. J. (2008, January 29). United States: The Foreign Corrupt Practices Act: The Next Corporate Scandal? Retrieved September 16, 2011, from mondaq: http://www.mondaq.com/unitedstates/article.asp?articleid=56616
The cons to the argument for saying the Foreign Corrupt Practices Act is obsolete is discussed in the article With Wal-Mart Claims, Greater Attention on a Law by Charlie Savage. In this article Charlie Savage argues that the FCPA has always been a useful tool in stopping corruption but in recent years with companies becoming more globalized other countries gradually adopted similar laws, the United States has started to enforce it more strictly. The dollar amount of fines imposed by the Justice Department and the Securities and Exchange Commission has increased even more, including a record-setting $800 million paid by Siemens in 2008. Enforcement under the act has soared, from just two enforcement actions in 2004 to 48 in 2010. There are currently at least 100 open investigations, specialists estimate.
The Sarbanes-Oxley Act was drafted to encourage and protect whistleblowers from retaliation after the fraud scandal that cause the collapse of Enron in 2001. In a 2010 Senate Report found that “external auditors detected only 4.1 percent of uncovered fraud schemes, “whistleblower tips detected 54.1% of uncovered fraud schemes in public companies” and were thirteen times more effective than external audits” (Turpan, 2016). Whistleblowers serve an important service to the public and are more effective than external audits. The CFAA has been used to by employers to retaliate against employees who act as informants for agencies like Internal Revenue Service or Security Exchange Commission to expose fraud. There employees, not to their financial gain, gather information as evidence of fraud by the company. With a broad interpretation of CFAA, the employee would "exceed their authority" and was "unauthorized" to access the information, therefore allowing the company to hide their illegal
Las Vegas Sands, an American casino and resort located in Nevada, has to pay $9 million in a penalty fine for neglecting to appropriately authorize and document millions of dollars paid overseas. After a six-year investigation by the Securities and Exchange Commission, and with the aid of the United States Foreign Corrupt Practices Act, they provide no evidence of corruption or bribery of foreign government officials by the company; which, is the main concern of the United States Foreign Corrupt Practices Act. Nonetheless, Sands is required to hire an independent consultant for business in China and Macau, were the majority of the money was sent, a settlement put in place by the SEC.
Webb, P. (2005). The United Nations Convention Against Corruption: Global achievement or missed opportunity? Journal of International Economic Law, 8(1), 191-229.
The International Anti-Bribery and Fair Competition Act amends the Securities and Exchange Act of 1934 and the Foreign Corrupt Practices Act of 1977. The Securities Exchange Act is a United States law which regulates the trading of securities in the secondary market. The secondary market involves sales that take place after a security is originally offered by an issuer which is typically a company (Sarkar). The Foreign Corrupt Practices Act is a United States law which prohibits paying bribes to foreign officials to retain or obtain business. It also requires companies to retain accurate records and books. Companies are also required to implement a system of internal controls which provides reasonable assurances that transactions are executed and assets are accessed and accounted for in accordance with management's authorization (U.S. Securities and Exchange Commission). The Convention on Combating Bribery of Foreign Public...
Sabino, Anthony Michael, and Michael A. Sabino. "From Chiarella to Cuban: The Continuing Evolution of the Law of Insider Trading." 2011.Web.
This was the question asked in the case Mathews v. United States in 1988. The defendant, an employee of the Small Business Administration (SBA), was the contact for James DeShazer, the president of a company, which participated in the SBA (“Mathews v. United States”). DeShazer believed that he was not being provided with all of the benefits of the program, so he worked together with the FBI to request a loan from the defendant, attached to a bribe. The defendant agreed to these conditions and met up with DeShazer to exchange the money. The defendant was immediately arrested on a federal offense for accepting a bribe in exchange for an official act (“Mathews v. United States”). The defendant asked for an entrapment defense but the Court struck down his motion because the defendant would not agree to all the elements, and the Judged ruled that the jury would not hear an instruction of
The major provision to the FECA that resulted from the misuse of money and Watergate scandal is the prohibition of donations directly from corporations, labor organizations, and national banks. There were also prohibitions against donations from government contractors, foreign nationals, ca...
Often times, Americans do not realize the corruption that surrounds them in their nation. Capitalism is an economic and political system in which the country’s trade and industry is controlled by private owners for profit, rather than by the state. Business owners, CEO’s, corporations, and large businesses have the propensity of taking extreme advantage of the power capitalism brings. For decades companies and corporations have been taking unexplainable benefit of the power they have. Capitalism in the Unites States leads to corruption.
Domestic Surveillance Citizens feeling protected in their own nation is a crucial factor for the development and advancement of that nation. The United States’ government has been able to provide this service for a small tax and for the most part it is money well spent. Due to events leading up to the terrifying attacks on September 11, 2001 and following these attacks, the Unites States’ government has begun enacting certain laws and regulations that ensure the safety of its citizens. From the Foreign Intelligence Surveillance Act (FISA) of 1978 to the most recent National Security Agency scandal, the government has attempted and for the most part succeeded in keeping domestic safety under control. Making sure that the balance between obtaining enough intelligence to protect the safety of the nation and the preservation of basic human rights is not extremely skewed, Congress has set forth requisites in FISA which aim to balance the conflicting goals of privacy and security; but the timeline preceding this act has been anything but honorable for the United States government.
While some of this bribery can simply expedite decisions and actions, other situations may involve a distortion of business outcomes. Meanwhile, government officials in positions to alter the firm’s overall profitability may receive substantial payments. Funds that rightfully belong to the public may be diverted into private hands. Firms that would have paid fees to the government may be able to reduce their financial obligations. Corruption distorts free market outcomes, resulting in business and government decisions that reduce efficiency and so reduce a nation’s aggregate production. Some investors may reject potential business dealings in certain cultures because of the presence of corruption. Recent years have witnessed global attempts to reduce corruption, and many nations now treat corruption as a crime. In this context, management encounters issues that challenge ethical positions and that involve risks of legal prosecution, as well as impacting potential
Bribery is wrong, and it would be almost instinctive to point at the benefits of impartially functioning public servants and incorrupt corporations to our democratic society as justification. However, in this imperfect world where bribery is rife in varying degrees, is it possible to express this notion convincingly? Certainly 'because the UK Bribery Act says so' is far less persuasive to a council planning office in Shanghai than in London, and indeed in compliance with section 7 of the Bribery Act 2010 which relates to commercial offences, it is essential that this question is engaged with on a corporate scale and without assertion through dogma. Accordingly, this essay will argue that elements wrong with bribery are inclusive of both moral and economic considerations. Moreover, in conjunction with international mandates, advent of aggressive legislation such as that of the UK Bribery Act 2010 is representative of global efforts to eliminate bribery. Hence, it follows that bribery can never be considered a normal part of business because it is economically unsustainable in the long term.
[7] Cavendish Lawcards Series (2002) Company Law (3rd edn), p.15 [8] [1976] 3 All ER 462, CA. [9] Griffin, S. (1996) Company Law Fundamental Principles (2nd edn), p.19 [10] [1990] Ch 433. [11] Lecture notes [12] Lecture notes [13] [1939] 4 All ER 116.
The existence of bribery and unethical behavior is rampant in the world market and may not change overnight. The question of bribery has been distilled in business literature as a question of ethics. In this situation at the airport with the customs officer, it is important to distinguish between business ethics and personal ethics. In a business ethics situation, the Foreign Corruption Practices Act would prohibit offering any bribe to the custom office – for example to free a shipment of goods that was lost in red tape (Pitman & Sanford, 2006). Most companies also have policies against bribery as well. In this situation, however the main issue at hand is that of personal ethics. When in a situation where your company is unknown and there is no business being conducted, normal business ethics and laws (including FCPA) do not apply only personal ethical standards.
Corruption is a cancer that spreads rapidly all over the body. It’s a big hurdle in the prosperity of the nations. Due to concrete measures in Australia, Canada and few European countries corruption has dropped extensively, nevertheless in developing and underdeveloped countries (especially Afghanistan and Somalia) it is still a critical problem. According to the Global Corruption Barometer 2013 released by Transparency international, a worldwide survey conducted with 114,000 people that analyze bribery and political corruption in 107 countries. It was found in the report that, bribery and corruption are widespread across both developed and underdeveloped countries. More than 50 percent of the respondents from survey said that the corruption had worsened in the recent past, and 27 percent of them admitted to offering bribes in order to get their work done in public services and institutions (Wills 2013).