Premium Essay

The Foreign Corrupt Practice Act

In: Other Topics

Submitted By Meke123
Words 1128
Pages 5
The Foreign Corrupt Practice Act


The paper explores the focus on the Foreign Corrupt Practice Act and its correlation with other governmental firms. In the United States, foreign transactions are closely viewed by the government to insure that no funds are being transferred to country foreign officials for business purposes. To avoid this type of activity, the Foreign Corrupt Practices Act was implemented. In this paper you will read about the FCPA as a whole as well as how it was implemented, by whom it is enforced, the violations, amongst others.

Foreign Corrupt Practice Act

There are many companies in the United States who conduct business with firms all over the world. This is the way the world is growing with other markets to be profitable and sustain their companies afloat. However, not all the companies have proper business ethics which can be an issue when doing business between the US and foreign companies who do not have any limits to their business laws. “For instance, in many foreign countries side payments to government officials for an exchange of a favorable business contract are not unusual.” (Hollowell &Miller, 2011,pg. 22). Due to the extensive amounts of these types of activity, congress passed the Foreign Corrupt Practice Act (FCPA) which prohibits any US business person from bribery to foreign officials for business purposes.
The FCPA is composed of two provisions which are, first, the anti- bribery provision that prohibits corrupt payments to foreign officials to obtain business enforced by the Department of Justice and the second provision is a record keeping provision that mandates accurate record keeping of internal controls enforced by the Securities and Exchange Commission (SEC). This also applies to foreign firms and persons who take any act in continuance of such a corrupt...

Similar Documents

Premium Essay

Foreign Corrupt Practices Act

...FCPA PAPER The Foreign Corrupt Practices Act of 1977 (FCPA) evolved from investigations by the Office of the Special Prosecutor that provided evidence of illegal acts perpetrated by U.S. firms in foreign lands. More than 400 U.S. companies admitted to making questionable payments to various foreign governments and political parties as part of an amnesty program (U.S. Department of Justice Given the environment of the 1970s and the proliferation of white-collar crimes (e.g., insider trading, bribery, false financial statements, etc.), particularly the payments made to foreign officials by corporations, Congress felt obligated to introduce legislation that led to the act. Congress's objective was to restore confidence in the manner U.S. companies’ transacted business. The FCPA is unique. Throughout history, governments have had laws making it illegal for governmental officials to take a bribe. One basic provision of the FCPA is that it prohibits U.S. partnerships, companies, and organizations from not only giving payments but also offering or authorizing payments to foreign officials or political parties with the objective of encouraging or assuring business relationships. There are two types of bribery provisions. The first prohibits any bribes made directly by the U.S. company. The second prohibits any organization from knowingly arranging for a bribe through an intermediary. Many thought that the FCPA would place U.S. companies at a disadvantage in......

Words: 1222 - Pages: 5

Free Essay

The Foreign Corrupt Practices Act

...The Foreign Corrupt Practices Act The Foreign Corrupt Practices Act (FCPA) of 1977 and the corresponding amendments set forth by the Omnibus Trade and Competitiveness Act of 1988 and Amendments of 1998 have tremendous ramifications for U.S. multinational companies at large, their subsidiaries, and foreign partners.  While the main purpose of the original policy was to make it “unlawful to bribe foreign government officials to obtain or retain business”, the many statutes, their exceptions, and enforcement have gone through several iterations and most recently expanded jurisdiction of the law to non-U.S. territories.  In bribery cases, several conditions involving the perpetrator, intent of the act, and the recipient of the bribe, must be met by the “corrupt act” for a breach to be founded. Similar stipulations apply to illegal payments made to third parties, specifically if such payments are used to filter or launder monetary bribes for a government official. The penalties levied if such conditions are proven, however, serve as compelling deterrents against fraudulent acts in global business practices (US Dept. of Justice, Lay-Person’s Guide). The FCPA was passed unanimously in both chambers of Congress and subsequently signed into law by President Jimmy Carter in 1977. Many initiatives thenceforward have been undertaken to broaden global cognizance of its provisions for US multinational corporations and to increase compliance in international operations.  To......

Words: 648 - Pages: 3

Free Essay

Baker Hughes: Foreign Corrupt Practices Act Study Questions

...economy and a loss of direct foreign investment in countries where participation in corruption is how business is done. Politicians and government officials worldwide receive bribes valued between $20 billion and $40 billion annually. Companies that participate in bribing can face reputational damage and loss of investors. According to the World Bank, 0.5% of GDP is lost due to corruption each year. Corruption makes the poor poorer. In terms of social impact, corruption causes the rich to become richer and the poor to become poorer as a general trend. This causes an increase in social divisions and conflict between the socioeconomic groups. Corruption also causes division among various ethnic groups as people become bitter, suspicious, jealous and distrusting. 2. Is the “optimal” amount of bribery payments for a country equal to zero? Yes, the optimal amount of bribery payments for a country is equal to zero. Since bribery and corruption have long term negative impacts, and optimal means the most favorable, it is the most favorable option for a country to have zero bribery payments. By having zero bribery payments, a country will in theory not be subject to any of the negative impacts of bribery. 3. Should the board of directors be actively involved in policing foreign corrupt practices or is this a management issue? It is also the responsibility of the board of directors to be involved in policing foreign corrupt practices. If a company......

Words: 1031 - Pages: 5

Premium Essay

Foreign Corrupt Practice Act

...Introduction Team D’s assignment for week 6 was to read four articles and discuss the impact on business of meeting the Foreign Corrupt Practice Act (FCPA). As will be discovered from the discussion that ensues, businesses are having difficulties meeting the provisions of the Act. These difficulties are not always under the corporation’s complete control, yet they are issues that the corporations must contend with if they are to comply with the Foreign Corrupt Practice Act. In today’s growing global economy it is important for corporations to not only accept the FCPA, but embrace it and set a standard that can thrive towards successful objectives. Supplier Codes Can Help Handle Third-Party Risks In reviewing the article “Supplier Codes Can Help Handle Third-Party Risks” by Susan Kavanagh I discovered one problem that companies have meeting the Foreign Corrupt Practice Act (FCPA). Recent cases show that although corporations are investing more time and money into their ethics and compliance programs, they have not extended the same effort to abate third-party risks (Kavanagh, 2010). The article goes on to say that a corporation may have an outstanding program to meet the standards of the FCPA; however corporations are not passing the same standards of adherence down to their suppliers or third-party partners. Compliance across the board is mandatory to meet the FCPA. This includes the corporate level as well as the supply chain to make the final product. The......

Words: 504 - Pages: 3

Premium Essay

Foreign Corrup Practices Act

...This Foreign Corrupt Practices Act was established in 1977. This act is a United States federal law; it is widely known primarily for two of its main requirements. The first one called Trade Act, addresses accounting transparency requirements that were under the Act of Securities Exchange of 1934. The other one concerns bribery of foreign officials. The Trade Act intended for the Attorney General to give guidance concerning the branch of justice's enforcement guidelines with respect to the Act to possible exporters and small businesses that are not able to obtain specialized counsel on facts related to the foreign corrupt practices. The United States of American firms in search of doing business in foreign markets must be conversant with the Foreign Corrupt Process Act since it tackles corrupt paying of money to foreign officials for the principle of obtaining or keeping business. Adding up, other statutes such as, the wire fraud and mail statutes accept the federal prosecution of infringement of state commercial bribery statutes. As a result of Security and Exchange Commission investigations in the early 1970's, over 300 United States of American companies accepted doing doubtful or unlawful paying in excess of millions of United States dollars to foreign government officials, ......

Words: 3049 - Pages: 13

Premium Essay

International Business Ethics

...nations hold entirely different standards of both law and ethics. In America, business ethics can be employed because, in general, the disagreement between what actions are ethical and what actions are unethical in a single culture will be lesser than the disagreement between two entirely different cultures with different values and cultural practices. As a result, one business might believe it is acting perfectly in accordance with international business ethics, while another would view that first business as acting in a completely unethical fashion. Many businesses adopt the policies of cultural relativism, in which they attempt to take on the business ethics exhibited by the nation in which the business is working a particular deal, as opposed to attempting to carry any of their own business ethics across cultural boundaries. However, this practice is not without its own flaws. For more information on the basic issues and problems facing any attempts to form coherent international business ethics codes, click the link. One of the biggest problems facing any international business code of ethics is that standards for employment practices are not constant...

Words: 1192 - Pages: 5

Free Essay

Assignment 1 Res 351

...In (FCPA. the One-Stop Resource on the Foreign Corrupt Practices Act) the court case involving the “U.S. v. Lockheed (1994), the corporation and two of its executives were accused by the U.S. Department of Justice (DOJ) of paying a US $ one million bribe to a member of the Egyptian parliament in order to secure sale of aircraft to the Egyptian military.” Lockheed also submitted fraudulent statements to the Defense Security Assistance about the bribes This was a clear case of corruption in business practices that continue to go on today. Many large corporations have gotten away with this type of practice time and time again. I am also under the assumption this is not the first time Lockheed has consorted with other businesses by unethical means. This practice states; corruption is an integral part of business deemed to be normal practices. Lockheed plead guilty paying over $24 million in fines and penalties. The fines were a result of Lockheed violating the Foreign Corrupt Practices Act (FCPA). The Foreign Corrupt Practices Act was authored by Senator William Proxmire which was created to prevent U.S. corporations from using bribes to gain sales outside of the country (Professor M. R. Kumara Swamy, 2011). This act was enacted to eliminate…(Professor M. R. Kumara Swamy, 2011) “government corruption, subsidies and kickbacks.” The act has been over looked by U.S. corporations since it was established since 1977 and 1988 versions. What brought the government to...

Words: 572 - Pages: 3

Premium Essay

Business Law Reflection

...2012 Mr. James Blevins Learning Team Reflection This learning team reflection will discuss the compliance issues associated with the Foreign Corrupt Practice Act of 1977 (FCPA). What is Foreign Corrupt Practice Act? For those who don’t know might ask, well, the Foreign Corrupt Practice Act of 1977 which was introduced in the U.S Senate as S.303 by Mr. William Proxmire (D.W) and signed into law by president Jimmy Carter on December 19, 1977 is a United States Federal Law known primarily for two of its main provisions. One that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another one concerning bribery of foreign officials. The anti-bribery provision of the FCPA prohibits any person from making use of interstate commerce corruptly, in furtherance of an offer or payment of anything of value to a foreign official, Foreign Political Party, or Candidate for political office, for the purpose of influencing any act of that foreign official in violation of the duty of that of that official, or to secure any improper advantage in order to obtain or retain business. ("Wikipedia") The “Foreign Corrupt Practice Act” protects “American Values” it shields us from the rampant corrupt practices around the world. It holds us to the highest standards of ethics. As the U.S corporations venture into foreign markets they must keep in mind that what is against the law in U.S such as Bribery could be accepted or even are part of their......

Words: 704 - Pages: 3

Premium Essay

Precision Parts do business in Germany, it is important to understand their business ethics and laws. By understanding the law at hand, it would give Precision Part Inc. a better understanding on how Germany conduct business and also to make sure the company is ethical. A few international countries believe in corruption. Corruption can consist of bribery and nepotism. Bribery is more common in underdeveloped countries that are looking for additional income to bring in. Bribes are expected in many countries, the United States’ 1977 Foreign Corrupt Practices Act prohibits payments made to foreign government officials with the aim of gaining or maintaining business (Here Comes the Bribe). The Foreign Corrupt Practices Act was updated in 1998 after bribery was banned from Germany. Now the Foreign Corrupt Practices Act applies to foreign firms and persons who cause an act in making such a corrupt payment within the United States territory (Foreign Corrupt Practices Act). Bribery is another way of saying extorting money from someone. Bribery is when money or something value is promised to, given to, or taken form an individual or company in attempt to sway someone decisions. Nepotism is more of a government corruption. Government will use their powers for dishonest gains or illegal means. German engineering conglomerate Siemens, rocked by the worst bribery scandal in the country’s history, they won a court ruling reversing a $56 million fine against the Munich-based company (In......

Words: 1123 - Pages: 5

Premium Essay

Ethical Governance

...“Ethical Governance: SOX & FCPA” In this paper we will attempt to define the importance of a the, Sarbanes-Oxley and Foreign Corrupt Practices Act. The Foreign Corrupt Practices Act is a United States federal law known primarily for two purposes, one that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another concerning bribery and government officials. The primary purpose of the Foreign Corrupt Practices Act (FCPA) was to prevent the bribery of foreign officials in order to obtain business. “official statistics show that 400 American firms have collectively paid $300 million in bribes and other questionable payments to foreign governments, political parties and also directly to the accounts of government officials” ("Fcpa"). Unfortunately, the improvement in internal control systems was not enough to prevent added problems. In the late 1990s and early 2000s the media was full of news of accounting frauds and problems at companies such as Enron, Xerox, WorldCom, Global Crossing, and others. While Enron made $62 billion in assets, declared bankruptcy (Romney, Steinbart 201-202). In response to these problems, Congress passed the Sarbanes-Oxley Act of 2002 (SOX). SOX was intended to prevent financial statement fraud, make financial reports transparent, protect investors, and punish executives who perpetrate fraud (Romney, Steinbart). Many people believe that SOX is the most important and influential......

Words: 380 - Pages: 2

Free Essay

Accounting Repsonabity

...reference to discuss the regulations of the Oxley Act of 202 and the Securities Act of 1933 and what accountants can do to prevent from breaking these regulations. This article goes in depth about the regulations and how they are enforced. 2. Bank of America Corporation Other Release No.: 34-73243 I am going to use this article to show laws that were broken relating to keeping books and records in reasonable detail. 3. Beatty, J. F., Samuelson, S. S., & Bredeson, D. M. (2013). Introduction to Business Law. Mason, OH: Cengage Learning. I am going to use this source to discuss the responsibly of each client. 4. Chaffee, E. C. (2014). LEAD ARTICLES EDITION: Current Trends in International Trade and Their Impact on Multinational Business: ARTICLE: From Legalized Business Ethics to International Trade Regulation: The Role of the Foreign Corrupt Practices Act and Other Transnational Anti-Bribery Regulations in Fighting Corruption in International Trade. Mercer Law Review, 65701. I will use this reference to discuss the regulations of the Foreign Corrupt Practices Act of 1977 and how they were broken by accountants. This article goes in depth about the regulations and how they are enforced and lwas that have been broken by ceratin accountants. 5. Holt, M. F. (2008). The Sarbanes-Oxley Act : Costs, Benefits and Business Impact. Amsterdam: CIMA This article discuss the benefits of following the regulations of the Oxley Act of 2002. 6. Ford, C. (2014).......

Words: 527 - Pages: 3

Premium Essay

Week Six Team Reflection It is important that the laws are understood and not confused with others. There are global practices that have been put in place as well to help protect businesses that conduct business globally. The Foreign Corrupt Practice Act of the 1970’s is just an example of the United States law that was put in place to protect companies. Team C elaborates on these practices through the review of several articles. Future of Anticorruption Laws Stricter laws against corruption in international business transactions gained momentum during 2010. In reaction to fraudulent practices abroad, the United States authorities collected larger fines and imposed stiffer penalties in concordance with the Foreign Corrupt Practices Act (Morley, Hadley, & Saulnier, 2011). FCPA violations are a new law enforcement priority and are concurrent with the emphasis on fighting global terrorism. In addition, the United Kingdom revised their anti-bribery laws to impose greater regulations than the FCPA (Morley, et al. 2011). In response to the increase in number of cases, the United States adopted more aggressive enforcement measures, expansive jurisdiction, and bounty payments to whistle-blowers (Morley, et al. 2011). Those who provide independent information on those who break the law receive from 10-30% of the money collected from those individuals. In the United Kingdom, the new Bribery Act provides stiffer penalties and fines as compared to the FCPA. Broad jurisdiction, strict corporate......

Words: 1231 - Pages: 5

Premium Essay

Critical Analysis

...Jessica Yarington Critical Analysis: Bribery and its Effect on Business Practices BMAL 560-D06 Dr. Henry Critical Analysis Critical Analysis Topic: Bribery and it’s Effect on Business Practices PRINCIPLE: * Bribery refers to “the offering, giving, soliciting, or receiving of any item of value as a means of influencing the actions of an individual holding a public or legal duty” (Bribery, 2015). * Economist say that bribery negatively impacts economic growth because it encourages rent seeking behavior (Bribery, 2015). * Rent seeking behavior refers to an “individual’s or corporation’s attempt to illicitly influence the open market in order to provide that individual or corporation with a disproportionate amount of wealth” (Bribery, 2015). * The United Nations reported that corruption costs governments about $1.6 trillion dollars every year. * Economists estimated, based on a poll done in 86 countries, that 1 in every 4 businesspersons worldwide, paid a bribe in the past year (Lawrence & Weber, 2014). * Legislation has been established in an attempt to combat bribery. * The US Foreign Corrupt Practices Act (FCPA) is considered to have the widest jurisdictional reach, being aggressively enforced, both nationally and worldwide (Ernst & Young, 2013). PRACTICE: * Bribery is found in almost all sectors of the global market (Lawrence & Weber, 2014). * An analysis of Transparency International’s......

Words: 2795 - Pages: 12

Premium Essay

Baker Hughes

...FOREIGN CORRUPT PRACTICES ACT 1. Discuss the economic and social impact of brides and other similar payments in emerging economies. Corruption can take many forms and can be found in many countries, but mainly in the emerging ones. The main form of corruption is the bribery in the form of payments demanded by the government or ministry officials in exchange for a favor (granting a service, awarding a business).Corruption affects all the businesses that interfere with the government, but studies have shown that certain industries are more exposed to it. These industries are construction, airline manufacturing, power plants, and oil and gas production. In emerging economies the impact of bribes and other similar payments can affect the economic development of the countries. It can affect the decision made by those in power; the quality of these decisions and can also affect the foreign investments by reducing the inflow of foreign direct investments. Once a company decides to make these payments it will damage its public image and it will make it very difficult for the company to refuse these payments in the future. In countries with a high level of corruption people lose their trust in the government, in the efficiency of the legal institutions. There is a strong relationship between the quality of the state run institutions and public services and the people. The stronger tis relationship is the lower the risk of corruption will be. 2. Is the “optimal” amount of......

Words: 1039 - Pages: 5

Premium Essay

Mkt 421’s name, and institution name) Environmental Factors Paper Ikea, one of the largest big box chain stores in the United States and abroad is affected by both global and domestic environmental factors. These factors, along with changes in technology, all impact and shape the organization and affect marketing decisions. This paper will identify environmental factors that shape the organization and impact marketing decisions. It will discuss the influence of global economic interdependence and the effect on trade practices and agreements. The paper will discuss the importance of demographics and physical infrastructure, analyzes cultural differences, and examines the importance of social responsibility. Finally, the paper will analyze the effect of political systems and its influence on international relations, the influence of the Foreign Corrupt Practices Act of 1977, and the influence of local, national and international legislation on Ikea’s business practices. There are many macro-economic factors that impact and shape marketing decisions at Ikea. These factors include economic, environmental, political, social, technological, legal and cultural (Unknown, 2007). These factors influence the decisions the organization makes, how it operates nationally and globally and how it will adjust to the factors to ensure the business will continue to operate smoothly. Politically, Ikea is impacted by local government and what products the local government believes that......

Words: 1226 - Pages: 5