Baker Hughes: Foreign Corrupt Practices Act Study Questions

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1. Describe the economic and social impact of bribes and other similar payments in emerging economics. In emerging economies, bribes and other similar payments have a negative impact. Such corruption, although appearing to provide short term growth, will not turn into long term growth. Corruption reduces the efficiencies of the operations of the market 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…show more content…
Indirectly being involved is still a foreign corrupt practice. 6. Evaluate whether the changes in Exhibits 4 and 5 are likely to stop future foreign corrupt practices at Baker Hughes. Exhibits 4 and 5 are likely to help stop future foreign corrupt practices. To have a set of rules and expectations such as in Exhibit 4, the due diligence procedures, helps by leaving a paper trail. It is important to document the process of hiring a new agent, to make sure that you are complying with the FCPA. Exhibit 5 is also helpful because it is a reference point for anyone who may not be familiar with corruption in international business. To have a set of red flags that can be referenced, it can reduce employees just looking the other way and claiming they were not aware of the potential for corruption during a business deal. While neither of these will stop every occurrence of corrupt practices, having them in place will cause employees to think twice about engaging in such practices. If there is a standard for everyone to follow, it will also be easier to catch those that still decide to intentionally engage in foreign corrupt practices because they will be unable to say they did not know what was happening. 7. Discuss how the compliance and governance changes are likely to impact the future profits and shareholder value at Baker Hughes. Compliance and governance changes will be likely to increase future profits and shareholder value at

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