Foreign Corrupt Practices Act :

OECD published Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and Related Documents to prevent bribery and corruption. The aim of this convention was making the bribery of a foreign public official a crime under their laws (International Monetary Fund, OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, 2001). This document recommends to member countries that:

According to Benston (1977) an unaware public pays for government-required accounting disclosure. Sunstein (1999) claims that disclosure of information allows the federal government to control public and private conduct. Foreign Corrupt Practices Act Over the decades accounting regulations have come from various sources. The Securities and Exchange Commission as well as the Internal Revenue Service and Interstate Commerce Commission are examples of regulatory bodies that promulgate accounting regulations. A more recent example occurred during the 1970s. During the Watergate era there were a number of investigations, some of which affected American business. One of the investigations, conducted by the Securities and Exchange Commission (SEC) in 1975, revealed that 19 publiclyheld corporations had made illegal campaign contributions and that these contributions were made from cash accounts that had not been recorded on the corporation’s books. (Heldack, 1977) This prompted the SEC to launch an investigation into what were considered ―questionable payments.‖ What came out of the investigation was that many U.S. multinational corporations were making hundreds of millions of dollars in ―questionable payments‖ to foreign officials to obtain business. As a result, the Foreign Corrupt Practices Act (FCPA) was unanimously adopted by Congress in 1977. Bribery of foreign officials to obtain business for the corporation

The Foreign Corrupt Practices Act has been pursued by government agencies recently as the SEC, the FBI, and Department of Justice are cracking down on international business corruption. Companies are working harder at expanding economically in the market by doing business with individuals and other companies in foreign countries. Foreign countries are not always in compliance with US laws and regulations, causing US companies who deal with them issues with compliance on the home front. Because of these ongoing issues congress decided to introduce the Foreign Corrupt Practices Act and to prosecute foreign companies for corrupt activities within the United States. The Foreign Corrupt Practices Act is a federal law that was amended in 1977,

Bribery weakens competition and diminishes free trade which can affect companies, shareholders, and stakeholders. Jacob Franklin knowingly extended bribes to governments and contractors while knowing it was against company policy. Jacob engaged in bribery even though he knew it was wrong because he was advised that it was common practice at Richard Drilling. “In 1977, President Carter signed the Foreign Corrupt Practices Act (FCPA). The law made it illegal to bribe foreign officials. The maximum punishments for violators were set at $100,000 and 5 years in jail. Companies can be fined millions” (Bredeson, 2012, p.301). Not only was extending the bribe against company policy, it was against law and could cost Jacob and Richardson Drilling money and freedom.

Since Nixon’s corruption was serious, he must have spent a huge amount of money on illegal bargains. His corruption would also affect nation’s economy, such as the price of goods went up. It is convincible that those presidential candidates would feel so unconvinced after hearing Nixon used bribe mean to protest his reelection. The public would also fall in deep regret that they voted for Nixon to become president again after they knew what kind of president he is. To avoid resemblant corruption happen again, The Federal Election Campaign Act had been passed in 1971, and later in Congress passed several amendments to the law. The Federal Election Campaign Act set limits on campaign contributions, provided partial federal funding for presidential campaigns, created the Federal Election Commission to enforce these laws. It placed strict limits on House, Senate, and presidential candidates:$25000 for House campaigns;$35000 for Senate campaigns; and $50000 for presidential Campaigns. It limited independent expenditures that is individuals or groups could give to campaigns—— to $1000 per candidate (U.S. Congress. Federal). With enaction of this act, those large contributors could be eliminated, and president’s expenditures could be restricted. The Ethics in Government Act was passed in 1978. It required financial disclosure forms from public officials, restricted government officials’ ability to lobby ( Finney ). The Government in the Sunshine Act

an agent of the company offered a bribe and it is shown that the company failed to create and maintain a corporate culture that required compliance with the laws against bribing foreign public officials.

This paper discusses the lack of transparency in the Foreign Corrupt Practices Act’s accounting provisions. Transparency, especially for public companies, is essential in reporting financial information. Users rely on company financial information to make investment and other financial decisions. Congress passed the Foreign Corrupt Practices Act in 1977 following the Watergate scandal. The act addressed a growing trend among companies to hide their illegal acts of bribery by not accurately reporting transactions in their books. The act intended to enhance the value of the auditing process over financial information (U.S. Department of Justice et al., 2012).

Bribery has become a common term in the corporate world, specifically when international business deals are discussed. Until 1977, it was legal in the United States to bribe foreign officials in order to receive preference or a better business deal. But, the passing of the Foreign Corruption Practices Act of 1977 and its subsequent amendments made it a criminal act for any organization within the U.S. or foreign organization doing business in the United States, to practice any form of bribery and also required the President of the United States to engage other nations in creating similar laws. Since, many nations have chosen to band together against bribery and have formed the Organization for Economic Cooperation and Development that ultimately created the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. This now makes it illegal to practice bribery in any of the countries that are part of this organization. While the United States and the world has come a long way in stamping out bribery, there are still some organizations that think they can get away with it but end up with massive fines and prison time. But, with so many nations banding together, one can still be hopeful for a world in which we can do business ethically with other ethical businesses around the world.

(USDOJ, Fpca, Web. 2011). As expressed on the US Bureau of Equity site, "the US Congress got to be distinctly worried that American organizations were working off guard contrasted with remote organizations who routinely paid fixes and, in a few nations, were allowed to deduct the cost of such rewards as operational expense on their charges". ("Lay Person's Guide" Foreign Corrupt Practice. Antibribery Provisions. Justice.gov.

The Foreign Corrupt Practices Act changes the way business is done in the global market because it levels the playing field for other competitors who are vying to make their mark in other developing countries. It also affects the way other countries conduct business as well. Since the introduction of this act, many countries have adopted similar laws as well. In 1997, the Organization for Economic Cooperation and Development signed a treaty that made bribery of foreign officials a serious crime. This treaty improves the way business is conducted globally and also levels the playing field for US businesspersons.

The Foreign Corrupt Practices Act (FCPA) governs the conduct of business operations and activities by American companies engaged in international business (Mundial, 2013). Through the statutory provisions of the FCPA, companies are prohibited from soliciting unfair advantage in their activities by paying bribes or offering to pay them directly or

The punishment prescribed by the statute is a fine for both individuals and companies. For individuals, the criminal penalties may include up to $250,000 in fines per violation and up to 5 years in prison and civil penalties of up to $16,000 per violation. For companies, the criminal penalties may include a fine up to $2 million per violation and civil penalties up to $16, 000 per violation. Moreover, employees are not permitted to pay the fines of their employees or agents. Nevertheless, the Alternative Fines Act allows for fines up to twice the amount of any benefit obtained by the defendant who made the corrupt payment, and the Federal Sentencing Guidelines are used to decipher the appropriate fine amounts. Furthermore, companies found liable under the FCPSA may also face suspension or be permanently prevented from contracting with the federal government and in some cases, lose export privileges. An individual could be imprisoned for ten years for a violation, and both individuals and the company face unlimited fines for violating FCPA provisions.

In 1977, Congress enacted the Foreign Corrupt Practice Act (FCPA). It prohibits any form of bribery conducted by American companies (and foreign companies publicly traded on a U.S. exchange) abroad. While the FCPA does not put those U.S. firms at a competitive disadvantage as most of the opponents of the act argue, it is not the best way to combat corruption because of its vagueness, neglect of cultural differences, and intrusiveness to other countries’ sovereignty.

A payment made by a citizen to a government official for expedite the process of government facilities for who is entitled called facilitation payment in U.S. but in some other countries these payments called bribe. These payments are extra burden on companies or individuals. Both payments are not good as per ethics. This fee only applies when the payment if made to speed up the government’s action. There are several different classifications that can be considered a facilitation payment and these vary in many ways. Section 162 C of FCPA act defined the bribe and facilitation payments. If a company made a payment to a foreign government official or employees which is unlawful under sec 162 c of FCPA Act called bribe. Bribes can be paid by money or other things in place of money for influencing government decision. The payment of bribe is considered unlawful under FCPA act, so it is not allowed as deduction under income tax as expenses. A payment made to Government official to expedite the process of government facilities for whose otherwise company or

A Current Guide to Understanding the Foreign Corrupt Practices Act (FCPA) and Foreign Anti-Corruption Legislation regarding the Canadian, British, and Chinese Markets