The Foreign Corrupt Practices Act

In today’s ever changing and competitive modern world of business, it is critical for the companies to have activities internationally. In order to prohibit frauds and illegal activities, several acts and documents have been elaborated. One of the documents is Foreign Corrupt Practices Act that has been enacted in the 1970’s, as a result of SEC investigation of several U.S. companies that made illegal payments to foreign governmental officials, politicians, and political parties (Barnes 73). The FCPA had a critical impact on the way U.S. firms do business. Companies that did not comply with FCPA have been subject of criminal and civil enforcement actions that later resulted in huge fines and sentences for

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,

Many companies are trying to expand economically in the market by doing business with an individual or another company in foreign countries. These businesses are engaging in into using improper ways of payments that are leading to secret bribes to the foreign public officials. Foreign countries are not always in compliance with the laws and they tend not to follow them. Having these problems with the US and all the millions of dollars that have been passed they wanted to take a more affirmative approach and be able to correct the problem. That is when congress decided to introduce the Foreign Corrupt Practices Act to prosecute foreign companies for corrupt payments within the United States. The Foreign Corrupt Practices Act is a federal

During the years 2001 through 2005 According to the information and plea document, three Miami-Dade County telecommunications companies executed a series of contracts with Telecommunications D’Haiti that allowed the companies’ customers to place telephone calls to Haiti. Joel Esquenazi, an executive of one of the companies, was charged with making illegal payments to officials at Telecommunications D’Haiti. In exchange, the foreign officials presented business advantages on the Miami-Dade County companies, including issuing preferred telecommunication rates the number of minutes for which payments was owed, and giving a variety of credit to owed sums. A shell company, owed by alleged co-conspirator Juan Diaz, and co-defendant Marguerite

While reading this case analysis, The Foreign Corrupt Practices Act came into discussion as an underlying factor in Weihardt’s decision. The Foreign Corrupt Practices Act was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. This practice applies to Weinhardt in the fact that he was given the opportunity to give Lee a bribe to obtain Lees’ business.

Author Scott Nette clearly explains that in July 2007, Anthony Tesvich, Melissa Tesvich, James P. Robinson and Ronald K. Jonston was Investigated, charged and convicted on the Foreign Corrupt Act. “The Foreign Corrupt Act States that it is illegal for an US person, entity and certain applicable foreign entity to make and/or accept bribes or offer any inducement for the purpose of obtaining or retaining business with an US firm.” – Scott Nette

The Hong Kong office of Salomon Brothers, a U.S. investment bank, estimates that to meet the expanding demand for telecommunication service in Asia, companies will need:

There are many corporate organizations that have expanded their business opportunities outside of the U.S. Consequently, these global organizations are required to conform to The Foreign Corrupt Practices Act of 1977 (FCPA). Under the FCPA, anti-bribery and accounting provisions exist for companies to identify unlawful acts and comply with requirements by maintaining accurate records of transactions and implementing internal controls. (DoJ, 2015a, FCPA: An Overview section, para. 2-3).

The anti-bribery provision of the FCPA proclaims that it’s unlawful for a U.S citizen to make a corrupt payment to a foreign official in the interest of obtaining or retaining a business, or directing a business to, any person illegally. The FCPA also requires companies to make and keep books and records that demonstrates all the transactions that the company has make. Only publicly traded U.S companies and foreign companies with its securities registered under the Exchange Act are required to meet those accounting provisions. The FCPA also states that companies listed in the United States must also maintain a system of internal accounting controls in its company.

In 1972, in order to make Nixon win the election the Committee to Re-election of the President of American Republican Party installed bug in Watergate building, the board office of Democratic Party aiming to steal the election policies of the party. The scandal brought great influence to American society. With the investigation deepening, special prosecutor found that the companies of United States had illegal donations during the competing re-election and later more than 400 companies of United States admitted that they made suspicious or illegal payments . They set up secret bribery capital

1. Describe the economic and social impact of bribes and other similar payments in emerging economics.

To compete in global markets US firms were trying to subvert anti-bribery legislation. They can

Throughout history, America and other global economies have consistently battled for equality and fairness in their country. Many new legislations and laws have been implemented and added throughout the years to adapt to the new technological advances each market has encountered. Even so, the question of ethics has been raised weighing whether or not each new law meets the ethics in business and morality. One important obstacle that is still at the forefront of new legislation and posed for ethical evaluation is money laundering. Money laundering has survived the years through questions of morality and lawfulness by adapting to rigorous restraints and finding new ways to manifest itself in different segmentation forms of trade.

The overwhelming facts point to a shady underworld of self-dealing and opportunistic exploitation of the poor and working class, which was until recently, well hidden from the commoner. The executives of WorldCom and Enron provide real world examples of unethical business practices, where the desire to make money for their shareholders transcended into an addiction to greed and self-dealing that were displayed by their, “excessive pay, perks, and golden parachutes”(Carson 392) at the expense of all stakeholders. All is not lost, there are corporations that pride themselves in their sound business model and commitment to ethical business practices. Such companies as Eaton Corporation, and Weyerhaeuser, who according to Ethisphere.com, a business ethics watchdog, are among the “2010 World`s most ethical companies.” (Ethisphere)