U.s. Foreign Corrupt Practices Act Of 1977

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

This case portrays the widely propagated and accepted phenomena of bribes and corruption in developing countries. Specifically how it affects every sector of the Ukrainian society, therefore making it difficult for the American investors to establish companies there and to prosper solely on doing good business. The case describes the types of obstacles and ethical dilemmas being created for the investors as a result of bribery and extortion.

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:

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.

Each of these jurisdictions works together to keep aspects of FCPA from being violated. This law is not always prohibiting all payments to the foreign officials. The FCPA has an exception for anti-bribery prohibitions and that is called “ routine government action.” This exception is also given the names “facilitating” or “ grease payment.” The Foreign Corrupt Practices Act defines this “routine government action” as for a foreign official to perform in obtaining permits, licenses, or other official documents that enable then to do business in that country, processing government papers such as visa and work orders, protection services and conducting inspections, and anything that has similar nature (6). The Foreign Corrupt Practices Act (FCPA) has two affirmative defenses and they consist of assertion that payment in question was lawful under the laws of the foreign country, and the assertion that the payment was valued a bona fide expenditure (6). This affirmative defense is aimed to be for the issuer, domestic concern, or other person. In this affirmative defense there must be some type of written law authorizing or supporting the payment. The penalties for violating the Foreign Corrupt Practices Act are different from the provision that they fall under. For an individual and it is from the anti bribery

Since 1977, the anti-bribery provisions of the FCPA have applied to all U.S. persons and certain foreign issuers of securities. With the enactment of certain amendments in 1998, the anti-bribery provisions of the FCPA now also apply to foreign firms and persons who cause, directly or through agents, an act in furtherance of such a corrupt payment to take place within the territory of the United States.

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 costs of managing a company who has to comply with the FCPA are not cheap, because not only do they have to pay for the extra accounting provisions, but need to hire decent employees to fulfill pure honesty. There is also the cost of finding other ways to expand their businesses into other countries (The New York City Bar Association, 2011, p.6). Sadly, the costs are not a one-time thing, but instead recurring. Statistics have shown that over 22% of companies have reported, “the burden of the law has increased their accounting and auditing costs by more than 35%” (“Impact of Foreign Corrupt Practices Act on U.S. Business”, 1981, p.13). The costs are difficult to measure, yet “evidence suggests that for large multinational companies, the FCPA component of compliance costs is in the high tens of millions of dollars per year” (The New York City Bar Association, 2011,

Yes, I think that the payments outlined on pages 12 and 13 should be considered corrupt practices because of the way they were registered in the company’s books -it was in compliance with the FCPA because of the anti-bribery provision and the books and records provision.

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 http://www.usdoj.gov). 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

The Foreign Corrupt Practices Act (FCPA) is second in discussion which, applies to all companies operating out of the United States. The standard of way to conduct business here in the United States and Japan are to be acknowledged because of the cultural differences. The law requires U.S. organizations to represent and report global exchanges precisely and demoralize the activities of officials that attempt accept any kind of pay off, or monetary motivators in return for opportune and favorable business decisions. While in Japanese business, culturally it might be seen as sign of good gesture to offer government officials financial gains in order to get business advantages, unlike in the United States where it is illegal to do so. The Foreign Corrupt Practices Act of 1977- is a U.S. Federal Law that

By taking such unethical decisions, Wal-Mart de Mexico violated laws from both Mexico and the U.S. Mexico has been known as a country where foreign companies have a significant risk for corruption. Bribery is common in many parts of the country, however, “attempted corruption, bribery, extortion, abuse of office, bribery of foreign public officials and facilitation payments are criminalized under Mexico’s Federal Penal Code” (Business Anti-Corruption Portal). As for the United States, the company violated the Foreign Corrupt Practices Act (FCPA), more specifically the Anti-bribery provision. This provision states “A company cannot corruptly make an offer, promise, or payment of anything of value to a foreign government official or politician

As the FCPA distinguishes between facilitating payments and the more serious issues such as bribery, any subsequent penalties for violating the act make perfect sense from an ethics standpoint. Bribery in and of itself is an