SUBJECT: Baker Hughes - Foreign Corrupt Practices Act CG-18
Economic and Social Impact
The economic impact of bribes in emerging economies “can increase the cost of a project by 10 percent,”1 and distorts public expenditure. Corruption can also be a contributing factor “to economic and political unrest by exacerbating income inequality, resulting in the denial of fundamental human rights for many citizens.” 2 Corruption and bribes lead to an unfair playing field for honest companies, and good people in face lose business.
The “optimal” amount of bribery should be zero, except for the fact the FCPA allows for facilitating payments that are “generally assumed to be payments of less than a few hundred dollars.”3 In a perfect world, the “optimal” amount of bribery should be equal to zero.
Board of Directors
A board of directors should be actively involved in policing and developing foreign corrupt practices because of the Sarbane-Oxley Act of 2002, that holds the board and senior executives personally responsible for compliance.
Use of Experts
The pros and cons of using experts such as the independent investigators and blue-ribbon experts can be summarized as:
Very costly, yet effective way to change perception of company.
Help change current business practices, but could uncover more problems than initially anticipated.
Long process of investigating and changes procedures could deter new clients because of how long it takes until they finally get to business.
The payments listed on pages 12 and 13 could be considered foreign corrupt practices because of the anti-bribery provision and the books and records provision. It is the companies responsibility to know where their money is going, the only thing is these payments can sometimes fall into a grey area because of the facilitating payments part of the FCPA.
Exhibits 4 and 5
The changes in Exhibits 4 and 5 are likely to in fact stop future foreign...
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