Foreign Corrupt Practices Act
Foreign Corrupt Practices Act
In the 1970’s, hundreds of businesses were found to be making unethical practices in foreign countries. The Security and Exchange Commission (SEC) investigated and the findings compelled the US Congress to create the Foreign Corrupt Practices Act to require businesses to account for their business practices by providing records that portray an accurate documentation of the business accounting procedures. The Foreign Corrupt Practices Act (FCPA) was implemented to halt the bribery of foreign officials in the position to grant favors to American businesses to either obtain the ability to conduct business in the foreign country or to keep their businesses in the foreign country. Because America’s reputation was becoming so tarnished with accusations of foreign bribery, the United States Congress implemented FCPA to restore good faith in the ethical business practices of American businesses (Export-Import Bank of the United States, 2010). FCPA Prohibitions
The Foreign Corrupt Practices Act protects ethical business practices by forbidding the bribery of foreign officials in order to obtain a business presence in a foreign country or to retain business in a foreign country (United States Department of Justice, 2010). According to the “Foreign Corrupt Practices Act Antibribery Provisions” document by the United States Department of Justice to explain the FCPA in laymen’s terms, there are five components to meet in order to be in violation of FCPA. It outlines who, corrupt intent, payment, recipients, and business purpose test.
Therefore, this Act applies to any representative of an American business or a third party associated with the corruptible actions. This includes parent corporations, firms and stockholders action on behalf of the business. Additionally, the individuals or groups involved must be found to have corruptible intent, meaning that payment to government officials were made with the intent to bribe the officials for favors of business gain or retention. Regarding payments, the FCPA expressly prohibits any authorization of money or valuables as payment to an official. However, regarding the recipients of the intended bribe, the FCPA identifies the recipients as “any officer or employee of a foreign government, a public international organization, or any department or agency thereof, or any person acting in an official capacity” (United States Department of Justice, 2010). Apparently, bribing other companies or organizations is not covered here unless that business or organization becomes a third party participant and brokers the bribe for the business. Finally, the business purpose test applies to any business, organization, entity or person that the American business wishes to establish or retain business practice with without regard to its connection to the government. FCPA Impacts
From an ethical standpoint, the FCPA impacts American businesses positively in the respect that when American businesses follow the guidelines of good business practices, they are in essence setting a standard for others to follow as well as establishing an excellent business reputation. If foreign businesses or organizations wish to conduct business with American businesses and organizations, then the burden of ethical business practices rests with them. International Impacts
Internationally, the FCPA has no jurisdiction over foreign governments, businesses, or entities. Therefore, the FCPA only governs our American companies. Because of the higher business practices and our laws governing ethical business, American companies are ideal to work with for foreign business simply because our own government will punish American companies for corrupt practices. In contrast though, the same FCPA that makes America great to conduct business with also can limit American foreign business...