Gifts & Bribes
Introduction
The conducting of business in a multi-national environment calls that extra factors are considered. This is the case where cultural practices pertaining to gifts, bribes, and any other kind of payments have become part of accepted business norms. In the United States, through the Foreign Corrupt Practices Act (FCPA) of 1977, “companies cannot make payments of this nature while knowing or having reason to know that any portion of the funds will be transferred to a forbidden recipient to be used for corrupt purposes” (Fadiman, 1986). This paper aims to discuss, briefly, why bribery might become a problem for U.S. managers working in foreign countries; the major features of the Foreign Corrupt Practices Act (FCPA); why the Foreign Corrupt Practices Act may create a competitive disadvantage for U.S. firms; and three non-Western traditions that can lead to confusion regarding “gifts” versus “bribes.” Finally, this paper will offer some suggestions for managers who want to give bribes without violating the FCPA in the U.S.
U.S. Companies Abroad and the FCPA
In 1977, the U.S. Congress passed what is known as the Foreign Corrupt Practices Act (FCPA or simply “the Act” in this paper) to help U.S. companies understand what bribery is, and what is considered acceptable or not acceptable behavior both domestically and internationally. It may be easy for U.S. managers when dealing locally, but not so much when in foreign countries. This is because in other countries, it is sometimes hard to tell what a bribe is and what is not; since what may be considered a bribe from a U.S. perspective may not be seen as such in other places (Fadiman, 1986). Under the 1977 Act, not all payments can be considered bribes. For instance, the Act states that some payments are acceptable if they do not violate the local laws of the place where the transaction is taking place. In the same vein, bribes given to influence political decisions are not allowed, while those that are given
The conducting of business in a multi-national environment calls that extra factors are considered. This is the case where cultural practices pertaining to gifts, bribes, and any other kind of payments have become part of accepted business norms. In the United States, through the Foreign Corrupt Practices Act (FCPA) of 1977, “companies cannot make payments of this nature while knowing or having reason to know that any portion of the funds will be transferred to a forbidden recipient to be used for corrupt purposes” (Fadiman, 1986). This paper aims to discuss, briefly, why bribery might become a problem for U.S. managers working in foreign countries; the major features of the Foreign Corrupt Practices Act (FCPA); why the Foreign Corrupt Practices Act may create a competitive disadvantage for U.S. firms; and three non-Western traditions that can lead to confusion regarding “gifts” versus “bribes.” Finally, this paper will offer some suggestions for managers who want to give bribes without violating the FCPA in the U.S.
U.S. Companies Abroad and the FCPA
In 1977, the U.S. Congress passed what is known as the Foreign Corrupt Practices Act (FCPA or simply “the Act” in this paper) to help U.S. companies understand what bribery is, and what is considered acceptable or not acceptable behavior both domestically and internationally. It may be easy for U.S. managers when dealing locally, but not so much when in foreign countries. This is because in other countries, it is sometimes hard to tell what a bribe is and what is not; since what may be considered a bribe from a U.S. perspective may not be seen as such in other places (Fadiman, 1986). Under the 1977 Act, not all payments can be considered bribes. For instance, the Act states that some payments are acceptable if they do not violate the local laws of the place where the transaction is taking place. In the same vein, bribes given to influence political decisions are not allowed, while those that are given
Cited: Fadiman, J. A. (1986). A Traveler 's Guide to Gifts and Bribes. Havard Business Review. Justice, D. o. (2012, August 31). Foreign Corrupt Practices Act. Retrieved September 2, 2012, from Department of Justice: http://www.justice.gov/criminal/fraud/fcpa/