What Was the Purpose of the Foreign Corrupt Practices Act of 1977?

Topics: Foreign Corrupt Practices Act, Bribery, Corporation Pages: 2 (446 words) Published: August 5, 2013
Have you ever invite your best customer outside for having an expensive dinner? Having some wine, discussing about more details in new contract? Or you invite them to an expensive resort, spend time there with the purpose of convince them your solution is better than others? Send a gift to a new CEO for building new relationship? All those things are normal in some cases, but it could be FCPA violation in case done with foreign government official. Scott Lane, Principal and CEO, The Red Flag Group said that: “Every businessperson working in the emerging markets should read and understand the way in which their actions and behavior may fall subject to the Foreign Corrupt Practices Act (FCPA) of 1977”. The purpose of the FCAP was to make it illegal for employees of American corporations to induce foreign officials, by offering monetary or other payments, to use their influence to gain an unfair competitive advantage for the organization, John M. (2010, page 108). An example retrieved from FBI website, ABB Ltd, a Swiss corporation, and two of its subsidiaries have resolved charges related to violations of the Foreign Corrupt Practices Act (FCPA). As part of ABB Inc.’s plea, it admitted that one of its business units based in Sugar Land, Texas, ABB Network Management (ABB NM), paid bribes from 1997 to 2004 that totaled approximately $1.9 million to officials at Comisión Federal de Electridad (CFE), a Mexican state-owned utility company. ABB NM’s primary business was to provide products and services to electrical utilities, many of them foreign state-owned utilities, for network management in power generation, transmission and distribution. In exchange for the bribe payments, according to court documents, ABB NM received contracts worth more than $81 million in revenue. ABB Inc. admitted that the bribe payments were made through various intermediaries, including a Mexican company that served as ABB NM’s sales representative in Mexico on its contracts with CFE. ABB...

References: Murphy, Aaron G., Foreign Corrupt Practices Act: A Practical Resource for Managers and Executives. Retrieved from:
ABB Ltd and Two Subsidiaries Resolve Foreign Corrupt Practices Act Investigation and Will Pay $19 Million in Criminal Penalties. Retrieved from:
John M.I. (2010). Human Resource Management. New York. MA: McGraw-Hill Companies, Inc.
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