Analyzing Foreign Corrupt Practices Act Fcpa Term Paper

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FCPA

The following till take a look at Foreign Corrupt Practice Act or in other words the FCPA.

Discovering the corporate payments difficulty in the middle of the 70s from a blend of work by the Watergate Special Prosecutor office, this includes related additional work and inquiry by SEC-Security and Exchange Commission and the Multinational Corporations Subcommittee by Senator Frank Church. In 1975, within four months, separate hearings were held by the Church Committee on Gulf Oil, Mobil Oil, Northrop, and Lockheed (Koehler). Every one of these corporations became the main subjects of allegations, concerning uncertain payments made either directly or indirectly to officials of foreign government or foreign political parties bearing a business purpose in mind. For example, the Gulf Oil primarily involved the contributions made to political campaigns of the Republic of Korea President. Northrop was mainly involved in making payments to a general in Saudi Arabia. Principally, Exxon was involved in contributions made to political parties in Italy. Principally, Mobil Oil was involved in contributions made to political parties in Italy. Lockheed mainly involved payments made to the Prime Minister of Japan Tanaka, Prince Bernhard (the Inspector General of the Dutch Armed Forces and the husband of Queen Juliana of the Netherlands), as well as Italian political parties.

Corruption is one very pressing issue for international businesses that operate in every part of the world. This is mostly common to corporations that operate in third world and developing nations with unstable political terrain (Tab, 2012). Over 400 companies admitted that they made illegal payments to officials of foreign governments or United States politicians. The steps are mostly taken to enable the companies benefit from foreign government policies or to make sure government functionaries discharge their duties adequately (mostly meaning -- favorably).

The FCPA was the initial effort of any country to particularly criminalize the practice of. The statute came into use at the start of the United States Watergate scandal, which in 1974 led to the resignation of President Richard Nixon and subsequently led to an erosion in people's trust in the government (History of the Foreign Corrupt Practices Act). In 1976, after some prosecutions for unlawful use of corporate money that came from the Watergate scandal, the United States Securities and Exchange Commission (S.E.C), which are responsible for regulating the United States security industry, gave a report on Illegal and Questionable Corporate Payment Practices. In the report, the S.E.C. decided that bribing foreign officials by the United States corporations was widespread enough to be treated as a matter of serious concern. According to the investigation carried out by S.E.C, several hundreds of United States companies made some illegal and fraudulent foreign cash remissions to the tune of several hundreds of millions of the U.S. dollars. This background inspired the decision of the United States Banking Committee on the need to have a reliable legislation in the U.S. against bribery. Corporate bribery is a very bad business according to the report of the committee. In the free market system, we practice, it is important that selling products should be regulated solely by price, service, and quality. In this main tenet, corporate bribery is basically destructive. The 1977 Foreign Corrupt Practices Act, as amended, 15 U.S.C. § 78dd-1, et seq. ("FCPA"), was endorsed with the aim of making it an illegal practice for some classes of individuals and corporate bodies to pay officials of foreign governments with the aim of obtaining or retaining business (History of the Foreign Corrupt Practices Act).

Especially, the FCPA anti-bribery provisions forbid using mails or any other instrumentality of interstate commerce in a willfully corrupt manner to further any offer, promise to make payment, payment, or authorization to pay money or any other valuable to any individual, with the knowledge that every part or some parts of the money or any of such valuable being offered, promised or given, directly or indirectly, to any foreign official to persuade the foreign official and his or her official decision as determined by his or her official position; persuade the foreign official to act or fail to act in a way that violates his or her legal duties, or to gain any undue advantage with the aim of assisting an individual to either obtain or retain a business with or for, or forwarding business to, any individual.

From 1977, the FCPA anti-bribery provisions have been directed at every United States indigenes and some foreign security issuers. When in 1988, certain enactment of some amendments were made, the FCPA anti-bribery provisions currently apply to businesses owned by foreigners and individuals who either directly or indirectly cause a furtherance act of such illegal payment to occur in the U.S. territory (History of the Foreign Corrupt Practices Act).

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The FCPA similarly requires firms that have their securities listed in the United States to make sure they meet all accounting provisions of the U.S. See 15 U.S.C. § 78m. These accounting provisions were designed to work hand-in-hand with the FCPA anti-bribery provisions, and they require corporations covered by the provisions to (a) make sure they keep records and books that fairly and accurately show the transactions made by the corporations and (b) create and maintain an appropriate internal accounting regulatory system.

Three different knowledge standards in the anti-bribery provisions of the statute are:

1) All violations must be of corrupt nature;

2) To impose criminal penalties on any individual, the individual must have willfully taken action; and

3) If there is premised liability on any payment made to a third party, the said payment must have been made willfully such that either the money or valuable would be channeled in part or whole to an official of a foreign government (Burns, et.al).

Out of these three, only one of them, which is the knowledge that any payment made to a third party will be channeled to an official of a foreign government- is well defined in the statute. There is no acceptable definition of willfully or corruptly. The provision of the statute is that an individual's state of mind is having knowledge of a circumstance, conduct, or a result if:

a) The person knows he is taking part in such conduct, that the circumstance is a reality or that there is every certainty that the result will occur; or b) The person has a strong belief in the existence of the circumstance or that there is a high chance of the result occurring. Knowing that a certain circumstance is in existence is established when the individual knows the immense probability that such circumstance exist, except the individual choose to believe in the non-existence of such circumstance.

Under the FCPA act, an individual or organization would be held guilty of taking part in illegal trade practices if (Tan, 2012):

there is a payment, offer, promise to make payment or an authorization of any cash payment or any other valuable;

to an overseas official, foreign political candidate or party or any other individual with the knowledge that the gift or payment will be made to an overseas official;

with the intent of corruption

With the aim of:

manipulating any decision or act of the party

influencing the party to either take action or fail to act in a way that disturbs his legal duty

getting an advantage

influencing the party to make use of his influence or an external government decision;

to assist in the obtaining or retaining of a business for or channeling business to any individual

Involves an employee or officer of an external government or a government agency or of an international organization with a public status.

Any business dealings with any of these parties, which involve giving out nonmonetary benefits illegally, would attract FCPA sanctions. Nevertheless, a person can be held guilty even when he failed to execute the corrupt act (Tan, 2012). This is because a promise or an offer of a gift has been made illegal and in a corrupt manner. According to the FCPA act, the term, obtaining or retaining business, goes beyond merely awarding or renewing a contract. However, the obtained business must not have any links to the foreign government.

Impact of International Business Law

Under extensive practice, organizations mostly spend several millions of dollars carrying out investigations on themselves for possible violations of the Foreign Corrupt Practices Act of 1977, and then turn the results over to the government aiming to get away with smaller penalties or no penalties at all. A total of $456 million these three companies (Gulf Oil, Mobil Oil, Northrop, and Lockheed) spent were mostly paid to law firms and other experts engaged to carry out the probes and strengthen the internal anti-bribery controls of the companies. The law that came up after the Watergate scandal has now become very big business for legal practitioners who go into company operations as a way of responding to investigations carried out by the Securities and Exchange Commission and the Justice Department-or as a way of avoiding one (Palazzolo, 2012). The….....

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