Foreign Corrupt Practices Act Ethics Foreign Corrupt

Foreign Corrupt Practices Act

Ethics

Foreign Corrupt Practices Act: How this affects U.S. business interests overseas

Simply because United States corporations do business in nations with different ethical standards does not mean that U.S. companies get a free legal 'pass' regarding how they comport themselves abroad. "The Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. § 78dd-1, et seq. ('FCPA'), was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business" (FCPA, 2012, DOJ). Even if bribery is an accepted aspect of doing business in the developing world, a U.S. business will still run afoul of the FCPA if it complies with this type of 'cultural tradition.' The "payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a foreign official to influence the foreign official in his or her official capacity" is still illegal (FCPA, 2012, DOJ). The FCPA also requires that Securities and Exchange Commission (SEC)-registered companies "maintain proper books and records" and they must "devise and maintain a system of internal accounting controls" (Adkins & Segal 2012).

One company that recently fell afoul of the FCPA is Wal-Mart. It was found that "Wal-Mart de Mexico had orchestrated a campaign of bribery to win market dominance. In its rush to build stores...the company had paid bribes to obtain permits in virtually every corner of the country" (Barstow 2012). Although violations of the law can hardly be excused, it is worthy of note that following the FCPA in a nation where bribery is a way of life can make doing business very difficult, thus leading to the temptation to 'cheat' or 'game the system. For Wal-Mart in Mexico, "the idea...was to build hundreds of new stores so fast that competitors would not have time to react. Bribes...accelerated growth. They got zoning maps changed. They made environmental objections vanish. Permits that typically took months to process magically materialized in days" (Barstow 2012). These bribes were bestowed by higher-level Mexican employees of Wal-Mart and viewed as a part of normative business practices.

Other red-flag nations in which there is a notable discrepancy between the ethics culture of the nation and that of the United States include India, China, and Russia. For example, in Russia "since the overthrow of Communism, some government officials in Russia have seen their salaries drop and have sometimes relied on their positions to create substantial money-making opportunities in the new commercial world" (Adkins & Segal 2012). This is also true in China's burgeoning capitalist culture.