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The Foreign Corrupt Practices Act Essay

1657 words - 7 pages

The Foreign Corrupt Practices Act, or FCPA, is an act that was put into place in 1977 to control the dealings US persons or entities would have with foreign officials. The act make it unlawful for any US party to pay, whether it is directly or indirectly, with money or anything else of value, to a foreign official in exchange for obtaining or retaining a business (FCPA Enforcement). In addition to this, any company that trades securities in the US is required to file periodic report to the Securities and Exchange Commission to have record of any business transactions in order to maintain effective internal controls (Department of Justice).

In the US, most contracts are formed privately allowing entities to control their business effectively preventing the problem the FCPA tries to resolve. No party is going to take a bribe that is not in their benefit and most of entities do not have jurisdiction over the contracts of others to be able to take any control. In many other countries, however, it is quite the opposite. It is the government that controls the contracts for major construction and manufacturing. Because of this, many entities in these countries will pay or bribe officials in order to get business contracts in their favor. Since this type of policy also applies to foreign entities doing business in these countries, many US businesses would follow this practice even though in the US this was not the norm (Miller & Hollowell, 2011, p. 22). For this reason the FCPA was created. It allowed the US to keep entities from using foreign business as a way to pay their way into beneficial contracts which they could not in the US. It also prevents foreign entities from having this advantage if doing business in the US.

The rules of the FCPA are a lot more complex than simply stating bribery is not allowed. There are many rules under the act to prohibit entities from conducting foreign business in ways that would be unethical and unlawful. When it comes to bribery, the Department of Justice is very strict about what it views as a violation. Any payment or gift that is given towards an official that has the power to manipulate the outcome of a business contract, and is given for this purpose, is prohibited. It can, however, be difficult to determine when a payments or gift was made for this purpose. Because of this the Department of Defense keeps a very close eye on these transactions to make sure that type of behavior is not overlooked. As an example, there was a case of an American corporation that investigated for assisting an official in getting his daughter a US education. Even though it was found it was not for purposes of bribery it shows how strict the Department of Defense can be with these situations (Stackhouse, 1993). It should also be noted that this would not apply to gift given to officials with less power solely for the sake of speeding up the processing of contracts that were already accepted as this would not fall under the...

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