Foreign Corrupt Practices Act Research Paper
How the Foreign Corrupt Practices Act Works name Sunday, August 31, 2014
Dr.
school
Abstract
The United States foreign corrupt practices act is the law that makes foreign bribery illegal. Terms from the act are defined to further understand the extent of the act and how it was created and why. Provision covered within the act are also explained to further understand how this act can convict multiple officials and companies committing corrupt acts of bribery with foreign officials.
How the Foreign Corrupt Practices Act Works
The foreign corrupt practices act (FCPA) was signed on December 19th, 1977 in the White House during that time Jimmy Carter was the President …show more content…
of the United States. The foreign corrupt practices act prohibits financial gain for the purpose of making business between certain people and/or entities between countries. For example: A businessman in Canada can’t be paid a bonus for using an American made product in his factory instead of using another country’s product. Essentially this would be considered bribery which is the purpose for enacting the foreign corrupt practices act.
The idea of creating this act originally came to after over 400 American companies were found to have committed acts of bribery to foreign officials they were conducting business with overseas. The government wanted to prevent US companies from conducting such illegal business again with foreign officials and profiting from bribes. During the 1970’s, the world was beginning to chance in ways that were drastic. Technology was advancing very quickly and cutting costs to maintain a company going was a beginning to weigh heavily on business owners. The thought of moving business overseas to reduce cost became tempting and a lot of business owners decided to move their business overseas where overhead cost was tremendously lower then production costs in the United States. Salaries were climbed in North American as technology was growing job were being created and workers didn’t want to perform manual labor as much as they have in the past. Having the manufacturing work performed overseas for a lower cost than receiving the product in pieces that simply needed to be assembled was both profitable and favorable for American business owners.
Keeping foreign contacts in place was crucial to this new way of life and staying competitive with others wanting to outsource their work would be beneficial. Bribes become an essential part of doing business with foreign business men looking to find the highest bidder to go into business with. The world became a competitive market of foreign exchanges for work that originally was performed in the United States. Made in China had become a common label on all things mass produced, it was essential to create bonds with foreign countries that could produce these product at a fraction of the price that an American factory could. This explains the situation happening in the world before the foreign corrupt practices act was signed and why it was clearly needed. The foreign corrupt practices act applies to three separate categories of entities:
1. Issuers
2. Domestic concerns
3. Certain persons acting as such while in the United States
Issuers includes companies that are required to file periodic reports with the SEC under section 15(d).
This definition of an issuer is quite interesting since some companies which are listed under the American Exchange are considered issuers and are subject to the law of the foreign corrupt practices act. Domestic concerns are any individual living or conducting business with or in the United States even if it is on behalf of someone. The exact definition per The department of Justice’s guide to the FCPA: “…any individual who is a citizen, national, or resident of the United States, or any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship that is organized under the laws of the United States or its states, territories, possessions, or commonwealths or that has its principal place of business in the United States. Officers, directors, employees, agents or stockholders acting on behalf of a domestic concern, including foreign nationals or companies, are also covered” () This seems to include every entity possible covering all possible persons involved in the act of …show more content…
bribery.
In 1998, amendments were added to the original act to included foreign persons committing acts of bribery while in the United States. Therefore, this law doesn’t just convict American causing acts of bribery but all people committing these acts while on US soil. The act clearly defines a foreign official as: “any foreign official, any foreign political party or official thereof, any candidate for foreign political office, or any person while knowing that all or a portion of the payment will be offered, given, or promised to an individual falling within one of these three categories”.
(FCPA, section 30A) This defines any foreign official as any ranking official within a foreign organization not meaning only high ranking officials but low ranking officials alike. Including civil employees and government officials alike, by defining this term clearly the act involves any person who is trying to give a bribe or even a donation to a foreign official therefore convicted everyone
involved. There is a statute of limitation on civil cases brought on by SEC, set forth at 5 years from the date the claim took place. This means the SEC has 5 years to pursue a civil case from the time when the act was claimed to have taken place. This is different for non-citizens since they don’t typically reside in the United States their statute of limitations begins when they committed the act while their stay in the United States and continues on. The FCPA includes Accounting Provisions that encompass:
1. The books and records provision
2. Internal controls provision
3. Potential reporting and anti-fraud violations
These provisions add more convictions to acts not covered by the original FCPA like royalty payments, commissions, rebates and discounts incurred from acts that are illegal under the FCPA. The federal prosecution can convict people for coming such acts even if they aren’t direct bribes to foreign officials. Once SEC officials have accumulated enough evidence to bring a case to trial, criminal charges are filed and the prosecution brings forth their case. Either being federal or civil depending on the extent of the acts being committed. Under criminal penalties, companies and corporations can be fined for up to two million dollars. Individual are subject to penalties of up to two hundred and fifty thousand dollars and up to five years in prison. References
Foreign Corrupt Practices Act (FCPA). BusinessDictionary.com. Retrieved February 17, 2014, from BusinessDictionary.com website: http://www.businessdictionary.com/definition/Foreign-Corrupt-Practices-Act-FCPA.html
Miller , R., & Hollowell, W. (2014). Business law text $& exercises. (7th ed.). Mason, O.h.: South-Western Cengage Learning.
U.S. Securities and Exchange Commission, (2012). Spotlight on foreign corrupt practices act. Retrieved from website: http://www.sec.gov/spotlight/fcpa.shtml
Dr.
school
Abstract
The United States foreign corrupt practices act is the law that makes foreign bribery illegal. Terms from the act are defined to further understand the extent of the act and how it was created and why. Provision covered within the act are also explained to further understand how this act can convict multiple officials and companies committing corrupt acts of bribery with foreign officials.
How the Foreign Corrupt Practices Act Works
The foreign corrupt practices act (FCPA) was signed on December 19th, 1977 in the White House during that time Jimmy Carter was the President …show more content…
of the United States. The foreign corrupt practices act prohibits financial gain for the purpose of making business between certain people and/or entities between countries. For example: A businessman in Canada can’t be paid a bonus for using an American made product in his factory instead of using another country’s product. Essentially this would be considered bribery which is the purpose for enacting the foreign corrupt practices act.
The idea of creating this act originally came to after over 400 American companies were found to have committed acts of bribery to foreign officials they were conducting business with overseas. The government wanted to prevent US companies from conducting such illegal business again with foreign officials and profiting from bribes. During the 1970’s, the world was beginning to chance in ways that were drastic. Technology was advancing very quickly and cutting costs to maintain a company going was a beginning to weigh heavily on business owners. The thought of moving business overseas to reduce cost became tempting and a lot of business owners decided to move their business overseas where overhead cost was tremendously lower then production costs in the United States. Salaries were climbed in North American as technology was growing job were being created and workers didn’t want to perform manual labor as much as they have in the past. Having the manufacturing work performed overseas for a lower cost than receiving the product in pieces that simply needed to be assembled was both profitable and favorable for American business owners.
Keeping foreign contacts in place was crucial to this new way of life and staying competitive with others wanting to outsource their work would be beneficial. Bribes become an essential part of doing business with foreign business men looking to find the highest bidder to go into business with. The world became a competitive market of foreign exchanges for work that originally was performed in the United States. Made in China had become a common label on all things mass produced, it was essential to create bonds with foreign countries that could produce these product at a fraction of the price that an American factory could. This explains the situation happening in the world before the foreign corrupt practices act was signed and why it was clearly needed. The foreign corrupt practices act applies to three separate categories of entities:
1. Issuers
2. Domestic concerns
3. Certain persons acting as such while in the United States
Issuers includes companies that are required to file periodic reports with the SEC under section 15(d).
This definition of an issuer is quite interesting since some companies which are listed under the American Exchange are considered issuers and are subject to the law of the foreign corrupt practices act. Domestic concerns are any individual living or conducting business with or in the United States even if it is on behalf of someone. The exact definition per The department of Justice’s guide to the FCPA: “…any individual who is a citizen, national, or resident of the United States, or any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship that is organized under the laws of the United States or its states, territories, possessions, or commonwealths or that has its principal place of business in the United States. Officers, directors, employees, agents or stockholders acting on behalf of a domestic concern, including foreign nationals or companies, are also covered” () This seems to include every entity possible covering all possible persons involved in the act of …show more content…
bribery.
In 1998, amendments were added to the original act to included foreign persons committing acts of bribery while in the United States. Therefore, this law doesn’t just convict American causing acts of bribery but all people committing these acts while on US soil. The act clearly defines a foreign official as: “any foreign official, any foreign political party or official thereof, any candidate for foreign political office, or any person while knowing that all or a portion of the payment will be offered, given, or promised to an individual falling within one of these three categories”.
(FCPA, section 30A) This defines any foreign official as any ranking official within a foreign organization not meaning only high ranking officials but low ranking officials alike. Including civil employees and government officials alike, by defining this term clearly the act involves any person who is trying to give a bribe or even a donation to a foreign official therefore convicted everyone
involved. There is a statute of limitation on civil cases brought on by SEC, set forth at 5 years from the date the claim took place. This means the SEC has 5 years to pursue a civil case from the time when the act was claimed to have taken place. This is different for non-citizens since they don’t typically reside in the United States their statute of limitations begins when they committed the act while their stay in the United States and continues on. The FCPA includes Accounting Provisions that encompass:
1. The books and records provision
2. Internal controls provision
3. Potential reporting and anti-fraud violations
These provisions add more convictions to acts not covered by the original FCPA like royalty payments, commissions, rebates and discounts incurred from acts that are illegal under the FCPA. The federal prosecution can convict people for coming such acts even if they aren’t direct bribes to foreign officials. Once SEC officials have accumulated enough evidence to bring a case to trial, criminal charges are filed and the prosecution brings forth their case. Either being federal or civil depending on the extent of the acts being committed. Under criminal penalties, companies and corporations can be fined for up to two million dollars. Individual are subject to penalties of up to two hundred and fifty thousand dollars and up to five years in prison. References
Foreign Corrupt Practices Act (FCPA). BusinessDictionary.com. Retrieved February 17, 2014, from BusinessDictionary.com website: http://www.businessdictionary.com/definition/Foreign-Corrupt-Practices-Act-FCPA.html
Miller , R., & Hollowell, W. (2014). Business law text $& exercises. (7th ed.). Mason, O.h.: South-Western Cengage Learning.
U.S. Securities and Exchange Commission, (2012). Spotlight on foreign corrupt practices act. Retrieved from website: http://www.sec.gov/spotlight/fcpa.shtml