Foreign Corrupt Practices
Explain what the employees should know regarding the Foreign Corrupt Practices Act.
Employees need to know that the Foreign Corrupt Practices Act was enacted to prohibit payments from foreign government officials. The prominent role that foreign government officials usually play is to obtain or retain businesses. However, those are not the only limitations, as it prohibits making payments to officials that participate in bribery activities. Employees need to know that the Act applies to all nations globally and extends to private and public trading companies in the United States. The target is corruption and bribery acts that take place internationally. Making payments to international government officials while filing tax returns was common in the 1970s (Perlman and Sykes, 2017). Various business entities have supported the creation of the Foreign Corrupt Act to gain the needed competitive advantage. In the past, domestic organizations could not compete with those that exist in the international market. Do you need any help for completing your assignment ? Contact us at eminencepapers.com. We endeavor to provide you with excellent service.
Provide examples of Foreign Corrupt Practices Act violations.
The violation of the Foreign Corrupt Practices Act can take place in various forms. For example, if there is the creation of documents to falsify transactions that can conceal a payment made to a foreign official or a political party at the international level. Another example is misclassifying a bribe as a commission, marketing, or the expense of goods’ cost. The last example is the creation of a scheme for accounting. For instance, the actual books of accounts can be inflated to make an improper payment. Sanctions are some of the giant companies in the United States that have resulted in the launch of an FCPA investigation (Seitzinger, 2016). The main focus is usually on determining who made the transaction through the triggering of the whistleblowers. Their crucial role is to pinpoint the victim for action to be taken.
Identify company actions or red flags that might indicate violations of the Act.
Several actions and red flags can indicate a violation of the Act. The most common is found in the books of accounts for the company. If there is inconsistency in the records, then there is a need for an investigation to be launched. For instance, some figures might be missing in the books of account. If they are not missing, then they might have been recorded wrongly. For example, a figure like $1,000,000 might have been recorded as $1,000,00 (Perlman and Sykes, 2017). There is an omission of one zero, which might appear to be a standard error in accounting. But in reality, it might be a violation of the Act. Another red flag is the lack of transparency and credibility in the operations and reporting of its financial information. There might be a need to investigate if there is no openness in reporting to the investors and other stakeholders.
List any consequences of the violations.
Civil and criminal penalties are the main consequences of violating the Foreign Corrupt Practice Act. The fines vary from one another. The consequences can either be direct or indirect. Also, the consequences take place on an individual basis and as an enterprise. That implies that the employees are not protected in any way under the corporate umbrella. Therefore, if an individual is fined because of the violation, the organization is unable to make the payment for their sake (Seitzinger, 2016). The employee will have to make the payment on an individual basis. There is a criminal penalty of up to $2,000,000 for every enterprise violation (Perlman and Sykes, 2017). If the violation of the account is up to $25,000,000 for each violation of the enterprise, the violation can be accompanied by other consequences, such as a jail term that can extend up to five years.
Recommend actions to report possible violations.
One of the actions that can be effective in reporting the violation is whistleblowing. The role is to use people who will act as a spy and report any violations. In most instances, the whistleblowers are paid for the information that they provide. In such a situation, there is consent and confidentiality to hide the identity of the whistleblower. Their life is always at risk for providing such information, and the state can protect them (Seitzinger, 2016). Another action has a feedback platform where it is easy to report the incidents. Reporting the incidents does not have to take place in face-to-face interaction, as most whistleblowers are scared. Having a communication channel makes it easy to report on the information. The company does not disclose since the discovery of the violation has already taken place.
Describe protections for whistleblowers. Why are they important? How do the protections impact the Act?
The protection of whistleblowers is protected with another act. There are two main entities in the Act. One is that of compensation, and the whistleblowers are paid for their information. The action is not to bribe them to give information. Instead, it encourages them to take a step and report any red flags that might lead to corruption or fraud. The other element is that of protection (Seitzinger, 2016). The privacy of the information that they provide is guaranteed. However, the relevant authority must validate the information they are given. That is because if they don’t, there might be aspects of the false acquisition. The function is to create equity in all the relevant stakeholders.
References
Perlman, R. & Sykes, A. (2017). The Political Economy of the Foreign Corrupt Practices Act: An Explanatory Analysis. Journal of Legal Analysis, 9(2), 153-182.
Seitzinger, M. (2016). Foreign Corrupt Practices Act (FCPA): Congressional Interest and Executive Enforcement, In Brief (Washington: Congressional Research Service).
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Question 
Week 6 Foreign Corrupt Practices Paper
Review the scenario and complete the activity below. This scenario can also be found in the “Questions & Problems” section of Ch. 6, “International and Comparative Law” in Dynamic Business Law (eText, pg. 157).
Foreign Corrupt Practices
Scenario:
In an interview published by The New York Times in February 1976, former Lockheed President A. Carl Kotchian defended the payment of bribes by the company as follows:
- “Some call it gratuities. Some call them questionable payments. Some call it extortion. Some call it grease. Some call it bribery. I look at these payments as necessary to sell a product. I never felt I was doing anything wrong.”
More than 30 years later, Reinhard Siekaczek, an accountant employed by Siemens who oversaw an annual budget for questionable payments in excess of $50 million, stated:
- “I never thought I would go to jail for my company. …We thought we had to do it. Otherwise, we would ruin the company. …People will only say about Siemens that they were unlucky and that they broke the Eleventh Commandment. The Eleventh Commandment is, ‘Don’t get caught.'”
You have been hired to assist ABC Multinational Company to help educate employees on ethical practices and corporate culture. More specifically, related to the Foreign Corrupt Practices Act, your role is to prevent situations described in the above scenario.
Create either a handout, job-aid, poster, or flier to educate employees on the Foreign Corrupt Practice Act. Complete the following for your educational tool:
- Explain what the employees should know regarding the Foreign Corrupt Practices Act.
- Provide examples of Foreign Corrupt Practices Act violations.
- Identify company actions or red flags that might indicate violations of the Act.
- List any consequences of the violations.
- Recommend actions to report possible violations.
- Describe protections for whistleblowers. Why are they important? How do the protections impact the Act?
Cite references to support your assignment.
Format your citations according to APA guidelines.