View
219
Download
0
Category
Preview:
Citation preview
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
1/20
1
Corporate Corruption and
BriberyThe Foreign Corrupt Practices Act
(FCPA)
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
2/20
2
Overview
The Bribery of foreign officials by US corporations to influencedecisions of foreign officials, foreign political parties, orcandidates for political office is occurring with greater
frequencyBribes are often given to ensure favorable actions by foreign
governments
Involving but not limited to the following industries: Drugs and Health Care
Oil and Gas Production/Services Food Products
Aerospace, Airlines and Air Services Chemicals
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
3/20
3
US Companies Involved inOverseas Bribery
Dow ChemicalXerox (India)
Tyco (Venezuela)Accenture (Middle East)
IBM (South Korea)Monsanto
TitanEnron
Just to name a few
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
4/20
4
Not Just a US Problem
May 1, 2003 and April 30, 2004 the global competitionfor contracts worth up to $18 billion may have been
affected by bribes by foreign firms of foreignofficials- Report from the US Department of
Commerce
A global survey by Price Waterhouse Coopers in 2003found that 49% of companies surveyed were required
to offer or pay a bribe at least four times
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
5/20
5
The Detriments of Bribery
Unethical- The payments of bribes conflicts with the moral expectationsand values of US citizens
Bad for Business- Bribery erodes publics confidence in the integrity ofthe free market. Bribery also gives those businesses with inefficient
operations an unfair competitive advantage
Unnecessary-We find in every industry where bribes have beenrevealed that companies of equal size are proclaiming that they see noneed to engage in such practices Former SEC Chairman Roderick Hills
Foreign Policy Problems- The disclosure of US bribes lowers the esteemfor the US among foreign nationals, embarrasses allied governmentsand suggests that US enterprises exert a corrupt influence on foreign
political processes
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
6/20
6
The Foreign Corrupt PracticesAct
Enacted in 1977 to prevent the corporate bribery of foreignofficials
Prohibits both the US and foreign corporations and nationals frompaying or offering anything of value to a foreign political party,
foreign government official, candidate for foreign public office,or an official of a public international organization in an attemptto obtain or retain business
Main Parts Requires corporations to keep accurate books, records, and
accounts Requires issuers registered with the Securities and Exchange
Commission to maintain a responsible internal accounting controlsystem
Prohibits bribery by US corporations of foreign officials
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
7/20
7
History of FCPA Legislation
-Consideration began during the 94th Congress-Based extensively on the Report on Questionable and IllegalCorporate Payments and Practices issued by the SEC May 12,1976
*Revealed the widespread practice of questionable corporateforeign payments
-September 21 and 22, the Subcommittee on ConsumerProtection and Finance held hearings on numerous bills thatshould to prohibit these payments
*HR 15481; HR 13870; HR 13953; S 3664*due to end of session pressures, the Subcommittee was unableto report prior to adjournment
-Continued in the 95th Congress-April 20 and 21, 1977
*focused on HR 1602 and HR 3815-Full committee reported the bill on September 20, 1977
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
8/20
8
Key ProvisionsProvide criminal penalties for US businesses found to use mail or interstate commerce corruptly in order to
further an offer or payment of anything of value to a foreign official to influence the person in theirdecision making to obtain or retain business
Prohibits the payment of money to any person by a business if the business knew that the payment was to beused to bribe a foreign official to influence business cooperation
Requires companies with publicly traded stock in the US to practice required accounting, books, records internalcontrols
ExclusionsThe definition of foreign official excludes foreign government employees whose duties are essentially
ministerial or clerical
The Act is not intended to cover grease payments (payments made to expedite shipments, secure requiredpermits, obtain adequate police protection, etc)
Extortions of money by foreign officials may be used as defense against charges of bribery by a business if
either its property or the lives of its employees are threatenedSection 2 regarding the prohibition against certain payments to officials by registered companies was made to
amend the Securities and Exchange act of 1934. The SEC is therefore to retain investigative jurisdictionover this matter due to their relatively easy access to reporting companies books and filings
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
9/20
9
Parties Involved
Enforcement
-Securities and Exchange Commission (SEC)
-Justice Department
US Corporations (Public and Private)
-Bristol-Myers; Exxon Mobil; Daimler Chrysler; IBM;Halliburton; Syncor; Monsanto; Titan; etc
Companies with stock publicly traded in the US
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
10/20
10
Increased Enforcement
Due to recent increases in global mergers andacquisitions as well as increasing revelations
of corporate bribery and corruption
instances, FCPA enforcement levels havereached record highs. The number ofenforcement actions is likely to increase
further in upcoming years as the US
government shifts additional resources intothis area
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
11/20
11
CriticismsDissuades Export Trade-The grey areas that exist within the legislation
regarding what is and is not permissible have led many corporations to ceaseforeign operations rather than face uncertainties
Remove the Reason to Know Standard- Removing the standard concerning theliability for actions of a specific business agent while in a foreign country wouldeliminate the legal responsibility of the management of a domestic firm over the
unauthorized actions of the agent
Too Costly- The internal accounting controls mandated by the Act were tooburdensome and costly on domestic firms. Failure to implement these controls
made officials unnecessarily cautions
Questionable Exports- In some nations, acceptance of a fee of payment by a
government official from a business is customary. If the US makes this paymentillegal, it appears that we are more concerned with exporting our cultural biasesrather than our products
Ambiguities- Defendants have been able to claim there is no prohibition of bribesintended to reduce customs duties or tax obligations
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
12/20
12
Are U.S. Companies Disadvantaged inWorld Trade by the FCPA?
If US businesses are restricted frombribery while foreign businesses arenot, does this result in an majordisadvantage for US businesses inglobal competition
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
13/20
13
International Anti-CorruptionAgreements
OECD
Convention on Combating Bribery of Foreign PublicOfficials in International Business Transactions
Adopted November 1, 1997 UN
United Nations Convention Against Corruption
Adopted September 29, 2003
WB Anti-Corruption Program (through good
governance)
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
14/20
14
International Enforcement
Lack of enforcement by OECD and UN Lack of compliance with the [OECD]
conventions provisions continues to hinder
corruption investigations and prosecutions.~ Transparency International
OECD convention is the strongest
international convention against corruptionto date
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
15/20
15
Implementation
Lack of or Partial Implementation byDomestic Governments Continued corruption in some OECD
countries Lack of enforcement domestically
Degree of Punishment possible
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
16/20
16
Status of Worldwide Corruption
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
17/20
17
Non-OECD Countries
OECD convention only signed by the 37members and 5 non-members What about all the other non-OECD
countries? Incentives to companies to operate in non-
OECD countries to escape FCPA
restrictions? Impacts of major new trading centers-
Singapore, China, etc.
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
18/20
18
Policy Proposal
Bi-lateral and Multi-lateral Agreements
World Trade Organization (WTO)
DSU offers some recourse forimplementation
Doha Agenda the topic of building an "anti-corruption"
strategy more explicitly was raised (byTransparency International representative Eigen) Current issues facing the Doha Round
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
19/20
19
Conclusion
Addressing bribery, and with it itsdetrimental economic, social and politicaleffectscould, further enhance thedevelopment opportunities and outcome. WTO, Development Opportunities from Doha
******************************************
Corruption and bribery are trade distortions.To level the playing field it is necessary forall countries to cooperate to eliminate
corruption.
7/29/2019 Trade Relations.monday.corruption-FCPA (Fall 2007)
20/20
20
Works Cited Congressional Research Service. CRS Report to Congress: Foreign Corrupt
Practices Act.http://www.fas.org/irp/crs/Crsfcpa.htm Organization for Economic Co-Operation and Development. The OECD
Convention on Combating Bribery of Foreign Officials in International BusinessTransactions.http://www.oecd.org/document/20/0,2340,en_2649_34859_2017813_1_1_1_1,00.html
Transparency International. Corruption Perceptions Index 2007.http://www.transparency.org/policy_research/surveys_indices/cpi/2007 United Nations. United Nations Convention Against Corruption.
http://www.unodc.org/pdf/crime/convention_corruption/signing/Convention-e.pdf
United States Department of Justice. Foreign Corrupt Practices Act.http://www.usdoj.gov/criminal/fraud/fcpa/
World Bank. Governance and Anti-Corruption.http://web.worldbank.org/WBSITE/EXTERNAL/WBI/EXTWBIGOVANTCOR/0,,contentMDK:20672500~menuPK:1740553~pagePK:64168445~piPK:64168309~theSitePK:1740530,00.html
World Trade Organization. The Doha Development Agenda and Beyond. (April 29,2002).http://www.wto.org/english/tratop_e/dda_e/summary_report_dev_opport_doha.doc
http://www.fas.org/irp/crs/Crsfcpa.htmhttp://www.fas.org/irp/crs/Crsfcpa.htmhttp://www.fas.org/irp/crs/Crsfcpa.htmhttp://www.oecd.org/document/20/0,2340,en_2649_34859_2017813_1_1_1_1,00.htmlhttp://www.oecd.org/document/20/0,2340,en_2649_34859_2017813_1_1_1_1,00.htmlhttp://www.oecd.org/document/20/0,2340,en_2649_34859_2017813_1_1_1_1,00.htmlhttp://www.transparency.org/policy_research/surveys_indices/cpi/2007http://www.transparency.org/policy_research/surveys_indices/cpi/2007http://www.transparency.org/policy_research/surveys_indices/cpi/2007http://www.unodc.org/pdf/crime/convention_corruption/signing/Convention-e.pdfhttp://www.unodc.org/pdf/crime/convention_corruption/signing/Convention-e.pdfhttp://www.unodc.org/pdf/crime/convention_corruption/signing/Convention-e.pdfhttp://www.unodc.org/pdf/crime/convention_corruption/signing/Convention-e.pdfhttp://www.unodc.org/pdf/crime/convention_corruption/signing/Convention-e.pdfhttp://www.usdoj.gov/criminal/fraud/fcpa/http://www.usdoj.gov/criminal/fraud/fcpa/http://www.usdoj.gov/criminal/fraud/fcpa/http://web.worldbank.org/WBSITE/EXTERNAL/WBI/EXTWBIGOVANTCOR/0,,contentMDK:20672500~menuPK:1740553~pagePK:64168445~piPK:64168309~theSitePK:1740530,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/WBI/EXTWBIGOVANTCOR/0,,contentMDK:20672500~menuPK:1740553~pagePK:64168445~piPK:64168309~theSitePK:1740530,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/WBI/EXTWBIGOVANTCOR/0,,contentMDK:20672500~menuPK:1740553~pagePK:64168445~piPK:64168309~theSitePK:1740530,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/WBI/EXTWBIGOVANTCOR/0,,contentMDK:20672500~menuPK:1740553~pagePK:64168445~piPK:64168309~theSitePK:1740530,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/WBI/EXTWBIGOVANTCOR/0,,contentMDK:20672500~menuPK:1740553~pagePK:64168445~piPK:64168309~theSitePK:1740530,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/WBI/EXTWBIGOVANTCOR/0,,contentMDK:20672500~menuPK:1740553~pagePK:64168445~piPK:64168309~theSitePK:1740530,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/WBI/EXTWBIGOVANTCOR/0,,contentMDK:20672500~menuPK:1740553~pagePK:64168445~piPK:64168309~theSitePK:1740530,00.htmlhttp://www.wto.org/english/tratop_e/dda_e/summary_report_dev_opport_doha.dochttp://www.wto.org/english/tratop_e/dda_e/summary_report_dev_opport_doha.dochttp://www.wto.org/english/tratop_e/dda_e/summary_report_dev_opport_doha.dochttp://www.wto.org/english/tratop_e/dda_e/summary_report_dev_opport_doha.dochttp://www.wto.org/english/tratop_e/dda_e/summary_report_dev_opport_doha.dochttp://web.worldbank.org/WBSITE/EXTERNAL/WBI/EXTWBIGOVANTCOR/0,,contentMDK:20672500~menuPK:1740553~pagePK:64168445~piPK:64168309~theSitePK:1740530,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/WBI/EXTWBIGOVANTCOR/0,,contentMDK:20672500~menuPK:1740553~pagePK:64168445~piPK:64168309~theSitePK:1740530,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/WBI/EXTWBIGOVANTCOR/0,,contentMDK:20672500~menuPK:1740553~pagePK:64168445~piPK:64168309~theSitePK:1740530,00.htmlhttp://www.usdoj.gov/criminal/fraud/fcpa/http://www.unodc.org/pdf/crime/convention_corruption/signing/Convention-e.pdfhttp://www.unodc.org/pdf/crime/convention_corruption/signing/Convention-e.pdfhttp://www.unodc.org/pdf/crime/convention_corruption/signing/Convention-e.pdfhttp://www.transparency.org/policy_research/surveys_indices/cpi/2007http://www.oecd.org/document/20/0,2340,en_2649_34859_2017813_1_1_1_1,00.htmlhttp://www.oecd.org/document/20/0,2340,en_2649_34859_2017813_1_1_1_1,00.htmlhttp://www.fas.org/irp/crs/Crsfcpa.htmRecommended