Marina Case China

8/12/2019 Marina Case China

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Marina Machado

Subject: Case 2 - Coping with Corruption in Trading with China

Prof - 24/02/2014

1 - List all the different types of bribes, payments, or favors represented in this

case under (a) FCPA, (b) Criminal Law of PC, and (c) Law A!ainst "nfair

Competition of the PC# $hy is each either le!al or ille!al%

nder the !CP"# there are two $ajor t%pes of bribes in&o'&ed which are e(tortion

and regu'ar briber%) These two t%pes of bribes are so$ewhat si$i'ar but are not the

sa$e depending on how the% are being de$anded for) *n the sense that briber% is

tota''% i''ega' an%where in the wor'd whi'e e(tortion is not considered i''ega' in so$e

counties but it is i''ega' in the nited State) +ne of the 'aws i$p'e$ented is The Cri$ina'

,aw of the PC .Peop'es epub'ic of China# which c'assifies its t%pe of briber% as

co$$on briber%) This t%pe of briber% inc'udes pa%$ents or gifts to state e$p'o%ees and

officia's of state owned enterprises in return for benefits)

"ccording to the case, under the !CP" there is a distinction between briber% and

e(tortion depending on the acti&it% resu'ted fro$ &o'untar% or de$anded pa%$ent) *n

fact# a'' countries consider this t%pe of pa%$ent i''ega' as * $entioned before) (tortion

as * said is a 'itt'e different it is i''ega' to practice in nited States but in so$e countries

is not considered i''ega') (tortion can be justified once a pa%$ent can be justified b%

stating# the pa%$ent is needed in order to 3eep the contract or wor3 started) "'' these

t%pes of bribes are considered i''ega' e(cept for e(tortion that is on'% considered i''ega'

in the nited State) Meanwhi'e# the fact behind these 'aws of briber% is so$ehow

co$p'icated and a'so depends on how the gifts are being presented or how its being

de$anded for)The second 'aw i$p'e$ented b% the CPC is the ,aw "gainst nfair Co$petition

for the PC which is a'so ca''ed co$$ercia' briber% which prohibits business within the

countr% to gi&e $one% or propert% to custo$ers to se'' or purchase products) These

t%pes of briber% inc'ude pa%$ents or gifts to state e$p'o%ees and officia's of state

owned enterprises in return for benefits) This 'aw a'so states that an%one who de$ands


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or accepts $one% or propert% in return for benefit is gui't% of briber%) Those two 'aws are

a bit confusing once it states that a gift cou'd not e(ceed 500 but it does not state

an%thing be'ow this a$ount which brings a 'ot of contradiction once so$eone cou'd

accept so$ething inferior than the $a(i$u$ a$ount and not be considered gui't%)

This just shows what co$panies are wi''ing to do and how $uch $one% the% are

wi''ing to pa% to enter a contract with China or their $ar3et# a'so show so$e

interference to the go&ern$ent to tr% a&oiding those practice) Most of the pa%$ents and

other fa&ors are $ade to estab'ish guan(i in China) 6una(i $eans 7connections8 and it

is i$portant part of the Chinese cu'ture) "ccording to 9estern standards $ost of these

connections which inc'ude gifts and bribes are i''ega' but $ust be done in order to

successfu''% dea' with Chinese businesses) This case presents with &arious i''ega' and

so$e 'ega' t%pes of pa%$ents)

& - For those practices that you listed as ille!al, classify each as lubrication,

e'tortion, or subornation, and e'plain your reasonin!#

Corruption is on the rise in China such as in $an% of other underde&e'oped

countries) Chinese press freuent'% has detai'ed cases of corruption and of ca$paigns

to crac3 down on it) The i''ega' practice of briber% can be easi'% c'assified under

subornation) Subornation in&o'&es a 'arge pa%$ent# ser&ice# or gift gi&en to an officia' in

order to get a process $o&ing faster or basica''% ha&e an officia' 'oo3 the other wa% if a

'aw is being bro3en) This practice happens a 'ot in $an% ; rdwor'd countries and * ha&e

seen that a 'ot in $% ho$e town


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of the contract is needed in order to get things going and to $a3e sure that things are

going according to the ti$e schedu'e) * honest'% do not see a prob'e$ with these t%pes

of pa%$ents that are 7outside8 of the contract# but in the S these t%pes of actions are

not considered 'ega'# which brings $ore regu'ations to the ga$e a&oiding ris3s with

$ore corruption)

- $hich of the payments, favors, or bribes are ille!al under the Forei!n Corrupt

Practices Act (FCPA)%

The !oreign Corrupt Practices "ct - !CP" $a3es it i''ega' for co$panies to pa%

bribes to foreign officia's# candidates# or po'itica' parties) Se&ere pena'ties can be

assessed against co$pan% officia's# directors# e$p'o%ees# or agents found gui't% of

pa%ing a bribe or of 3nowing'% participating in or authori=ing the pa%$ent of a bribe)

- Assumin! that the FCPA did not e'ist, what is the ethical response to each of

the payments, favors, or bribes you have identified%

*n countries where corruption runs in a spread wa% 'i3e China and


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* - +n your view, which of the e'penses detailed in the lawsuit could be in

violation of the FCPA, and which could be le!itimate business e'penses as the

American Company contends% iscuss#

* thin3 the $ost significant aspect of the 'awsuit is the e&idence against the

"$erican co$pan% pa%ing Chinese 6o&ern$ent +fficia's o&er a $i''ion do''ars in fees

for ser&ices and a'so e(tending gifts to a consu'tant that inc'uded hote's# shopping

sprees# and entertain$ent 'u(uries) "nother negati&e aspect the "$erican co$pan% has

against the$ in the 'awsuit is the fact that the "$erican co$pan% arranged for two

Chinese ban3ing officia's and their fa$i'% $e$bers &acations around the wor'd to

countries 'i3e >ong ?ong# !rance# the S# and *ta'%) *t e&en goes on to ta'3 about how

the S Co$pan% paid for Chair$ans wife and son of the Chinese co$pan% to ta3e

tennis 'essons as we'' as go'f fees) The "$ericans responded that a'' of the pa%$ents

$ade were 'egiti$ate pa%$ents that were needed in order to 3eep the contract with the

software co$pan%) n'ess it states in the contract that the S Co$pan% needed to pa%

for the Chair$ans son tennis and go'f 'essons# then * be'ie&e that these are not

'egiti$ate reasons for the S Co$pan% to $a3e e(tra&agant purchases in order to 3eep

the contract with the Chinese software co$pan%)

"'though this is an i''ustration of a ci&i' 'awsuit and the !CP" and S

6o&ern$ent was not in&o'&ed# it wou'd be prett% hard to con&ince these two entities that

the pa%$ent $ade b% the )S) Co$pan% to the Chinese co$pan% was so'e'% based on

the principa's of their contracts) *t see$s 'i3e the )S) Co$pan% went o&erboard with

the gifts and pa%$ents for $a3ing sure that their contract with the Chinese software

co$pan% was 'oc3ed in co$p'ete'%) This t%pe of corruption shou'd not be to'erated in

an% countr% and both co$panies shou'd be e(posed) *f it were not for co$panies 'i3e

these# we wou'd not need a'' of these foreign corruption 'aws) This is a perfect e(a$p'e

of wh% we do need these 'aws and other regu'ations i$p'e$ented and precise'%

fo''owed)


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- iscuss the le!al.ethical issues raised by the comments by the retired Forei!n

/ervice a!ent and the consultant#

* be'ie&e that the agent was tr%ing to he'p S Co$panies co$pete in a foreign

$ar3et that is corrupt# but on the other hand he is just as bad as the peop'e of that

countr% that are corrupt) >e is corrupt hi$se'f and not standing behind the 'aw for which

he wor3s for and stands for) *f so$eone is ac3now'edged to be a !oreign Ser&ice "gent

and is supposed to enforce and abide b% the 'aws of which he enforces# then wh% is this

officer in this position if he or she cannot do the job@ *n a'' fairness# the 'aw shou'dnt

e&en e(ist if those that are supposed to enforce it do not abide b% it)

nfortunate'% the stor% does not get into the host countr% the !oreign Ser&ice

"gent is wor3ing in# * a$ sure that wi'' ha&e a greater weigh on $% opinion on this

subject# but honest'% if he is wor3ing in the $ost corrupt countr% rated b% the CP* in

200A which was >aiti# then as far as * a$ concerned $ost co$panies wi'' not e&en want

to do business in a countr% that is e(tre$e'% corrupted) * wou'd not if * was in charge of

a $u'tinationa' co$pan%) * thin3 that the Ser&ice "gent shou'd either be fired for not

doing his or her job correct'% or re'ocated so$ewhere e'se where he or she is not put in

that position of power to $a3e up the ru'es and be part of the prob'e$ in that particu'ar

host countr%)

0 - List alternatives to payin! bribes in international marets and discuss the

plusses and minuses of each#

+b&ious'% corruption in business agree$ents is a serious prob'e$ but * strong'%

disagree that as a business owner or e(ecuti&e %ou shou'd ha&e to participate in and

acco$$odate such unethica' practices in order to be successfu') >owe&er * do be'ie&e

that it wou'd be e(tre$e'% foo'ish to engage in internationa' business and not anticipate

prob'e$s arising b% fai'ing to acco$$odate corrupt business reuests) *t is &er% hard to

a&oid bribes in unde&e'oped countries with a 'ow 'e&e' of education and infor$ation) The

first thing to do wou'd be in&esting on education to bring $ore infor$ation to peop'e

a'ong with se&ere regu'ations to a&oid those unethica' actions) "'so# co$pro$ising an


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agree$ent that is beneficia' to both parties is the 3e% to at 'east consider pa%ing bribes)

* sa% that because $ost of the ti$e co$panies just want to see their side and the

po'iticians or representati&es just thin3 on the$se'&es instead of both focusing and 'arge

benefits to its popu'ation) There was a po'itician in

Documents

Marina Case China