Abstract
In America, there is a continuing focus on trying to impose ethical standards on the way firms are doing business. This means that laws such Foreign Corrupt Practices Act o 1977 are designed to curb unethical behavior. However, the problem is that these challenges are creating issues in the way they are interpreted and the impact they are having on an organization. To understand the long term effects requires examining the ethics of the law and the long term impacts it is having on corporations.
The Foreign Corrupt Practices Act of 1977 is focused on dealing with issues of corruption when it comes to US firms and American citizens that are operating abroad. Under these provisions, the law makes it illegal for them to bribe government officials even when this is common practice within the host country. Moreover, various amendments to the law also hold foreign firms and individuals accountable for their actions by making it illegal for them to bribe foreign officials while they are inside the United States. The combination of these elements is designed to impose ethical guidelines on the way corporations, individuals and foreign based entities are conducting their activities. (“Prohibited Foreign Trade Practices,” 2013)
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However, one of the biggest challenges facing many firms is the fact that these practices are often utilized by domestic companies operating inside specific regions. This can give American corporations a strategic disadvantage by not engaging in business as usual. When this happens, there is the possibility that the American government is attempting to impose its values upon others. To fully understand the morality of the law requires carefully examining the different views and the impact they are having on firms.
The ethics associated with the Foreign Corrupt Practices Act is that lawmakers are trying to impose high moral standards on the way firms will conduct business overseas. This is problematic, as many of these companies have a large number of employees who are responsible for engaging in a variety of activities. The problem is that these issues will more than likely create a situation where someone is breaking the law based upon various traditions that utilized inside certain regions. This means that many of their employees could break the law, in order to meet the demands of customers. Yet, they are hurting their competitive position by not engaging in these activities. (Henning, 2013)
When this happens, it is creating a situation where companies will be discouraged from conducting business overseas. This is because there is no way to realistically control the activities of personnel in every single situation. As the Justice Department, has the ability to conduct investigations into their activities and can impose civil or criminal penalties against a firm. (Henning, 2013)
A good example of this occurred with Las Vegas Sands. During a recent internal investigation, it determined that there were violations of the law by several officials who are running their operations in Macau. This is despite the fact that the company has broad provisions in place to ensure compliance with the law. However, in spite of these safeguards, there is still the possibility that someone will engage in corruption as a part of doing business. (Henning, 2013)
Recently, the American Chamber of Commerce spoke out against the law by stating that the guidelines do not give US firms any kind of flexibility. This is because it is broadly enforced and the slightest altercation from it can result in a company facing an official investigation from the Justice Department. When this happens, there is the potential for firms to try and hide their activities from government officials or simply not go into specific regions (based upon the possibility of this occurring). These variables will hurt their ability to compete in foreign markets and to adjust to the culture of doing business inside them. (Henning, 2013)
In this aspect, the US government is attempting to impose stiff penalties on firms that are engaging these violations. At the same time, they have been conducting undercover operations to catch companies violating different provisions of the act. This has resulted in the Justice Department stepping up its enforcement of these provisions. Evidence of this can be seen with observations from Seitzenger (2010) who said, “The executive branch appears to have increased oversight of suspected American businesses for alleged violations of the act. On January 19, 2010, the U.S. Department of Justice (DOJ) announced that it had indicted 22 executives and employees in the military and law enforcement products industry for engaging in schemes to bribe foreign government officials to obtain and retain business.” This is illustrating how the US government is taking broader interpretations of the act to prevent American companies from engaging in corruption. (Seitzenger, 2010)
The problem with this kind of approach is that it is not curtailing the activities of US based firms who do this. In many cases, they will continue to engage in corruption, as a part of the culture of doing business. This is because the law has provisions that allow them to engage in actions that will speed up routine activities. (Finely, 2009)
However, the problem with interpreting this part; is it is so vague it creates confusion and will often hamper the ability of firms to deal with these challenges. At the same time, different lawyers will often have contrasting opinions about what it means. In some cases, this could be a sign that it is okay as long as it is speeding up government action. Yet, no one can be quite certain, as the law does not specifically define this. (Finely, 2009)
These different elements are showing how the Foreign Corrupt Practices Act is the US government’s way of trying to impose ethical standards on individuals and firms. The problem is that these issues are not changing moral beliefs and attitudes. Instead, it is creating confusion about the underlying challenges and the lasting effects it is having on firms. When this happens, there will be times when these standards are enforced more broadly. While at other times, the laws will have a negative impact by failing to take into account other ethical values inside specific regions. As a result, it should have more liberal guidelines that will give companies the ability to remain in compliance and improve their monitoring. Yet, not hold them accountable for every violation which may possibly occur. (Finely, 2009)
- Prohibited Foreign Trade Practices. (2013). Cornel School of Law. Retrieved from: http://www.law.cornell.edu/uscode/text/15/78dd-1
- Henning, P. (2013). Dealing with the Foreign Corrupt Practices Act. New York Times. Retrieved from: http://dealbook.nytimes.com/2013/03/04/dealing-with-the-foreign-corrupt-practices-act/
- Finely, S. (2009). The Foreign Corrupt Practices Act. SSD Law. Retrieved from: http://www.ssdlaw.com/learning-center/foreign-corrupt-practices-act-serious-business-overseas-business
- Seitzenger, M. (2010). Foreign Corrupt Practices Act. FAS. Retrieved from: http://www.fas.org/sgp/crs/misc/R41466.pdf
