Academic journal article Suffolk Transnational Law Review

International Corporate Corruption: Why the Foreign Corrupt Practices Act Is Not Enough to Stop Widespread Usage of Shaving Cream Pies

Academic journal article Suffolk Transnational Law Review

International Corporate Corruption: Why the Foreign Corrupt Practices Act Is Not Enough to Stop Widespread Usage of Shaving Cream Pies

Article excerpt

I. INTRODUCTION

After following the escalating News Corporation (News Corp.) scandal for several months, the world watched as a shaving cream pie was hurled at Rupert Murdoch during his testimony in a Westminster hearing conducted by British lawmakers. (1) Murdoch's wife and others leapt to his defense but the comedic effect of a pie in the face could not outweigh the tension in the courtroom caused by the underlying problem, namely, the CEO's lack of knowledge, or acknowledgement, of the deception and foul play within his own organization. (2) In addition to the charges pending in the United Kingdom, News Corp. is facing an investigation in the United States under the Foreign Corrupt Practices Act of 1977. (3) Though these charges focus on similar practices to those being investigated in the United Kingdom, there is not one common agency that could cover both investigations, or impose harsher penalties for the widespread practices within the corporation. (4)

This Note addresses the problems that occur as a result of corporate corruption in the absence of an international remedy, and argues for a global solution. (5) It begins by chronicling the development of corporate bribery and corruption, both in the United States and around the world, that created the situation business communities face today. (6) Next, this Note describes action taken to stop these practices by examining the Foreign Corrupt Practices Act of 1977 and its international counterparts. (7) This Note analyzes the inadequacies of the existing laws and calls for an overarching regulatory scheme to curb these corporate practices. (8) Finally, this Note argues that corruption and bribery will continue to exist as a widespread practice without an effective international mechanism to combat them, which calls into question the stability of the international economy. (9)

II. DEFINING CORRUPTION WITHIN THE CORPORATE CONTEXT

In order to be successful, the response to corruption must begin with how it is defined. (10) At its most basic, corruption deals with the abuse of power for personal and private benefit. (11) In a corporate setting, the focus moves to the bribery of foreign officials by representatives of a corporation, either to open doors or close mouths. (12) An important component of bribery in this framework is that payments are made with the intention of influencing the official receiving the bribe to act in a way that he otherwise would not act. (13)

In order to gain a competitive edge, or even just to be able to compete on an international level, corporations engage in illegal activity by making illicit payments to officials in the countries in which they wish to do business and disguising them in their corporate accounting records. (14) There are several classifications regarding the recipients of corporate payoffs. (15) By focusing on the exchange of power between these participants, governments and other interested groups can gain information about these corporate transactions. (16) Watching items of value change hands is also a tangible way for interested parties to monitor corruption. (17)

A. Tracking the Development in Modern Corporate Society

It is difficult to quantify exactly how many instances of corporate corruption take place around the world at any given time. (18) In some places, corruption is so prevalent and acceptable that it is included in the country's tax code. (19) In spite of that difficulty, however, there are several technical mechanisms in place to attempt to quantify it. (20) Monitoring the public and legal scandals related to corporate corruption gauges the prevalence of corruption in society. (21) The recent cases seem to be bigger and more egregious than instances of corruption from the past. (22) If corruption is a commonplace occurrence that does not shock the public conscience, corporations will continue the practice without hesitation. (23)

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