Magazine article Business Credit

Name an Oxymoron: Business Ethics. (Selected Topic)

Magazine article Business Credit

Name an Oxymoron: Business Ethics. (Selected Topic)

Article excerpt

Okay, so maybe it isn't the best oxymoron, but you have to admit the perception of international business practices is not exactly "Snow White" clean. Additionally, with the multitude of Enron, Tyco and dot-corn disappointments over the past few years, many of us are starting to question the role we play in shaping an ethical playing field. How do other companies address the relatively recent laws such as the Foreign Corrupt Practices Act (FCPA), Sarbanes-Oxley and the International Bribery and Fair Competition Act of 1998?

Foreign Corrupt Practices Act

One of the issues for all multinational corporations (MNC) relates to the ethical and cultural aspects of their targeted markets. Whether you are shipping wheat to Latin America or driving logistical and marketing expertise into European and East Asian countries, the practices and philosophies boil down to similar concerns. Specifically, a multinational cannot market "American Style" on an international basis and expect success. Nor can an American MNC expect to maintain the same transactional methodology throughout the world and expect to be universally successful. However, we are expected to hold our subsidiary and foreign partners to a standard that may present a competitive disadvantage.

Since cultural norms and values vary across borders, it is safe to assume that moral conflicts or ethical dilemmas will always exist. Taking this one step further, if the laws differ across borders, then both ethical and legal dilemmas arise. Of course, our political leaders have taken steps to level this playing field with regulatory practices such as the FCPA.

According to some of my research, the activity of illegal activities and bribery has changed very little from an investigation performed by the SEC in the mid-1970s. At that time, the SEC revealed that "over 400 U.S. companies admitted making questionable or illegal payments in excess of $300 million to foreign government officials, politicians and political parties." The abuses ran the gamut from high officials to government personnel performing clerical duties. The Carter Administration promoted a punitive law for similar actions, which was well received by the American Public, and resulted in Congress passing the Foreign Corrupt Practices Act (FCPA).

"The FCPA makes it unlawful to bribe foreign government officials to obtain or retain business. The anti-bribery provisions apply to public and non-public corporations, partnerships, associations, joint ventures and citizens of the United States. In short, it applies to all business entities. The act specifically prohibits bribes with either a direct payment, or an indirect payment through an intermediary, although a recent survey by Control Risks Group (CFO Magazine, January 2003) reflected that 70 percent of respondents believe that bribes are made through intermediaries.

In a place long, long ago, many of us may have heard "you may have to grease the wheels a little to get" ... (place the current concern here). It puts chills on the back of my neck just to write it! The implication, of course, is that a bribe must be offered for a business transaction or legitimate service to be performed. As a society, through acts such as the FCPA, we have clearly stated that this is not an acceptable business practice. Additionally, we have stated that American MNC's will be penalized if they participate or accept this as a normal practice.

Criminal penalties may be applied, although it appears that the civil penalties are the rule. Firms are subject to a fine of $2,000,000; officers, directors and stockholders are subject to a fine up to $100,000 and imprisonment for up to five years. Fines imposed on an individual may not be paid by the firm. Under certain circumstances, and under federal laws other than the FCPA, individuals may be fined up to $250,000 or up to twice the amount of the gross gain (to the defendant) or loss (to another person) resulting from the transaction. …

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