In business, and especially in competition, all the players need to have a level playing field. Firms, for instance, need to engage in fair competition in acquisition of tenders, raw materials, partnerships and other deals. The Foreign Corrupt Practices Act (FCPA) was passed to make the above a reality. Since it is not possible to assume that all firms will engage in fair and corruption-free activities, this Act was passed to regulate the issue. It is important to note that it was actually adopted as a corrective measure as very many businesses and individuals in the US were engaging in corruption and bribery at an alarming rate (Brown etal., 2007).
FCPA was enacted in 1977 in the United States as a federal law with a view of stopping payment of bribes among other corrupt proceedings that were used either to achieve or preserve business. It was created to have two provisions in order to be effective in dealing with corruption and boosting transparency. The act was designed to be all-encompassing and is employed in the entire globe for firms that are either US based or linked to it. It covers all the world’s companies, both private and public, as well as their officials. People such as employees, directors, agents and even stock holders are bound by this act and are expected to steer clear of corruption and bribery. Various agents and shareholders, including distributors, consultants, partners and party agents among others, are also bound by it.
In order for FCPA to be implemented fully, there are a number of requirements that every firm should fulfil. Additionally, this Act has been formulated into regulatory mechanisms for all firms and individuals in business. It is also equipped with the early warning systems for early detection of corruption (Black & Witten, 1997).
To be effective in its mandate, the Foreign Corrupt Practices Act obliges all firms and individuals in business to make and keep precise accounts and also have internal checks and controls against corruption, which should be fully functional and responsive with the early detection and control systems. In addition, the Act should guarantee that all transactions conducted and all assets exchanged or transacted are accounted in line with the firm’s approval.
The Security Exchange Act (SEC) is another act that focuses specifically on the corrupt officials or business owners themselves. It ensures that each person takes personal responsibility for corruption. In short, if a firm or individuals are found to be engaging in corruption, this Act assists to penalize companies and leaders who engage in corruption. Their illegally acquired wealth is disgorged in order to reestablish a level playing ground for all firms (Sinow, 1982). The Department of Justice assisted by SEC is responsible for dealing with corruption through enforcement of FCPA. They together create units and infrastructure they need to carry out their mandate effectively.
Limited time Offer
There are many examples where FCPA has been implemented to punish corrupt companies and individuals. The best example is where Siemens Global was slapped with a fine of $1.6 billion in 2011. SEC and the department of justice did this and opened charges against this global engineering giant for engaging in corruption in Israel, Argentina, the US among many other countries. The company had engaged in systematic bribing of corrupt officials with a goal of gaining billions of dollars in contracts.
In October 2011, SEC charged Citigroup in a court of law for misleading an investor. This action of Citigroup made an investor lose millions while Citigroup gained profit. SEC won the suit and Citigroup was ordered to settle $285 million to the investor in losses and damages. This is another instance where FCPA swung into action to punish corrupt traders.
Related Business essays