Question

OPEN A DISCUSSION AND ASK QUESTIONS ACCORDING TO RESPONSE

The FCPA, Foreign Corrupt Practices Act, is another set of policies in which companies are required to adhere to when doing business globally. The difficulty that managers can face when expanding globally is that they may not fully be aware of what kind of corrupt acts could be taking place within the company in those international locations. Osland & Clinch (2013) discussed a situation in which a major company they called A&A expanded globally and purchased a separate business to merge into their current organization. What they failed to discover, for many years, was that the leaders of this newly purchased company had been profiting off of illegal business dealings by profiting from bribery. It appears that they felt that something shady was taking place, but they did not have the evidence or full knowledge of the situation until about 10 years later when internal affairs were finally made aware. The struggle that management can encounter in situations like this is that they have been the operators of that business for 10 years while the illegal activity took place right under their nose and they can now be liable for any penalties handed down. The question is whether A&A should report their findings and risk the penalties or stay quiet about the profits that they have made, which was tens of millions of dollars over the years.

From our readings about FCPA (2010), we know that any company that is expanding globally or already doing business globally should be addressing their FCPA up front and from the top of the leadership ladder. It should be understood by all members of the board and management that they will not tolerate employees who notice infractions and do not speak up and they will make sure that measures are in place to minimize the company’s risks of having FCPA infractions. It is discussed that most of these infractions can be prevented by having strong standards and policies in place as well as continual training and communication to all employees regarding these policies.

Another example of an FCPA violation is Mondelez International. As the owner of Oreo and Cadbury, they were fined $13 million by the SEC for allegedly bribing officials in India in order to be approved for a plant to be built. Best (2017) discussed that although the company did not admit to the infractions, they agreed to pay the fine in order to settle the matter. This shows us that even when there may not be 100% factual evidence of wrongdoings, a company that partakes in questionable dealings may be accused of an infraction and be force into paying penalties.

There are many obstacles that managers must face in order to expand globally, and being FCPA compliant is one of those items that if ignored could cost the company more than the benefits of moving globally. Managers should always been fully aware of who their company is working alongside or making business agreements with. They should also know what kinds of business those separate companies might be conduction, because if something happens, you could be linked to them and accused of knowing what was taking place.

Answer 1

The managers while expanding their business globally or already having foreign business operations running in other country or countries should fully be compliant to FCPA and should act and take corrective actions against the corrupt employe or employees of their international unit/firm and the employees who were responsible for hiding the corrupt practices of their fellow colleagues and should immediately report these corrupt practices to the concerned authority and pay the penalties accordingly.

But question is where the companies should not contest the FCPA authorities if penalty is very heavy or not justified.

Like in case of A&A whether this company should report the corrupt practices of the leaders of their merged entity/firm and should hide them and not to report in order to avoid itself of paying the penalties which could be millions of dollar in all those years, i.e. 10 years since it was not aware of corrupt practices of its leaders of its acquired company for continuous 10 years and which had happened right under their nose, so in that case the A&A should disclose these wrong corrupt practices to concerned authorities and should be ready to pay the penalties but should ask for some kind of leniency, if possible, since by paying penalties A&A can ensure to address and disclose these corrupt practices and should show its image as an FCPA compliant company which will save A&A from even big penalties later on and also the potential damage to its brand value and confidence of its investors.

Should companies make and implement FCPA compliant policies and should they train their employees for the given FCPA rules and regulations and should they make mandatory for every new and left out employee to pass a certain internal exam regarding FCPA ? So answer is yes and yes this is a good practice to follow.