FCPA- Curbing Corruption and bribery
Corruption is a dishonest and illegal means that people in powerful positions engage in. They do it for personal gain that involves business profits as well. They gain an undue advantage with this illegal activity.
Bribe involves the illegal act of gifting money or any product of equivalent worth to influence a goal. There was an urgent requirement to keep a check on these corrupt practices, especially during international business deals.
The Foreign Corrupt Practices Act (FCPA) of 1977 is a United States federal law. This anti-corruption policy prohibits U.S. citizens and entities from bribing foreign government administrators to profit their company interests.
The FCPA pertains to restricted conduct everywhere in the world. It applies to both U.S. publicly traded companies and privately held companies. It helped in levelling the American business all across the globe.
Understanding the Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act checks bribery and corruption internationally. Spending on foreign officials for speeding legal processes or attaining contracts was a widespread business process around the world in the 1970s. In a few nations, firms occasionally wrote-off bribes as normal business expenses when documenting the tax returns. This practise was so prevalent that they did not consider it unethical.
When the act was finally passed in 1977, this anti-corruption policy obtained significant support from American companies because they were unable to compete honestly in international markets where bribery was prevalent. The FCPA has an anti-bribery regime that helps businesses to flourish without room for any malpractice.
Cases In 2019 Where Companies Were Caught Infringing with The Anti-Corruption Policy
Some Instances In 2019 Where SEC Took Action Against Corrupt Practices Are:
Case 1: Ericsson is a Stockholm based multinational telecommunications company. To resolve charges that it violated regarding the FCPA, It had to pay more than $1 billion to the SEC and DOJ. It engaged in a large-scale bribery scheme that involved the usage of sham consultants to privately funnel capital to government officials in many countries.
Case 2: Microsoft was accused of violation of FCPA in Hungary, Saudi Arabia, Thailand and Turkey. It had to pay more than $24 million to settle SEC charges.
What Needs To Be Done?
Corporations should maintain internal control through an anti-corruption policy to make sure that business transactions are managed properly. Violators of the FCPA can face huge penalties and sanctions. They must be made aware of The Foreign Corrupt Practices Act (FCPA) and anti-corruption through extensive training and workshops.