Chapter 4: Ethics and Business Decision Making Chapter 4: Ethics and Business Decision Making

Foreign Corrupt Practices Act.  In 1998 the United States Congress and 33 other countries acted against the bribery of foreign governmental officials in an attempt to reduce corruption and money laundering through the global financial system.  Federal or State Law – Court? 2

The FCPA has two parts: 1. addresses accounting transparency requirements under the Securities Exchange Act of 1934 Securities Exchange Act of and another concerning bribery of foreign officials 3

There are two provisions to the Foreign Corrupt Practices Act. Enforced by the Department of Justice and the accounting provisions are enforced by the Securities and Exchange Commission (SEC). 4

Foreign Corrupt Practices Act. Official statistics show that 400 American firms have collectively paid $300 million in bribes to foreign governments, political parties and also directly to the accounts of government officials. 5

Foreign Corrupt Practices Act Bribery by Foreign Companies.  Penalties for Violations: companies up to $2 million in fines, individuals up to $100,000, and up to 5 years in prison. 6

January 2014 Alcoa World Alumina agreed to plead guilty to one count of violating the Foreign Corrupt Practices Act and pay $223 million in five installments over four years, the Department of Justice said. 7

The U.S. Securities and Exchange Commission and the U.S. Department of Justice announced separate settlements on Thursday morning. The SEC said Alcoa's subsidiaries repeatedly bribed officials to retain the right to supply a government-controlled aluminum producer, Aluminium Bahrain, or Alba. 8

The US DOJ and the SEC are currently investigating whether Hewlett Packard executives paid about $10.9 million in bribery money between 2004 and 2006 to the Prosecutor General of Russia "to win a million-dollar contract to supply computer equipment throughout Russia. 9

Regarding payments to foreign officials, the act draws a distinction between bribery and facilitation or "grease payments", which may be permissible under the FCPA but may still violate local laws. 10

The primary distinction is that grease payments are made to an official to expedite his performance of the duties he is already bound to perform. 11

An April 2012 article in The New York Times reported that a former executive of Walmart de Mexico alleged in September 2005 that Walmart de Mexico had paid bribes to officials throughout Mexico in order to obtain construction permits. 12

In January 2012, Marubeni Corporation agreed to pay $54.6 million to settle multiple US Foreign Corrupt Practices Act charges. 13

(TSKJ) hired Marubeni to bribe lower-level Nigerian government officials to help it obtain and retain contracts to build liquefied natural gas facilities in Nigeria. TSKJ paid Marubeni $51 million which was intended, in part, to be used to bribe Nigerian government officials 14