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Apply Foreign Corrupt Practices Act

Apply Foreign Corrupt Practices Act

  

Introduction

Ethical considerations in organizations such as the ABC multinational companies revolve around integrity and honesty. These two characters form part of the organizational culture that influences how employees behave. For instance, for ABC to have a solid Ethical culture, employees must always be trained and shaped to speak the truth and do the right thing honestly as discussed in Thailand assignment help service. Therefore, an ethical culture enhances the relationship between the company, customers, the company, and the tax authorities, including regulators. However, there have been past experiences faced by companies such as Lockheed and Siemens concerning bribery payments and fraudulent financial activities that lead to huge losses. This work provides an educative insight on the Foreign Corrupt Practices Act to the employees of the ABC. 

Foreign Corrupt Practices Act Overview

The Foreign Corrupt Practices Act (FCPA) was passed in 1977 and disallows U.S. citizens and companies from offering bribes to foreign government officers to gain business advantages. Apart from U.S. entities, the ACT also governs other entities that trade in the U.S. capital markets (Thomson Reuters, 2022). Before 1977, no existing laws disallowed certain business practices, such as offering bribes to foreign governments and entities; therefore, many loopholes in the business practices facilitated fraudulent and bribery activities. In terms of enforcement, the FCPA is enforced jointly by the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ). Further, the FCPA covers companies' directors, employees, managers, shareholders, and agents. In particular, the agents include suppliers, business partners, and consultants (SEC, 2017). Lastly, the FCPA has three critical provisions on bribery payments, financial record keeping, and a system of internal controls. 

The FCPA provides that issuers and companies must keep accurate records and ensure that robust systems of internal controls are in place. Strong internal controls help organizations respond to and mitigate business risks (International Finance Corporation, 2021). Additionally, FCPA provides that companies must provide assurances that financial transactions be appropriately accounted for through proper management approval. 

Examples of Foreign Corrupt Practices Act violations at Assignmenthelpsite.com.

There have been several real examples of companies that have violated the FCPA. For instance, WPP Plc was fined more than $ 19 million in fines SEC for an FCPA violation in 2021. The company violated particular provisions of the Act, including anti-bribery, financial records, and internal controls. For example, WPP was expanding in new markets, and one of its subsidiaries in India bribed the Indian government officials to gain more advertising contracts. Also, WPP received numerous complaints on the issue and never acted(SEC, 2021). 

Another example is Goldman Sachs Group Inc., fined $ 1 billion in fines SEC in 2020. Similar to the above case, the company violated the FPCA provisions on anti-bribery, financial records, and internal controls through transactions with 1Malaysia Development Berhad. In this case, an official from the bank bribed government officials in Malaysia and Abu Dhabi through an agent. In return for the bribe, the bank received lucrative contracts from 1Malaysia Development Berhad to manage high-value bond offerings; the 1Malaysia Development Berhad is an investment fund owned by the Malaysian government (SEC, 2020). Read more examples on professional assignment help writers.

Red flags that might indicate violations of the Act.

Since the FCPA is a legal requirement for American entities, compliance is part of leaders' top concerns. However, compliance is a challenge, especially for multinational companies that operate in more than one jurisdiction. Employees and leaders must point out and be aware of the various red flags that indicate violations of the Act. 

1. One red flag of a breach is when company agents such as business partners and suppliers refuse or avoid acknowledging and certifying their compliance with FCPA regulations. 

2. Another red flag is when employees and agents avoid providing disclosure or further details on their relationship with government officials that may affect their integrity or promote conflict of interest. 

3. For multinational companies, a red flag occurs when one of the subsidiaries is in one of the most corrupt countries. 

4. For transactions and payments, a red flag occurs when such fees are not paid directly to the destination but pass through an agent or a third party. 

5. Further on payments and violation of financial transactions provision, red flag includes payments with unclear descriptions, falsified invoices, and bloated invoices.

Consequences of violations

Companies and individuals that violate the FCPA provision face several consequences. For individuals, it includes Imprisonment, criminal penalties, and civil penalties. The consequences for companies include criminal and civil penalties (SEC, 2017). 

Suppose employees suspect that there are cases of FCPA violations in ABC. In that case, they can utilize internal mechanisms at first by reporting through the compliance unit of the company or the internal audit unit. If the management does not act, the employees can notify the external auditor or lodge complaints anonymously through their attorney to the SEC. 

Whistleblowing

Employees that whistle blow and report directly to the SEC are protected as whistleblowers as per the Sarbanes-Oxley Act. The Sarbanes-Oxley Act protects employees from their employers in case of reprisal due to whistleblowing. In addition, the Dodd-Frank Act also protects whistleblowers through the SEC whistleblower program. The protection of whistleblowers is paramount in fighting corruption and bribery or violation of the FCPA programs. The protection strengthens the Act in that it shows that SEC is working as per the ACT.

  

References

International Finance Corporation. (2021). Internal Control Handbook. https://assignmenthelpsite.com/assignment-help-service-mexico-hire-native-writers-for-assignments/ 

SEC. (2017, February 1). Spotlight on Foreign Corrupt Practices Act. Sec.Gov. https://www.sec.gov/spotlight/foreign-corrupt-practices-act.shtml

SEC. (2020, October 22). SEC Charges Goldman Sachs With FCPA Violations. Sec.Gov. https://www.sec.gov/news/press-release/2020-265

SEC. (2021, September 24). SEC Charges World’s Largest Advertising Group with FCPA Violations. Sec.Gov. https://www.sec.gov/news/press-release/2021-191

Thomson Reuters. (2022). Foreign Corrupt Practices Act of 1977 (FCPA). Practical Law. http://uk.practicallaw.thomsonreuters.com/6-501-6309?transitionType=Default&contextData=(sc.Default)&firstPage=true

      

    Introduction

    Ethical considerations in organizations such as the ABC multinational companies revolve around integrity and honesty. These two characters form part of the organizational culture that influences how employees behave. For instance, for ABC to have a solid Ethical culture, employees must always be trained and shaped to speak the truth and do the right thing honestly as discussed in Thailand assignment help service. Therefore, an ethical culture enhances the relationship between the company, customers, the company, and the tax authorities, including regulators. However, there have been past experiences faced by companies such as Lockheed and Siemens concerning bribery payments and fraudulent financial activities that lead to huge losses. This work provides an educative insight on the Foreign Corrupt Practices Act to the employees of the ABC. 

    Foreign Corrupt Practices Act Overview

    The Foreign Corrupt Practices Act (FCPA) was passed in 1977 and disallows U.S. citizens and companies from offering bribes to foreign government officers to gain business advantages. Apart from U.S. entities, the ACT also governs other entities that trade in the U.S. capital markets (Thomson Reuters, 2022). Before 1977, no existing laws disallowed certain business practices, such as offering bribes to foreign governments and entities; therefore, many loopholes in the business practices facilitated fraudulent and bribery activities. In terms of enforcement, the FCPA is enforced jointly by the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ). Further, the FCPA covers companies' directors, employees, managers, shareholders, and agents. In particular, the agents include suppliers, business partners, and consultants (SEC, 2017). Lastly, the FCPA has three critical provisions on bribery payments, financial record keeping, and a system of internal controls. 

    The FCPA provides that issuers and companies must keep accurate records and ensure that robust systems of internal controls are in place. Strong internal controls help organizations respond to and mitigate business risks (International Finance Corporation, 2021). Additionally, FCPA provides that companies must provide assurances that financial transactions be appropriately accounted for through proper management approval. 

    Examples of Foreign Corrupt Practices Act violations at Assignmenthelpsite.com.

    There have been several real examples of companies that have violated the FCPA. For instance, WPP Plc was fined more than $ 19 million in fines SEC for an FCPA violation in 2021. The company violated particular provisions of the Act, including anti-bribery, financial records, and internal controls. For example, WPP was expanding in new markets, and one of its subsidiaries in India bribed the Indian government officials to gain more advertising contracts. Also, WPP received numerous complaints on the issue and never acted(SEC, 2021). 

    Another example is Goldman Sachs Group Inc., fined $ 1 billion in fines SEC in 2020. Similar to the above case, the company violated the FPCA provisions on anti-bribery, financial records, and internal controls through transactions with 1Malaysia Development Berhad. In this case, an official from the bank bribed government officials in Malaysia and Abu Dhabi through an agent. In return for the bribe, the bank received lucrative contracts from 1Malaysia Development Berhad to manage high-value bond offerings; the 1Malaysia Development Berhad is an investment fund owned by the Malaysian government (SEC, 2020). Read more examples on professional assignment help writers.

    Red flags that might indicate violations of the Act.

    Since the FCPA is a legal requirement for American entities, compliance is part of leaders' top concerns. However, compliance is a challenge, especially for multinational companies that operate in more than one jurisdiction. Employees and leaders must point out and be aware of the various red flags that indicate violations of the Act. 

    1. One red flag of a breach is when company agents such as business partners and suppliers refuse or avoid acknowledging and certifying their compliance with FCPA regulations. 

    2. Another red flag is when employees and agents avoid providing disclosure or further details on their relationship with government officials that may affect their integrity or promote conflict of interest. 

    3. For multinational companies, a red flag occurs when one of the subsidiaries is in one of the most corrupt countries. 

    4. For transactions and payments, a red flag occurs when such fees are not paid directly to the destination but pass through an agent or a third party. 

    5. Further on payments and violation of financial transactions provision, red flag includes payments with unclear descriptions, falsified invoices, and bloated invoices.

    Consequences of violations

    Companies and individuals that violate the FCPA provision face several consequences. For individuals, it includes Imprisonment, criminal penalties, and civil penalties. The consequences for companies include criminal and civil penalties (SEC, 2017). 

    Suppose employees suspect that there are cases of FCPA violations in ABC. In that case, they can utilize internal mechanisms at first by reporting through the compliance unit of the company or the internal audit unit. If the management does not act, the employees can notify the external auditor or lodge complaints anonymously through their attorney to the SEC. 

    Whistleblowing

    Employees that whistle blow and report directly to the SEC are protected as whistleblowers as per the Sarbanes-Oxley Act. The Sarbanes-Oxley Act protects employees from their employers in case of reprisal due to whistleblowing. In addition, the Dodd-Frank Act also protects whistleblowers through the SEC whistleblower program. The protection of whistleblowers is paramount in fighting corruption and bribery or violation of the FCPA programs. The protection strengthens the Act in that it shows that SEC is working as per the ACT.

      

    References

    International Finance Corporation. (2021). Internal Control Handbook. https://assignmenthelpsite.com/assignment-help-service-mexico-hire-native-writers-for-assignments/ 

    SEC. (2017, February 1). Spotlight on Foreign Corrupt Practices Act. Sec.Gov. https://www.sec.gov/spotlight/foreign-corrupt-practices-act.shtml

    SEC. (2020, October 22). SEC Charges Goldman Sachs With FCPA Violations. Sec.Gov. https://www.sec.gov/news/press-release/2020-265

    SEC. (2021, September 24). SEC Charges World’s Largest Advertising Group with FCPA Violations. Sec.Gov. https://www.sec.gov/news/press-release/2021-191

    Thomson Reuters. (2022). Foreign Corrupt Practices Act of 1977 (FCPA). Practical Law. http://uk.practicallaw.thomsonreuters.com/6-501-6309?transitionType=Default&contextData=(sc.Default)&firstPage=true