12483 -3- Pages within 24 hrs

FCPA

Student’s Name

Institution Affiliation

Introduction

International business is affected by numerous factors. MNCs have different motivation to enter into international business such as an increase in the market share, spreading of the risks, cost advantages and also desire to use core capabilities such as information technologies of IT firms in the U.S in the developing economies (Madura, 2018). There are various strategies through which MNCs enter international markets such as franchising, exporting, joint venture, acquisitions and foreign direct investment (Madura, 2018). Each country outlined procedures that should be followed by the organizations that seek to enter into international markets. Further, countries have developed a framework to ensure that all fair competitive practices are applied by the business in the global market. In response to this, the chosen article will analyse one of the legal issues about international business and establish an existing relationship with the text reading.

Chosen Article

In this week, an academic article has been selected which addresses one of the contentious issues relating to international business and more promoting equal playing ground for the player in international business, both domestic and foreign firms. Bribery and corrupt business practices in international business is an issue of concern. In the article, Griffith and Lee (2019) bring to attention enactment of the Foreign Anti-corruption laws which prohibits a business from making payment to the foreign officials to influence them to work in your favour to obtain or retaining the business. It is established that in 1977, the United States enacted the Foreign Corrupt Practices Act (FCPA). The act criminalized some of the payment made by U.S based firms officials to the foreign officials where they want to set up businesses or are seeking favorism in the business opportunities such as awarding of the tenders and payment were made for such transaction in the name of the cost of doing the business instead of referring them as.’ bribes’ (Griffith and Lee, 2019).

According to the article, foreign bribes created a competitive disadvantage because of the domestic business (Griffith and Lee, 2019). This is because some of the business opportunities were readily available and the domestic firms qualified for them, were denied them and instead given to foreign entities not because they are more capable than domestic firms but mainly because they had made payments to the officials in charge which leads to the suffering of the domestic firms (Griffith and Lee, 2019).

One of the questions that authors ask, why would the United States pass FCPA yet such bribes were working in favour of the United States. This brings the context of ethical business practices. Therefore, enactment and enforcement of FCPA is one of the ways for the U.S to protect its integrity in the international market. It is noted that after enactment in 1977, it stayed approximately fir 2 decades before it was enforced. However, in the 21st century, renewed effort with increased enforcement of the FCPA has been observed (Griffith and Lee, 2019). For example, U.S indicted Kay for violating FCPA. Plaintiff (U.S) argued that Kay influenced Haitian custom officials to understate custom and sales taxes. However, in the ruling, district defined offenses that would constitute a violation of the FCPA as follows: there must evidence showing the defendant influenced foreign official to use his/ her position to favour defendant, the foreign official must be in violation of his/her duty and finally, the official must wrongfully secure advantage from the defendants. Therefore, these conditions illustrates the minimum threshold for determining violations for FCPA. According to the district court, these conditions were not met which made it to rule against U.S. However, Even if the U.S was not successful in this case, it shows its commitment to combat foreign bribery (Taylor, 2008).

Relevance to the Text Reading

In the Appendix of the constitution, all business laws that applied in the international, interstate and domestic business have been highlighted and FCPA is one of these laws enacted in 1977, amended as 15 U.S.C. §§ 78dd-1 (Kubasek, 2017:Appendix A: The Constitution of the United States). The laws state foreign trade practices inclusive policies that highlight actions that constitute foreign bribery and corrupt prices. For example, the extension of the gifts, money or any other forms of the instrument to the foreign official to influence them to use their capacity to obtain or retain business violates FCPA, which is outlined in the constitution. Therefore, the text under appendix of the constitution makes the pronouncement of the FCPA, the issue that is addressed in detail in the selected article. This demonstrates the importance of the parties to the international market to clearly understand the nature of the business practices in the international market which constitutes a violation of the FCPA.

Finally, the incidence of side payments was very common in the United States for the firms operating in foreign countries. Foreign companies suppressed local companies by offering payment to an official in place of authority to win tenders and contract (Jennings, 2018). This drew the attention of the Congress to enact FCPA in 1977. This criminalized and rendered side payment offered to foreign officials to influence them as corrupt practices. However, there are some payment and engagement activities with foreign officials which do not constitute a violation of the FCPA (Jennings, 2018). For example, making some payment to fasten processing of certificates is regarded as greasing facility and does not amount to a violation of the FCPA. Therefore, MNCs should familiarize with international business laws to establish business practices which are permissible in the international market by their home country as well as international parties.

References

Griffith, S. J., & Lee, T. H. (2019). Toward an Interest Group Theory of Foreign Anti-Corruption Laws. U. Ill. L. Rev., 1227.

Jennings, M. (2018). Business: Its legal, ethical, and global environment (11th Edition). Cengage Learning

Kubasek, Nancy K., Bartley Brennan, M. Browne. The Legal Environment of Business: A Critical Thinking Approach, 8th Edition. Pearson Learning Solutions, 12/2017. Vital Book file.

Madura. J. (2018). International financial management. Cengage Learning.

Taylor, C. O. (2008). The Foreign Corrupt Practices Act: A Primer. Currents: Int'l Trade LJ, 17, 3.