Based on the provisions set forth in the Foreign Corrupt Practices Act and the information provided in this case we are going to assume that the headquarters or point of execution for this organization was within the United States and that the district office in Lima, Peru was opened at a later date. With this being the case, yes, the events taking place at the Lima district office of Geletex are indeed against the provisions set forth in the Foreign Corrupt Practices Act of 1977.
American firms conducting business in foreign markets are required to know the limitations set forth in the Foreign Corrupt Practices Act of 1977 (FCPA) as well as the provisions included in its 1988 amendments. To be ignorant of the Acts provisions and perimeters when involved in the global business market could leave business owners and employees open to large fines and lengthy stints of incarceration (Haynes and Boone LLP, 2002).
It is also extremely important for American firms conducting business in foreign countries to understand the laws that govern commercial relations in that country, understanding that ignorance in foreign business ventures could lead to the demise of firms engaging in the global market. Following the many scandals of the 1970’s American business landscape, Congress enacted the Foreign Corrupt Practices Act on December 19, 1977 as an attempt to restore public faith in the integrity of American business and to promote sound ethical business dealings (U.
S. DOJ, n. d. ). The federal government of the United States wants the leaders of the global market to look at America as a country that prides themselves on sound and moral, ethical business practices, not elements of a morally decrepit business system. They want companies formed in America and operating overseas to be looked upon as being based on a solid ethical framework. The FCPA is a blueprint for American organizations so that they are certain how to perform in the global market.
Its fundamental purpose was to outline internationally suitable business ethics and to prevent the occurrence of bribery in efforts to obtain illegal contracts while seeking to deter businesses from potential engagement in corrupt business practices that can result in unlawful and/or unfair advantages over market competitors. Since the Foreign Corrupt Practices Act also calls for transparency in accounting methods and standards used by companies with subsidiaries operating outside the United States in efforts to ensure high-quality and ethical financial dealings, I would suggest that Jed take action quickly.
It is understood that Jed and other executives must be aware of the way in which business is conducted in foreign countries where they have subsidiaries or offices present, but it is more important to remember that the Geletex home office is located within the United States, making them subject to the provisions set forth in the Foreign Corrupt Practices Act and every other government provision.
This means that by not choosing to act now Jed is leaving his organization open to the incurring of some huge fines, fees and the possibility of the company being shut down all together. In order for an individual or organization to be prosecuted for bribery or the offering of corrupt payments under the provisions of the FCPA there must be a number of elements present. There must be a payer of the corrupt payment, corrupt intent, an actual payment made, a recipient of the corrupt payment, and evidence of the business purpose test (Gorman, 2008).
The fact that the overpayment of employee commissions is present makes clear that payments are being made and received in exchange for the contracts signed. The organization is paying those commissions and as such acting as the payer in this instance; and the fact that when questioned, the Lima district manager made the statement, “Look, things are different down here. We’ve got a job to do. If the company wants results, we’ve got to get things moving any way we can, proves that there is corrupt intent present.
In understanding and being fully aware that (1) these corrupt payments are being made, (2) that in the United States, such payments are considered bribery and corrupt practices, and finally (3) that the presence of bribery in any context is a clear violation of Geletex’s organizational code of ethics, it is vital that Jed immediately contact his supervisors in the home office, make them abreast of the situation and decide how to go about handling the situation. If they cannot afford to shut down the Lima office they must ensure that the administering of corrupt payments stops immediately.
Works Cited Compliance with the Foreign Corrupt Practices Act in the Post-Sarbanes-Oxley World. (2002, August 22). Haynes and Boone, LLP. Retrieved May 23, 2009, from http://www. hg. org/articles/article_235. html Gorman, T. O. (2008, February 11). Foreign Corrupt Practices Act Enforcement: Renewed Emphasis by the SEC and DOJ. Lay-Person’s Guide to FCPA. Foreign Corrupt Practices Act: Anti-bribery Provisions. United States Department of Justice. Retrieved May 23, 2009, from http://www. usdoj. gov/criminal/fraud/docs/dojdocb. html