Question:
1. Why might bribery become a problem for U.S. managers working in foreign countries?
2. What are the major features of the Foreign Corrupt Practices Act (FCPA)?
3. Why might the Foreign Corrupt Practices Act create a competitive disadvantage for U.S.
firms?
4. Describe the three non-Western traditions that can lead to confusion regarding “gifts” vs.
“bribes.”
5. What are some suggestions for managers who want to give bribes without violating the
FCPA?
Answer:
1. Why might bribery become a problem for U.S. managers working in foreign
countries?
The Foreign Corrupt Practices Act (FCPA) was introduced in US in 1977 to help the
companies in developing an understanding about bribery and acceptable behavior at home
and other countries. FCPA has also issued guidance but even then the issue and concept of
bribe is not at all clear. The act does not consider all the payments to be bribes. Although
the Act prohibits the payment of some extra amount to political parties and discretionary
authorities as it might induce them to misuse their positions yet it allows smaller payments
in order to ‘grease’ foreign parties and authorities at ministry and clerical levels so that
they at least perform their normal duties. The act also requires keeping the record of these
kinds of transactions. But such kind of payments constitute to bribes only. Now this
confuses US managers that influencing political decisions by giving some monetary
payments is banned but payments made to induce officials perform their routine work is
allowed. There is no clear distinction between the two scenarios. Thus, many US managers
are unable to identify permitted and banned activities. Since there is no guidance and clear
distinction, many US business persons are found to be offering bribes, shaking down,
nepotism etc that must be banned in real. This creates unequal opportunities since foreign
officials will then choose to work for the person offering highest bribe and will induce
people to cross the line and win over others in their business.
2. What are the major features of the Foreign Corrupt Practices Act (FCPA)?
The Foreign Corrupt Practices Act (FCPA) was passed by Congress in 1977 and revised in
1988. This act has two main provisions viz. transparent accounting and Anti Bribery. The
law is aimed at prohibiting US managers and personnel from bribing foreign officers to
make corrupt use of their position in fulfilling some business deals against their natural
