Posted: February 1st, 2023
Corruption in the corporation circles is not new. People usually associate corruption with the government. When a third party is given money and the responsibility of using the money properly, then in such cases, the chances of corruption, bribery, and breach of trust arise. The same policy can be employed in the corporate world. Large corporations can go in billions of dollars. The management and the ownership are different in a company. Therefore, the owners or the shareholders only exercise control in the annual general meeting or appointing directors. However, management retains day-to-day control of the corporation, its assets, and cash. Management may embezzle monies and present falsified books of accounts and balance sheets. Shareholders are never aware of what is going on until it is too late. Due to the development of the internet and other forms of communication, the world appears to be shrinking as the twenty-first century progresses. This has given an impetus to the globalization of the markets of the world. This has resulted in multinational companies working in almost all nations. This has unfortunately resulted in international corruption as well.
Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act of 1977 is a federal legislation of the United States that applies worldwide. The objective of the act is to make certain payments to foreign officials and other people unlawful. Its main target is corruption and bribery that is committed internationally. The act was passed in the year 1977. At the time of its passing, it received huge encouragement from the American businesses because the act tried to create a level playing field. The American businesses could not compete with the foreign market where the bribe was habitually acknowledged. The said act applies to the following:
All the publicly traded companies
Officers of the company
Agents of the company
Privately held companies
It applies to foreign firms and personalities who assist or commit corrupt practices and payments in the United States. The same may be done directly or indirectly. â€œIndirectlyâ€ means done through agents or proxies. Even in such cases, the company does not receive protection and is still held liable. Therefore, the ultimate objective is to curb corporate corruption in the United States. In simple words, the ambit of the act has been kept wide enough to cover any person, whether having the protection of legal fiction or otherwise from influencing foreign officials with any bribe. The Securities Exchange Commission and the Department of Justice are in charge of enforcing the statute. Both criminals, as well as civil penalties, are attracted under this act. The act primarily contains two provisions:
The control provisions regarding accounting practices of the individuals and the companies
The anti-bribery law
Organization for Economic Co-Operation and Development
The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions was held by the Organization for Economic Co-operation and Development (OECD) (the convention). Thirty-seven countries have accepted the convention, which has also resulted in legislation. Bribing a foreign public official to obtain or maintain international business is prohibited by the convention. The countries that have ratified the convention have decided to make engaging in international business with foreign public authorities a criminal violation.
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