Ethical Issues in International Business, Essay Example

The Lima, Peru, office case study is a bright example of how cultural and ethical disparities can cause not only misunderstanding, but also law breaking practices. Here we face a situation when foreign manager regards making additional payments in order to succeed in running business as a normal practice. The case study states clearly that such payments are not merely violating Geletex’s code of ethics, but are also considered to be illegal according to United States legislation. It is clear enough that Mr. Richardson should not allow any practices that can be regarded as commercial bribery.

To understand the situation better, let us take a more precise look at Foreign Corrupt Practices Act (FPCA). “U.S. firms seeking to do business in foreign markets must be familiar with the FCPA,” the brochure states, “In general, the FCPA prohibits corrupt payments to foreign officials for the purpose of obtaining or keeping business.” (United Sates Department of Justice) The question is, whether what we see here is a commercial bribery indeed. To answer this question, FCPA suggests us to look at the situation from five major perspectives: who is involved into a doubtfully legal activity, is there any corrupt intent, is there a payment being made (no necessarily involving money), who is a recipient, and finally what is the business purpose of the activity.

As far as we see, researching all the mentioned issues, the activity discussed in the case looks a lot like being unlawful. There are money payments being involved, that are paid to foreign officials, with the purpose of succeeding in contracting, which can be classified as an activity “intended to influence any act or decision of a foreign official in his or her official capacity, to induce the official to do or omit to do any act in violation of his or her lawful duty, to obtain any improper advantage, or to induce a foreign official to use his or her influence improperly to affect or influence any act or decision.” (United Sates Department of Justice)

In the present case there is also a possibility of “affirmative defense” meaning that the payment being made may be regarded as legal under the established laws of the taken country. However, it is doubtful that we are facing such a situation, since the only objection made by a district manager is that “things are different down here”, which is far from being a defense worth considering. FCPA also points out that whether a payment was legal under the written laws of the foreign country is usually hard to find out, and that is why “seeking the advice of counsel or utilizing the Department of Justice’s Foreign Corrupt Practices Act Opinion Procedure when faced with an issue of the legality of such a payment” (United Sates Department of Justice) is advisable. In the Peru case finding out the extend of lawfulness of payments being made is not something simple indeed:  “Doing business in Peru consists of two volumes. The second volume reprints the Spanish text of more than 20 commercial and general laws. The first volume discusses fairly briefly (and with a rather disappointing lack of detail) all aspects of commercial law and practice in Peru.” (Foreign Law Guide, 2009)

In my opinion Mr. Richardson should in no way ignore what is going on in the Lima office. The situation should be analyzed properly. If he believes district manager to be violating the law, he should prevent such an activity from being practiced. FCPA states clearly that unlawful activities are to be punished strictly, and sanctions are to be imposed. The situation must be resolved in order to avoid the undesirable consequences and to cause as few negative effects as possible.

References

Foreign Law Guide. (2009). Peru. Retrieved November 1, 2009, from http://www.foreignlawguide.com/sample/Peru%20Introduction.htm

United Sates Department of Justice. Lay-Person’s Guide to FCPA. Retrieved November 1, 2009, from http://www.justice.gov/criminal/fraud/docs/dojdocb.html