Foreign Corrupt Practices Act, Essay Example

Foreign Corrupt Practices Act, the FCPA of 1977 is responsible for prohibiting bribery among foreign government officer in America and prescription of practices of record keeping as well as accounting. The Act has two provisions namely Anti-bribery provisions and accounting and record-keeping provisions.

Anti-bribery provisions of the Act, illegalizes bribery to foreign government officers to retain or obtain business and any payments made must be proven to be lawful based on the recipients written laws. Stiff and severe penalties are subjected to people who fail to defend themselves based on the FCPA (Cleveland, Favo, Frecka & Owens, 2009).

FCPA accounting and record-keeping provisions affect American publicly traded firms. The provision requires that the companies device and implement a system of accounting that facilitate for a tight control and keeping of accurate records regarding the firm’s assets dispositions. Through the provision therefore, any slush funds is prohibited and accounts used are able to inhibit any form of illegal payments. The provision also prohibits payments mislabeling and expenses misrepresentation (Margaret, Clive, Ogrady & Morgan 1997).

FCPA mandate involves crackdown of bribery among foreign officers and its breach is considered a high profile offence. Non compliance to the act may result to being barred from contracts tendering in American government, huge fines and criminal conviction leading to jail term. There is therefore a need for effective control among financial firms and have a clear understanding of management structure, financial dealings as well as well as group ownerships so that they have knowledge of business partners and avoid criminals (Brodsky, et al 2008). FCPA complements legislations such as Oxley Act through a requirement for effective control systems that avoid cases of frauds. Such effective controls include customer diligence and understanding their financial transactions, staff training, independent monitoring and conduction meetings with senior managements.

References

Brodsky, D., Greenburg, N., & Kelly-Najah, N. (2008). “Recent developments in the enforcement of the US foreign corrupt practices act”. Journal of Securities Compliance, 1(3), 212-230.

Cleveland, M., Favo, C., Frecka, T., & Owens, C. (2009). “Trends in the international fight against bribery and corruption”. Journal of Business Ethics, 90, 199-244.

Margaret M. G., Clive R. G. Ogrady & Morgan O. Forrest (1997). Foreign Corrupt Practices Act. Available at http://library.findlaw.com/1997/Jan/1/126234.html accessed on 23 February 2012.