Foreign corrupt practises act(fcpa)


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Foreign corrupt practises act(fcpa)

  2. 2. INTRODUCTION:- • The Foreign Corrupt Practices Act of 1977, ("FCPA"), was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments(offers, promises, and authorizations to make payments as well as actual payments) to foreign government officials to assist in obtaining or retaining business.
  3. 3. • The U.S. Foreign Corrupt Practices Act of 1977 ("FCPA") generally prohibits U.S. companies and citizens, Foreign companies listed on a U.S. stock exchange, Any person acting while in the United States, From corruptly paying or offering to pay, directly or indirectly, money or anything of value to a foreign official to obtain or retain business.
  4. 4. What happens when the Act is violated? • It is important that U.S. exporters dealing with foreign government officials fully understand the requirements of this Act because violations could result in a fine of up to:-  U.S. $2 million for corporations,  U.S. $1 million for individuals, Imprisonment of up to 5 years, or a combination of a fine and imprisonment.
  5. 5. What does the FCPA require? Issuers must keep detailed records. • The FCPA’s accounting provisions are designed to prevent illegal conduct by publicly traded companies by requiring them to keep records that would reveal illegal payments. • Issuers are required to keep records that “accurately and fairly” reflect all of the issuer’s transactions and assets and must be kept in “reasonable detail.”
  6. 6. Bribery of Foreign Officials • Issuers of securities, domestic concerns, and others all fall under the FCPA’s anti-bribery provisions. • All U.S. nationals and businesses, including their foreign subsidiaries, are prohibited from bribery anywhere in the world. • Foreign nationals and businesses also fall under the anti-bribery requirements when they are in the United States or its territory.
  7. 7. FCPA Enforcement Actions:- • For over two decade the FCPA was seldom enforced but this has abruptly changed. • Civil & Criminal Enforcement actions in connection with alleged payments to foreign officials have increased greatly in recent years. • From 2003 to 2007, twenty securities and Exchange Commission(SEC) enforcements actions and 23 Department of justice (DOJ) enforcements actions were intimated under the FCPA.
  8. 8. Continuation….. • The largest fines levied against the companies under the FCPA have been imposed in the last few years. • Titan corp. was fined $28.5 million in 2005 & Baker Hughes Inc. was ordered to pay $44 millions in 2007.
  9. 9. Follower of the U.S. • Following United States FCPA act, several other countries enforced laws similar to the FCPA with some changes according to there country. • Countries like Australia, France, Germany, Italy, Ireland and etc. investigated multiple violation of the trans-national bribery laws. • Till the year 2003, the UN convention was formulated with 125 members (out of which 95 countries had ratified as if 2007).
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  11. 11. Nestlé infant formula case • Its an Swiss based company • Infant formula for infants. • Marketing techniques-40 % ($3bi.) market • “If the mother develops a brand loyalty when her child is new born, her loyalty is unlikely to change over time ”.
  12. 12. • Strong revolt in developing countries boycotts all products of Changed promotional practices - 1976 but still continued to sale free & low cost formula. • W.H.O- International Code of Marketing for Breast Milk Substitute law in 1982
  13. 13. • Nestlé has voluntary agreed to supply as per the request of hospital administration • 3rd world block however continued to order • In Sweden , Ireland , Britain boycott continued as a result in Jan.1991 Nestlé stopped free & low cost formula completely
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