US'Foreign Corrupt Practices Act, 1977: GovernanceMusings on US-listed Companies



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Code : GOV0046

Year :
2010

Industry : General Business

Region : US

Teaching Note: Available

Structured Assignment : Available

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Abstract:
Corruption in Multinational Companies (MNCs) is a worrying factor as it puts an additional burden of 20%–30% to the cost of government, leading to the diversion of public funds from constructive areas to address this issue. Many MNCs, as a result of globalisation, expanded and set up their operations in the developing and Least Developed Countries (LDCs). However, in conducting their business in these countries, theywere resorting to corrupt practices. To tackle this issue, the US Department of Justice (DOJ) and Securities Exchange Commission (SEC) speeded up the investigations for the US-listed entities under the Foreign Corrupt Practices Act (FCPA). The case study captures few cases of MNCs operating in India – such as Dow Chemical Company,A.T. Kearney, WestinghouseAir Brake Technologies Corporation and Xerox Corporation – which came under the ambit of FCPA. It alsocaptures the underlyingreasons which enableMNCs to set uptheirsubsidiaries in the LDCs and emerging markets like India where corruption is tentativelyhigh.

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Pedagogical Objectives:

  • To analyse the relationship betweenTransparencyInternational’s Corruption Perception Index and number of MNCs operating in the bottom-50 countries i.e., the most corrupt countries in the world
  • To examine the nature of MNCs operating in the most corrupt countries in the world from the standpoint of the MNCs’ countryof origin and their respective ranking in the TransparencyInternational’s Corruption Index
  • To discussand debate on theefficacyofUS’FCPAand its provisions from theperspective of companies operating in most corrupt countries in the world
  • To raise a larger yet subtle debate on whether US-listed (native as well as foreign) companies get penalised for their dutiful discharge of duties as required by SEC disclosure norms.

    Keywords :Foreign Corrupt Practices Act, 1977, FCPA, Sarbanes Oxley Act, Corruption Perception Index, Bribe Payers` Index, Corporate Governance, Foreign Business Practices, US-Listed Companies, Transparency International, Corporate Governance of US-Listed Companies, OECD Convention, Facilitation Payments, Dow Chemicals, AT Kearney, Westing House Airbrake Technologies, Xerox Corporation

    Contents :
    » Dow Chemical Company
    » A.T.Kearney
    » Westinghouse Air Brake Technologies Corporation
    » Xerox Corporation


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