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International Payoffs - Profits and Morality

NCJ Number
International Journal of Comparative and Applied Criminal Justice Volume: 4 Issue: 1 Dated: (Spring 1980) Pages: 57-62
S Barone; S H Him
Date Published
6 pages
The Foreign Corrupt Practices Act enacted in 1977 to sustain international confidence in U.S. business and institutions has been criticized for its ambiguities and for the absence of a corresponding international treaty.
The Securities and Exchange Commission (SEC) initiated investigations that led to the formation of the act as a response to a probe of illegal corporate contributions to the reelection campaign of former President Nixon. The act that emerged makes it unlawful for a U.S. company to corrupt foreign officials or to make payments to a person when the company has reason to believe that part of the payments will go to a foreign official. The act also requires the institution of internal accounting controls to ensure that all transactions are executed according to management's specific authorization, that all transactions are accurately recorded to permit preparation of financial statements, and that access to assets is allowed only in accordance with management's authorization. However, according to a survey of American businessmen on international payoffs, half the respondents think that international payments must be made to compete effectively with companies from Western Europe and Japan. They argue that foreign governments have done little to control the unethical practices of their companies in international business. Thus, if non-U.S. multinational companies are not subject to restrictions similar to those imposed by the U.S. Government, American firms will be placed at a disadvantage in competing with less scrupulous foreign companies. Ethical standards change from country to country and because international payoffs are a means of achieving business goals, criteria should be provided for determining the conditions under which international payoffs should or should not be made. In particular, political donations and kickbacks are payments which present problems. Eight references are provided.


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