Question

Topic: Ethics and the Foreign Corrupt Practices Act

Scenario: You are the owner of a small business that imports clothing from Brazil to the U.S. One of your senior executives, Sam, just returned from a trip to check in on the company’s manufacturers in Brazil, and Sam informs you that he was forced to make payments to several Brazilian officials in order to ensure that a recent shipment made its way through customs quickly. You are concerned about the payments, about precedent, and about the possible ethical and legal implications of such payments. Sam has assured you that the payments to these officials were “necessary” and “acceptable” within Brazil, but you remain unconvinced and are especially troubled by the ethical consequences of such payments; especially since these are prohibited under the U.S. Foreign Corrupt Practices Act.

After reading The Foreign Corrupt Practices Act in Chapter 2 of your text and the supplemental Ethics PowerPoint presentation, discuss the following:

Should you be concerned about the payments, and if so, why?

After reviewing the supplemental Ethical Approaches pdf in the Learning Activities area, choose one of the ethical approaches that best explains the ethical principles behind laws prohibiting such payments to government officials, Consequential, Nonconsequential, or Virtue Ethics Theories?

What is your response to the situation, and why?

Be sure to address the Discussion topic(s) in an initial post of at least 100 words no later than Saturday night Eastern Time. Be sure to respond to at least two others (not including the professor) and participate in the Discussion by posting on three different days of the unit.

Answer 1

The payments made by Sam to Brazilian officials to custom clear the shipment is unethical (Under the virtue theory of ethics) but legal according to US Foreign Corrupt Practices Act-Anti bribery provisions under the “facilitation payment option” where you can pay to a government official to facilitate and expedite routine government actions.

As according to the FCPA 1977 the company can face legal consequences states as follows:

That companies and individuals can be held criminally and civilly responsible for corruption offenses committed abroad.

The bribery act applies to following:

• The US-based companies
• The companies listed on US stock exchange
• The companies having a principal office in the US
• The companies acting from the US jurisdiction to make payments to corrupt officials to get and retain business.

The exception is in case of Facilitation payment whereby you can pay government officials to facilitate and expedite routine government actions.

The payment made by Sam in Brazil can be taken as a facilitation payment which is allowed under US FCPA 1977 “where certain payments can be made to government officials to facilitate and expedite routine government action in this case clearing the shipment from the customs.”

The three approaches to ethics as follows:

• Virtue ethics: It dictates how to live your life with right values reducing vices and increasing the good qualities. It is also to aspire to achieve certain identified virtues and limit the vices. The virtue theory is also non-consequentialist and states that the basic values should be good and right irrespective of the consequences.
• Consequentialist ethics: The consequences of my action or behavior is making in the world and talks about bringing the greatest amount of good to the greatest number of people. Consequentialist ethics are further divided into egoism and utilitarianism. The egoist promotes his self-interest and what makes him happy. The utilitarianism dictates what brings happiness for everyone, it reflects about ways it maximizes happiness and reduces unhappiness.
• Deontologist ethics: “This is ethical position or morality based on rules because rules bind you to your duty.” The theory focuses on the rightness and wrongness of the action itself.

The action done by Sam is ethically incorrect as per the theory of non-consequentialist or virtue theory of ethics as the individual should adhere to certain values and virtues to maintain a good quality of life irrespective of the consequences.