Tag Archive for ‘Corruption’
The way business ethics is taught must change if there is any hope of stemming the continuous abuse by corporate managers and leaders of the public trust, argues a university professor. “Educators must stop lecturing to students,who usually sit passively listening to moralizing professors, and instead encourage ethical dialogue around the ‘water cooler,’” he says.
Even as anger over governmental corruption has exploded into protests across the Middle East, the U.S. Chamber of Commerce has been working to weaken the U.S. Foreign Corrupt Practices Act, a law that bans companies from bribing foreign officials.
The UK’s Bribery Act 2010, set to take effect in April, goes much further than the U.S. Foreign Corrupt Practices Act, which has been used aggressively by American prosecutors against multinational companies in bribery cases worldwide. Among other provisions, the new law creates a “failure to prevent bribery” offense which applies whether or not any conduct in the bribery scheme took place in the UK.
The Securities and Exchange Commission charged that from 2000 to 2003 two GE subsidiaries — along with two other subsidiaries of public companies that have since been acquired by GE — participated in a $3.6 million kickback scheme with Iraqi government agencies to win contracts to supply medical equipment and water purification equipment.
A Transparency International report found that while most export credit agencies have formal policies that prohibit support for bribe-tainted transactions, they do not require applicants to have management controls to deal with bribery and none have issued guidance to applicants describing elements of an appropriate anti-bribery program.
In a decision with far-reaching implications for the prosecution of corruption and fraud cases in the United States, the U.S. Supreme Court ruled that the federal government’s “honest services” law could be constitutionally applied only to cases involving bribery and kickbacks. The decision was a partial victory for two high-profile executives – Jeffrey Skilling, former CEO of Enron, and Conrad Black, former chairman of Hollinger International.
Only about one-third of the 38 countries that have agreed to prosecute foreign bribery cases under the Organization for Economic Development’s Anti-Bribery Convention have sanctioned individuals or companies since the Convention was adopted 10 years ago, according to a report issued by the OECD.
Attorney General Eric Holder said the prosecution of individuals “is accelerating” amidst continuing evidence of transnational bribery. “Let me be clear, prosecuting individuals is a cornerstone of our enforcement strategy because, as long as it (bribery) remains a tactic, paying large monetary penalties cannot be viewed by the business community as merely ‘the cost of doing business,’ ” he said.
The statute is an issue in three cases before the Supreme Court this term – involving former Enron chief executive Jeffrey Skilling, Hollinger International chairman Conrad Black and former Alaska lawmaker Bruce Weyhrauch – and it could have implications for hundreds of criminal cases involving public officials and business executives convicted or charged with fraud.
The study found that news of an alleged fraud resulted in an average 16.7 percent abnormal stock price decline in the two days surrounding the announcement. Companies engaged in fraud also often experienced bankruptcy, delisting from a stock exchange, or asset sale, and in nine out of ten cases the SEC named the CEO and/or CFO for alleged involvement, the study found.