individual assignment business ethics topic managing the risks of global bribery in business

Bribery constitutes a crime and is defined by Black''''s Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or oth

NATIONAL ECONOMICS UNIVERSITY

SCHOOL OF ADVANCED EDUCATION PROGRAM

I, Introduction 1

1.1 The case backgrounds 1

1.2 Data for the case 2

1.3 The debate issues 4

2 Issue Analysis 4

2.1 Definition of Animals rights 4

2.2 Animal Rights & Animal Welfare 7

2.3 Overview about Eating dog meat 7

3 Apply theories 10

3.1 Define and apply Consequentialism, Utilitarianism and Ethical egoism 10

3.1.1 Definition of Consequentialism 10

3.1.2 Forms of consequentialism: Ethical egoism and Utilitarianism 10

3.1.3 Strengths and Weaknesses of Consequentialism 11

3.1.4 Consequentialism In Situation of Eating Dog Meat 11

3.2 Define and apply Deontology 12

3.2.1 Definition of Deontology 12

3.2.2 Examples of Deontology 12

3.2.3 Strengths and Weaknesses of Deontology 13

3.2.4 Deontology In Situation Of Eating Dog Meat 14

3.3 Define and apply Virtue Ethics 14

3.3.1 Definition of Virtue Ethics 14

3.3.2 Examples of Virtue Ethics 15

4 Conclusion 19

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of value, advantage, or merely a promise or undertaking to induce or influence the action, vote, or influence of a personin an official or public capacity.In economics, the bribe has been described as rent Bribery in bureaucracy has beenviewed as a reason for the higher cost of production of goods and services.

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Tipping, for example, is considered bribery in some societies, while in others the two concepts may not be interchangeable The offence may be divided into two great classes: the one, where a person invested with power is induced by payment to use it unjustly; the other, where power is obtained by purchasing thesuffrages of those who can impart it Likewise, the briber might hold a powerfulrole and control the transaction; or in other cases, a bribe may be effectively extracted from the person paying it, although this is better known as extortion The forms that bribery take are numerous For example, a motorist might bribe

a police officer not to issue a ticket for speeding, a citizen seeking paperwork orutility line connections might bribe a functionary for faster service Bribery mayalso take the form of a secret commission, a profit made by an agent, in the course of his employment, without the knowledge of his principal From a legal point of view, active bribery can be defined for instance as the promising, offering or giving by any person, directly or indirectly, of any undue advantage [to any public official], for himself or herself or for anyone else, for him or her

to act or refrain from acting in the exercise of his or her functions Passive bribery can be defined as the request or receipt [by any public official], directly

or indirectly, of any undue advantage, for himself or herself or for anyone else,

or the acceptance of an offer or a promise of such an advantage, to act or refrainfrom acting in the exercise of his or her functions The reason for this

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dissociation is to make the early steps (offering, promising, requesting an advantage) of a corrupt deal already an offence and, thus, to give a clear signal (from a criminal policy point of view) that bribery is not acceptable Besides, such a dissociation makes the prosecution of bribery offences easier since it can

be very difficult to prove that two parties (the bribe-giver and the bribe-taker) have formally agreed upon a corrupt deal Besides, there is often no such formaldeal but only a mutual understanding, for instance when it is common

knowledge in a municipality that to obtain a building permit one has to pay a

"fee" to the decision maker to obtain a favourable decision

2.0 Overview of bribery

The nexus between bribery and corruption must be fully comprehended at the outset of this paper This is because there can be no bribery without corruption Corruption refers to the misuse of entrusted power for private gain Corruption

is a broader term in which lesser evils such as bribery, nepotism and even misappropriation fall under as can be seen from Nye’s definition of corruption:

‘behaviour which deviates from the formal duties of a public role because of private regarding (personal, close family, private clique) pecuniary or status gains, or violates rules against the exercise of certain types of private regarding influence This includes such behaviour as bribery (use of a reward to pervert the judgment of a person in a position of trust); nepotism (bestowal of patronage

by reason of ascriptive relationship rather than merit); and misappropriation (illegal appropriation of public funds for private regarding uses)’

Bribery can also be an offer, a payment or a promise to pay money or goods, favour, anadvantage, privilege, property or an object of value to a person in order to influence his views, actions or conduct Bribery is viewed in two ways These are bribery according to rule and bribery against the rule Bribery according to rule is where a bribe is paid in order to receive preferential treatment for something that the bribe receiver is required to do by law For instance, a builder offers to pay money to a building inspector in order that his building premises are inspected Bribery against the rule is where a bribe is paid

to receive preferential treatment or obtain services for which the bribe receiver

is prohibited from doing For instance, an accused person offers to pay money tothe prosecuting officer in order not to get charged to court For an act to be seen

as a bribe, there will be an understanding that the thing offered, paid or promised to be paid is meant to influence the views, actions andconduct of the receiver who if he accepts must reciprocate the gesture by performing the intended act It is for this reason that general gifts and tips (usually given as a token of appreciation for good services) cannot be considered as bribes

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Bribes are more or less illegal and immoral agreements between the bribegiver and receiver for the performance of an act in exchange for an object of value for the purpose of influencing the receiver views, actions or conduct in order to gain special treatment In most jurisdictions bribery is seen as a crime, which is punishable by a term of imprisonment, a fine or a combination of the two The bribe giver and receiver are both culpable and as such most

jurisdictions treat them as offending parties In some other jurisdictions bribery may be treated with less severity and may be more acceptable as a norm or part

of the society It is for this reason that bribes in such jurisdictions have been given names like ‘grease money’ in order to oil the views of the receiver and make him swing into action Bribery can take place in both public and private capacities Public capacity involves public officials or people who are being paid by the taxpayer and private capacity involves anyone not being paid by the taxpayer

Bribery can also be viewed vertically from top to bottom and vice versa Bribery from top to bottom is where the bribery takes place at the highest levels

of government and some of the bribe payments trickle down to the lower officials as ‘hush money’; while bribe from bottom to top is where numerous bribes are paid to lower officials and a percentage of the payment is passed on

to higher officials in the level of hierarchy

3.0 Economic analysis on the act of bribery

Bribery is defined as "the offering, promising or giving something in order to influence a public official in the execution of his/her official duties" (OECD Observer, 2000) Bribes can take the form of money, other pecuniary advantages, such as scholarship for a child's college education, or non-pecuniarybenefits, such as favorable publicity In the international context, bribery involves a business firm from country A offering financial or non-financial inducements to officials of country B to obtain a commercial benefit

If bribery is a burden to international firms, it is even more costly to the countries where they are prevalent It has been estimated that money lost to bribery is the largest potential source of funding available to many new democratic governments aside from foreign direct investment (Hamra, 2000) The World Bank believes that tackling bribery can lead to significant increases

in national income and faster economic growth and to improvements in quality

of life issues such as child mortality rates (The Costs of Corruption, 2004)

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Husted (1999) examined the role of economic and cultural variables and found that a significant inverse relationship exists between perceived levels of bribery in a country and the per capita income in purchasing power parity terms.Cultural dimensions using Hofstede's classification of masculinity and power distance were significant factors (Hofstede, 1980) Sanyal and Samanta (2002) confirmed Husted's findings and found that income distribution in a country wasanother significant economic factor Similarly, Getz and Volkema (2001) found that bribery in a country was related to wealth and so was power distance and uncertainty avoidance Uncertainty avoidance moderated the relationship between economic adversity and bribery Thus, there is an empirical basis to suggest that certain economic and cultural factors determine perceived levels of bribery Sanyal and Samanta (2003) have also found that economic freedom andlevel of human development are associated with levels of perceived bribery in a country with open economies and high level of human development inversely related to bribery All these studies found that per capita income is inversely related to bribery.

The level of economic development in the world is very uneven This is reflected in per capita gross national income (formerly gross national product)

in purchasing parity terms of as high as $42,000 in the U.S.A and as low as

$830 in Yemen Table 1 provides an overview of this worldwide disparity

4.0 Legal analysis on the act of bribery

“Bribery in criminal law refers to the improper acceptance by a public official, juror, or someone bound by a duty to act impartially, of any gain or advantage tothe beneficiary, including any gain or advantage to a third person by the desire

or consent of the beneficiary A gain or advantage may be a pecuniary benefit in the form of money, property, commercial interests or anything else the primary significance of which is economic gain.”

“Every person who shall voluntarily offer or receive any benefit as

consideration to influence an official act to be done or not done, shall be guilty

of bribery, and upon conviction thereof shall be imprisoned for a period of not more than three years, and fined three times the value of the benefit offered or

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received, or both If the value of the benefit cannot be determined in dollars, the fine shall be not more than $5,000.00.”

5.0 Ethical analysis on the act of bribery

During the early 2000s, Ireland was categorized as a tiger economy, which is an economy that experiences brief but rapid growth Since Ireland offers low corporate tax rates, companies like Google and IBM placed Europeanheadquarters in the country, and made Ireland a hub for big business For a time,Ireland enjoyed this prosperity but it soon came to a halt when the collapse of the U.S economy triggered a worldwide domino effect Now, Ireland is unable

to pay off debt, and may need to be bailed out by other affluent countries like Germany

While the Irish government is trying to find ways to decrease the deficit, one startling proposal made by a blogger recommends that Irish officials bribe credit-rating agencies to inflate credit scores in order to keep interest costs on debt payments low There are deficiencies in this proposal, however; it assumes that a higher credit score will solve all of Ireland’s financial problems There is

no guarantee that bribing a credit agency will bring about the change necessary

to get Ireland out of debt This argument also may not be feasible since bribery

is an illegal act, but let’s assume that such a proposal is a viable option for Ireland In terms of ethics, there are pros and cons

When doing ethical analysis, there are four models that serve as a framework to structure an argument: utilitarianism in terms of actions, utilitarianism in terms of rules, rights & duties, and virtue Utilitarianism is the process of weighing benefits and harms, and choosing the option that offers the most benefits for the greatest number of people

In terms of benefits and harms to the Irish economy, the benefits of bribing credit-rating agencies would have a significant impact Government would be able to get a handle on its interest payments and pay off debt quicker, without the financial support of other countries Such benefits would likely reduce unemployment and drastically increase the quality of life for Irish citizens For this argument, harms are minimal—there is no harm that comes to the credit-rating agencies if no one finds out of such bribery If discovered, the

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reputation of the agency may be diminished, but that certainly does not outweigh the benefits associated with helping the 4.5 million citizens of Ireland Another argument in favor of bribery has to do with duties The Irish government has an obligation to do what it takes to ensure the health and happiness of its citizens While Ireland enjoyed prosperity for a short time in theearly 2000s, the government may have made poor choices that led to Ireland’s current financial position One blogger claims the reason for the crisis stems from government’s decision to guarantee all bank liabilities, a promise that Ireland could not keep Doesn’t the government then, have a duty to citizens to use whatever means are available to restore the economy to a normal state? If the government has the power to bribe credit-rating agencies to help stimulate the economy, it should fulfill its promise of serving in the best interests of citizens.

While there are ethical arguments in favor of bribery, there are also arguments not in favor Although the action of the bribery may bring more benefits than harms to the people of Ireland in this particular situation, the rule that forbids bribery brings more benefits than harms in all situations There are countless historical examples of individuals using bribery as a means to gain power or money that is used for evil; in fact, I argue that there are more examples of bribery used for immorality rather than for good Because of the benefits that arise from outlawing bribery, it would be unethical for the Irish government to use such tactics, even if it greatly benefited its citizens

Although the blogger notes that credit-rating agencies are already involved with bribery, it would not be ethical to allow it in this case because it undermines the functional purpose of a credit-rating system These agencies are created so that investors have a resource to be able to assess the risk with investing in bond markets By using bribes to enhance credit scores, these scores become biased and are no longer a useful tool for potential investors There is no way to ethically justify bribery in a credit-rating system because it goes against the very purpose of why such a system exists in an economy The most powerful argument against bribery is related to the virtue model Bribery is a form of corruption that alters a behavior or outcome based

on a reward Rather than encouraging good habits of character, such as hard work and judiciousness, the action teaches individuals to cheat in order to get ahead By using such a tactic to pay off debt, the Irish government is justifying

to citizens that the ends justify the means Such examples will likely lead to corrupt behavior within the Irish economy, because the government did not fulfill its duty of being a moral representation of the country it administers If

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the government engages in bribery, what would stop business owners,

politicians, lobbyists, and other stakeholders from doing the same? This would open Pandora’s Box

Based on my ethical analysis, I believe Daria’s proposal is unethical based on the principles of rule-utilitarian thought and virtue While there are benefits for Ireland that arise from stimulating the economy, that harms that occur from distorting the credit-rating system as well as encouraging citizens to engage in immoral behavior outweigh such benefits It may have to rely on neighboring countries to pay off debt, but bribing credit-rating agencies is certainly not the ethical means to solve Ireland’s problems

Conclusion

Widespread bribery may have roots in culture and history, but it is, nevertheless,

an economic and political problem It causes inefficiency and inequity It is a symptom that the political system is operating with little concern for the broaderpublic interest It indicates that the structure of government does not channel private interests effectively The economic goals of growth, poverty alleviation, and efficient, fair markets are undermined by corruption Bribery erodes political legitimacy and the protection of rights Twenty years into the global fight against bribery, there has been progress in both policy and research, but much remains to be done Attempts to measure bribery – imperfect as they are –have exposed especially corrupt governments and industries, spurring reform toward transparency and more ethical dealings in the public and private sectors, but most governments still receive failing grades on the control of bribery Our goal is to further understand the circumstances that contribute to bribery and thepolicies that can help to combat corruption, but there is no one-size-fits-all anticorruption program

II, Global bribery managing

This case analysis examines two of the major laws that impact the use of bribery

on a global scale: the Federal corrupt Practice Act of the United States and the Bribery Act of the United Kingdom While there are many other global bribery laws, these laws are the most well-recognized anti-bribery laws in the world Webegin by examining the back-ground of these two laws and then discuss the

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rules and regulations of both The case explains why these laws were enacted and who is subject to the standards The analysis provides examples of bribery, along with the consequences Finally, we offer an overview of how bribery negatively impacts national institutions, including political, social, and economic institutions.

1.0 Foreign Corrupt Practices Act (FCPA)

The Foreign Corrupt Practices Act of 1977 (FCPA) is the most widely enforced anti-corruption law and was enacted to discourage paying bribes to foreign government officials or entities for the purpose of obtaining or retaining business in foreign countries The act if one can be fined up to double the amount of benefit received after accepting the bribe

Main features of FCPA are:

 Strictly prohibits bribery of foreign officials

 The act seeks to ensure accounting transparency which is the major feature that is focusedin FCPA

 People involved in this can be jailed and a provision is there to make them service prison sentence as well

 Payments to foreign officials do not mean only money rather it involves any sort of gifts as well

Businesses cannot grow and be sustained by getting involved in bribery therefore, foreign officials are not allowed to get influenced by money power and they are supposed to take fair and unbiased decisions

Foreign Corrupt Practices Act has helped most of organizations globally to stay away from the corruption which has significantly gave them a goodwill and competitive advantage This act has brought sanity and accounting transparency

to most business organization and thus increasing their competitive advantage with the help of various strategies The act also applies to individuals to mitigatethe corruption practices and establish healthy competition in the way of doing business

The act additionally assisted in significantly reducing exploitation taking place

in the business world and hence bringing honesty and integrity When firms willnot engage in illegal acts like bribery paying or taking of undue advantage in foreign nations, then it will allow the countries tomaintain their reputation in the

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world market for being honest and fair in their business dealings This way FCPA comes into a light to play an important role.

1.1 FCPA Penalties

Criminal penalties for violations of the anti-bribery provisions of the FCPA include fines of up to $2,000,000 for corporations and other business entities and up to $100,000 for officers, directors, stockholders, employees and agents

of such entities Individuals held criminally liable can be subject to

imprisonment for up to five years The statutory fines can be significantly increased under the Alternative Fines Act, up to twice the benefit that the defendant sought to obtain by making the corrupt payment Fines imposed on individuals may not be paid by their employer or principal

Civil penalties provide for a fine of up to $10,000 against any firm, as well as any officer, director, employee or agent of a firm, or stockholder acting on behalf of the firm who violates the anti-bribery provisions Additional penalties can be imposed in SEC enforcement actions at the court’s discretion These penalties can range to the greater of (i) the gross amount of the pecuniary gain

to the defendant as a result of the violation, or (ii) a specified dollar limitation The specified dollar limitations are based on the egregiousness of the violation, ranging from $5,000 to $100,000 for a natural person and $50,000 to $500,000 for any other person

In addition to civil fines or penalties, the Attorney General or the SEC, as appropriate, may also seek to enjoin any act or practice of a firm if it appears that the firm (or an officer, director, employee, agent or stockholder acting on behalf of the firm) is in violation of the anti-bribery provisions

1.2 FCPA FAMOUS CASES

A number of high profile cases have gained notoriety for costly penalties againstcompanies found in violation of the FCPA These companies include:

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SIEMENS AG FCPA CASE

Munich, Germany-based industrial and consumer product manufacturer, Siemens AG, pled guilty not only to bribery but to violating accounting provisions, as well In December 2008, Siemens AG reached a settlement in the amount of $800 million, agreeing to pay $350 million to the SEC in

disgorgement and $450 million to the U.S Department of Justice in criminal fines Additionally, the company was responsible for a fine in excess of $5.5 million to the Office of the Prosecutor General in Munich

According to the Director of the SEC’s Division of Enforcement, Linda Chatman Thomsen, the scale of Siemens’ nearly $1.5 billion in foreign bribery was unprecedented, reaching government officials from Africa, America, Asia, Europe, and the Middle East It was also found that in addition to more than 4,200 payments to bribe government officials worldwide in exchange for business to Siemens, the company made more than 1,000 other payments totaling nearly $400 million to third parties for embezzlement and other illicit and unethical purposes

KBR AND HALLIBURTON FCPA CASE

In 2008, the SEC, with the help of the U.S Department of Justice Fraud Division, the Federal Bureau of Investigation (FBI), and foreign authorities in Africa, America, Asia, and Europe, found substantial evidence of FCPA violations by KBR, Inc., and Halliburton Co An investigation revealed that for more than a decade KBR subsidiary Kellogg Brown & Root LLC bribed government officials in Nigeria in order to secure construction contracts The

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