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    Scenario Analysis and Discussion

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    Analyze two different scenarios.

    Scenario Analysis and Discussion 1

    Foreign Corrupt Practices Act
    You are the Director of Foreign Sales for Acme Manufacturing, Inc., a U.S. company with headquarters in Miami, Florida. Acme Manufacturing of Brazil (AMB), a subsidiary of Acme Manufacturing Inc., was formed to represent Acme's interests in Brazil. Acme Manufacturing Inc. controlled all of AMB's actions, paid all expenses, employed management, and consolidated financial statements. You have recently discovered that your Sales Manager, Don Johnson, has been paying or authorizing bribes to the customs and other government officials in Brazil to accept documents that understate the value of Acme's products imported into Brazil to reduce the duties, sales taxes, and other fees owed by AMB.
    Using Foreign Corrupt Practices Act (FCPA), analyze the issues facing Acme Manufacturing Inc. and the individuals involved, as well as arguments for and against the allegations that these parties have violated the FCPA. Consider the following in your analysis:
    ? What is the purpose of the FCPA?
    ? What is the difference between a bribe and a facilitation fee? Which one applies in this case?
    ? Does it make a difference that bribes are legal in Brazil?
    ? Does the FCPA make it more difficult for American companies to compete in foreign countries?
    ? What are the legal elements needed to prove bribery under the FCPA?
    ? If one or more of the parties are found guilty, what recommendations would you make to Acme Manufacturing Inc.?
    Evaluation Criteria for Scenario Analysis and Discussion Response:
    Accurately stated the purpose of the FCPA and articulated the difference between a bribe and a facilitation fee. [4 points]
    Explained the implications of legal bribes in Brazil.
    Listed the legal elements needed to prove bribery under the FCPA.
    Assessed how the FCPA affects American companies competing globally and recommended a course of action in the event of a guilty verdict.

    Scenario Analysis and Discussion 2

    Consumer Products Safety Commission

    With increased efforts to provide low-cost goods while maximizing profits, your company decided to move its toy manufacturing plant to Adjistan. The move resulted in the loss of 1200 jobs in the U.S. and increased profit for the shareholders. As the Director of Human Resources, you have recently discovered that the factory management in Adjistan has been involved in child labor practices in violation of internationally accepted standards. After discussing this issue with the management of the Adjistan facility, you determine they have no intention of improving the working conditions. To make matters worse, you discover that the toys are manufactured using lead paint, which is prohibited for use in toys in the U. S.

    Identify at least three ethical issues presented in this scenario. Provide a course of action to correct each ethical issue or potentially unethical practices that are identified. Provide at least three recommendations to your company's officers to prevent future violations.

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    Solution Preview

    Running Head: Foreign Corrupt Practices Act (FCPA)

    Foreign Corrupt Practices Act (FCPA)
    Course code:

    The purpose of the Foreign Corrupt Practices Act (FCPA)
    The Foreign Corrupt Practices Act (FCPA) was enacted in 1977 with the sole purpose of addressing "bribery of foreign officials" and enforcing "the existing Securities and exchange Commission (SEC) requirements of transparency in accounting" (FCPA Reporting Centre, 2011). The provisions of the Act prohibit U.S persons from bribing foreign government officials and prescribe the standards of recording keeping and accounting practices that should be observed. This implies that the Act directly prohibits companies from unfairly retaining or obtaining business in foreign countries by "an offer of payment of anything of value" to foreign officials (FCPA, 1977).
    The Act though provides for an exception to anti-bribery prohibition. Bribery in the Act includes offering, paying, promising or authorizing payment or anything of value in order to receive unfair business advantages and opportunities. Payments meant to facilitate expediting the performance of a routine government action would not be considered as a bribe. These includes acquiring licenses and permits, processing official papers, loading and unloading cargo, clearing goods through customs and providing police protection (FCPA, 1977). In this case scenario, since the sale manager made payments in order to understate the value of Acme's imported products, which is not a routine government action, then this was a bribe rather than a facilitation fee. It may be argued though that bribe in Brazil is so rampant that it may be considered legal and therefore the funds were spent as part of performing a contractual obligation rather than bribing.
    Implications of legal bribes in Brazil
    Over the past years, the awareness of the high rate of corruption in Brazil has increasingly been debated and even though there has been rising awareness and commitment in combating corruption in Brazil, the extension to foreign bribery has been slow. Transparency International Bribe Payers Index in 2006 measured Brazil as one of the countries in the world with the perception of propensity to pay bribes (OECD, 2007). Despite that fact that bribes are the norm in Brazil, U.S companies working in Brazil are prohibited by FCPA from paying bribes to Brazil officials in order to obtain favors. A U.S company or national can be held liable for a "corrupt payment made by agents or employees working outside the U.S" even without any "involvement of Personnel residing in the U.S". In addition a U.S parent company which controls, directs and authorize activities in a subsidiary outside the U.S. can be held liable for the acts of its foreign subsidiaries as provide in ...

    Solution Summary

    The solution provides a scenario analysis and discussion.