商业伦理学课件Lecture 14

Foreign Corrupt Practices Act (《反海外腐败法》)
• Passed in 1977, revised in 1988, 1994, and 1998.
• Jointly enforced by Securities and Exchange Commission (SEC) and the Department of Justice
- Reinhard Siekaczek
Case analysis: Child labor in China
• Step 1: establish the facts: is using child labor a common practice in China?
Case analysis: Child labor
• Step 2: identify the relevant stakeholders
– Why do the plants hire child labor? What are the benefits and costs/risks for them?
– Why do the children accept to work in these plants despite the bad working conditions?
– Do the multinationals have incentive (动机) and legitimacy (合理性) to intervene in their Chinese suppliers' decisions to use childre labor? If they decide to intervene, what obstacles do they face?
– Foreign Corrupt Practices Act – The Siemens case
• Child labor in developing countries
– Step 1-2: Q&A – Step 3-5: reading & quiz
Reading (JP Morgan): Questions
• Imagine you were the CEO of a Chinese company and your company had two plans for the next year:
1. Doing business in a corrupt African country, 2. Getting listed on NYSE (New York Stock Exchanges)
Business Ethics
Lecture 14: Ethics in international business
Tuesday, Dec. 9,bery in international business
– Case: JP Morgan "elephant hunting" (video & reading)
– Subsequent business culture: regarding bribery as a normal and indispensible part of international business even after 1999
• Case description: At Siemens, bribery was just a line item, on NYTimes, 2008
– rules out the illegality of "lubricating fees" (润滑费), – allows plea of not guilty if bribery is not outlawed by the host
country.
Do you understand the incentives behind these changes?
• It was revealed that Siemens systematically used bribery to win contracts overseas. Money was usually channelled to foreign officials and politicians in the name of consulting fees through secret offshore accounts.
• Background
– According to SEC investigations in the mid-1970s, 400+ US companies admitted having paid $300+ million in bribery to foreign officials and politicians.
Discussion
• What would be the costs and benefits of FCPA to US? • The 1988 Amendment of FCPA:
– requires US president to urge other countries to pass similar laws,
• Significance:
– The first national law which holds accountable corruption in foreign countries. Successor: Canada.
– Precursor of international anti-corruption treaties (e.g., OECD AntiBribery Convention 1998, United Nations Convention Against Corruption 2005 ).
• Facing embezzlement (贪污) charges and harsh penalties, Siekaczek turned himself in (自首) to the justice and confessed that he was running an intl. bribery network with annual budget of $40 millions for Siemens from 2002 to 2006.
Could you see any potential conflict in these two objectives? How could you reconcile them?
The Siemens bribery case
• Background:
– German business law & practice: payment to foreign officials can be stated as advertising expenses and deducted from corporate tax until 1999 (the enactment of OECD AntiBribery Convention).
The confession of a tainted witness (污点证人)
• "We all knew that what we were doing was illegal. I didn't really look at it from an ethical standpoint. We did it for the company. It was about keeping the business unit alive and not jeopardizing thousands of jobs overnight. We always thought the top management would back us up, which, unfortunately, didn't happen...Instead, they decided to pin it [the crime] on me."
• Objective:
– To bring a halt to the bribery of foreign officials
– To restore public confidence in the integrity of the American business system.
• FCPA imposes financial sanctions and criminal penalties on:
• Results:
– 157 cases since 1977 (source: lexisnexis), including GE, IBM, Siemens, Lucent Tech., etc.
– Siemens (2008): the largest intl. bribery case to date (large scale, historically high fines, international cooperation on law enforcement, involvement of Chinese officials)
• US department of Justice and SEC stepped in and imposed a $1.6 billion fine on Siemens. Relevant information was also handled to Chinese authorities.
department of a multinational's Chinese branch, your superior, the regional president, asked you to hire an official's child in order to win a government contract. Would you follow the order? Why?
– US citizens or companies which pay bribery to foreign officials, – Foreign companies listed in US stock exchanges whose financial statements
include dubious (可疑的) transactions, – Any other foreign entities which conduct corrupt practices on US territory.
• What does "elephant hunting" mean? • Why did JP Morgan engage in "elephant
hunting" in China? • What's the impact of "elephant hunting" on
different stakeholders? • Imagine you were the chief of the HR
Case Summary
• Based on info. provided by a Greek prosecutor, German police raided Siemens and arrested Reinhard Siekaczek, accountant and midlevel executive, for bribery. Eleven top executives, including former president Heinrichvon Pierer and former CEO Klaus Kleinfeld were accused of "failing to oversee the company's daily operations and stop employees' illegal actions".