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The Ethical Issues Faced by the FCPA and How to Better Serve the Stakeholders

 


Written by Colin Zlotnicki

Edited by Sarah Mejia

The purpose behind the FCPA and the SEC’s work is to promote ethics. There was a time when companies and their executives were getting away with bribes and arbitrage. The ethics issue that the FCPA faces is honesty and integrity. There are so many cases today because companies are still developing a code of ethics that set a precedent for employees and the company as a whole. The world is becoming more globalized every day; advantages in the market pop up around every corner, and companies are doing all they can to gain that competitive advantage.

Most allegations and settlements are a result of companies bribing governmental officials to create contracts or to gain any advantage in their market. Stakeholders want to see their organization grow and be profitable, but the appointed management often does not do business in the interest of these stakeholders. The question becomes whether executives operating their businesses honestly and with integrity. Management has different ways of getting compensated across the market. According to the Dodd-Frank Act, shareholders are beginning to have a say in the compensation of executives. The world market is becoming increasingly competitive, and it is not meeting all the firms’ needs and wants. Opportunism does exist and was approached incorrectly by firms such as Siemens AG and Tyco. The field ofcorporate social responsibility (CSR) encourages companies to take the interests of all stakeholders into consideration during their decision-making processes instead of making choices based solely upon the interests of shareholders.

Not everything in this market is solved naturally. We are social people and collaborate and defect on each other based on opportunities to outperform our market and jobs. As previously mentioned, the world is becoming more globalized and competitive. There are companies and executives who make “back-door” solutions to satisfy their wants and needs.

A utilitarian system shows that the ethically correct action is the one that will produce the greatest amount of pleasure or the least amount of pain. Executives and management seems to be maximizing happiness for themselves based on the settlements made by the SEC. Their decisions are not reducing suffering, but that might be the reason for change. When using utilitarianism, the decision maker must take a broad perceptive concerning whom in society might be affected by the decision. The FCPA is forcing companies to not take risks that would endanger the company and everyone who is involved. Until businesses strive to perform in the interest of the stakeholders, there will continue to be cases of bribery and unethical decision making. They have to make sure that there are systems in place with sufficient fail-safes at every level to ensure that issues are documented and handled effectively. When the people feel heard and see consistent behavior in their leadership, they are more inclined to contribute to an ethical work environment.

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**Due to technical difficulties, we recently had to switch domains and transfer all of our website content.  Please keep in mind that while we have been publishing articles for two years, the published dates shown may not reflect the initial publish date.

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http://www.sec.gov/spotlight/fcpa/fcpa-cases.shtml
http://deloitte.wsj.com/cfo/2011/06/16/foreign-corrupt-practices-act-proactive-compliance-advised/?KEYWORDS=FCPA
http://blogs.wsj.com/corruption-currents/2012/10/16/wal-mart-hires-international-compliance-chief-amid-bribery-probe/
http://www.investopedia.com/ask/answers/08/difference-between-a-shareholder-and-a-stakeholder.asp#ixzz2DYADgrie

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