1. What are the differences between the provisions of the United States Foreign Corrupt Practices Act and the United Kingdom Bribery Act?
2. Check for more recent situations where companies have been accused of violating the Foreign Corrupt Practices Act. Why do you think these companies chose to engage in bribery?
3. Why is it so difficult to determine when a minor gift, entertainment, or incentive constitutes a bribe?

Bribery is one of the most pervasive forms of corruption in global business. In the United States, the United Kingdom, and many other countries, bribery in business is illegal, particularly when it involves the bribing of foreign officials. Unfortunately, bribery plagues even the most well respected organizations. Corporations past and present have witnessed or participated in this illegal practice. Multinational organizations face the added challenge of having to monitor their subsidiaries in various countries, including some where bribes are expected as part of the normal course of business. IBM, for instance, paid fines of $10 million to settle claims it paid officials in China and Korea with gifts and other bribes to secure contracts. With fines often reaching into the millions, it is essential for companies to have systems in place to prevent this form of misconduct.

Bribery is defined as the offering of payments or other incentives to gain illicit advantages. In business, bribery can be used to influence an organization or individual to provide preferential treatment. Although bribery occurs on a widespread level, it is far from harmless; rather, it interrupts the competitive process between organizations. Many cultures, including the United States and the United Kingdom, consider bribery to be an unfair way of conducting business. For years corporations have adopted anti-bribery and anti-corruption policies in their organizations. However, these efforts mean little if they are not enforced.

The form and frequency of bribery vary depending on the culture. In some cultures, bribery is a common way of doing business. Many cultures, including the United States, allow companies to provide hospitality or small gifts to those with whom they wish to do business. In fact, in Japan it is often considered rude not to bring a gift. One challenge for many companies is how to determine what constitutes a gift or an act of hospitality and what can be construed as a bribe. Giving a potential client a mug with the company logo on it is likely to be seen as a form of hospitality because it is so small in value it will not likely influence the client’s business decision. An all-expenses paid trip to the Bahamas is another question entirely. However, other items are not as easily defined. For instance, is a bottle of wine a gift or a bribe? What if the wine costs $20? How about if it costs $175? The distinction between gifts and bribes can be a gray area. It is the firm’s responsibility to be aware of the bribery laws within each country it operates in and conduct business accordingly.

Even if the business has operations in a country where bribery is acceptable, antibribery laws sometimes reach across borders. For example, the U.S. Foreign Corrupt Practices Act and the United Kingdom Bribery Act prohibit companies with operations in the United States or the United Kingdom, respectively, from bribing foreign officials anywhere. Another important measure for combating international bribery is the OECD Anti-Bribery Convention, meant to criminalize international bribery of foreign public officials. All 34 OECD member nations and 7 nonmember nations are subject to this convention, although some countries are more proactive in enforcement than others. Even countries where bribery is commonplace have passed bribery laws and are prosecuting individuals or companies for acts of bribery. For example, China recently amended its criminal code to allow prosecution of companies that offer bribes to foreign officials over $31,640 (RMB 200,000). Brazil also recently passed its own corporate bribery law, making companies civilly liable for bribing government or foreign officials. The new Brazilian law is actually much stricter in some ways than its U.S. and U.K. counterparts, although how effectively it will be enforced remains to be seen.