Case 6-7 Transways' FCPA Dilemma (a GVV Case)

Transways, Inc. is a global U.S. company and provider of offshore oil drilling services and equipment based in Houston, Texas. The company just received a multi-million-dollar contract to explore for oil off the African coast. Ben Jones is the controller for TransWays. He recently met with Lonnie Wilson, the chief accounting officer, to discuss certain payments that will be made to freight forwarding agents in various African countries. The meeting did not go well. Jones expressed his concern about the payments that, he believed, qualified as bribes under the FCPA. Wilson took a different view, classifying the payments as facilitating payments, not bribes. The two accountants couldn't resolve their differences so a meeting was set for the following day, at which time the two of them, would discuss the matter. Each agreed to research the provisions of the FCP to determine whether the payments violate the law.

The payments being discussed relate to business operations in several African countries. The transactions are for the import of goods and materials and deep-water oil rigs into African waters. The amounts in total are significant. The transactions involve payments by freight forwarding agents in these countries to customs officials to circumvent each country's customs regulations, which are unduly burdensome and will delay operations and extend the assignment beyond the agreed-upon completion date. In that case, TransWays will have to pay a penalty.

Wilson claims that the payments qualify as facilitating payments because they are designed to induce the customs officials to let TransWays begin its operations as soon as possible. The payments simply help the company to obtain the necessary permits, licenses, and the official documents to qualify the company to do business in these countries.

Jones, on the other hand, isn't so sure about the payments. He is concerned that the payments are a bribe to get things done.

Assume you are in Ben Jones' position and preparing for the meeting. You fully expect Lonnie Wilson to push hard for classifying the payments as facilitating.

Questions:

1. Using the GVV framework, answer the following questions:

What are the main arguments you expect to hear from Wilson?

What are the reasons and rationalizations you need to address?

What is at stake for the key parties including TransWays?

What levers can you use to influence Wilson?

What are your most effective responses to the reasons and rationalizations?

2.) Assume Wilson wins the argument and you are told that the payments should be treated as facilitating payments. What would you do next and why?