Business

Geletex Inc. is prospering and expanding to the international telecommunications market.  The U.S. market considers Geletex, Inc. a reputable business and their employees like the recognition. The Director of Compliance, Jeb Richardson has some legitimate worries in regards to the Geletex Inc. operations in other countries. He knows there are some differences in business practices and culture, but he is not sure how much he should let go on the basis of that difference.  Jeb is also knowledgeable of the Foreign Corrupt Practices Act (FCPA) of 1977 and the Trade Act of 1988.  He has also read the 1998 document created and signed by 33 countries in regards to the Organization of Economic Cooperation and Developments provisions in the Combating of Bribery of Foreign Public Official in International Business Transactions.

With regard to the office in Lima Peru, there are several things that must be considered with respect to ethical practices.  First and foremost is the commissions paid to the sales people of the office. The commissions are higher and exceed the norm of the industry in many countries not just Peru. This is a definite red flag and needs to be taken into consideration. The second is the operations manager who ignores the questioning of Jeb by saying that things are done differently there. Jeb knows the culture of Lima Peru is much different than in the United States, but what he believes is happening is commercial bribery and is a violation under the FCPA (Department of Justice 1998).

Based on the FCPA definition of commercial bribery, it is the corrupt payments to foreign officials for the purpose of or keeping business.  Jeb needs to look at the five factors that constitute criminal commercial bribery.  The first is who is making the bribe, and that would be the sales men in the field. Jeb believes they are using kickbacks to gain business.  Their promise of a kickback shows intent to make the corrupt payment or bribe, hence their large commissions which allow for the third factor the actual payment. The fourth requirement is the recipient.  The FCPA states that the recipient of a commercial bribe must be a foreign official, a foreign political party, or party official, or any candidate for foreign political office. The last requirement is the business purpose test which states that any payments to keep or obtain or direct business could be a crime (Department of Justice 1998).

As Jeb evaluates the Peru Office accounting books, he realizes that they have only met four of the five requirements to be a commercial bribe.  He was missing the fourth requirement of the payment made to a government official.  Based on the FCPA, the Geletex Inc is still working within the guidelines, only because it is not known who are receiving the kickbacks (Department of Justice 1998).

With this knowledge Jeb should launch an investigation into who is receiving the kickbacks and how much is costing the company to due business. If it is found to cost more to have the office in Peru based on the kickbacks, and the recipients of those kickbacks, he should recommend the office be closed and show his evidence.  However, if the office is turning a profit even with high commissions, and if the kickbacks are going to business owners or private citizens then technically the office is not in violation of the FCPA and can continue with their practices (Department of Justice 1998).

Ethics in one country is hard enough, but being ethical in all countries is almost impossible.  Each given situation was different, and each skimmed the FCPA, some to the unethical side, and some just this side of a violation.  Thus Jeb is right to be suspicious, but needs to gain more evidence before he shuts it down for good.