Business Law Question
Response-1 Mariano Gonzalez posted Feb 24, 2023 4:36 PM
Robert Manning and Global Shippers Inc. engaged in several unethical and potentially illegal actions to secure and maintain the exclusive contract with Neristan. These actions include:
- Paying a bribe: The prime minister of Neristan requested a payment of $100,000 to be wired to his personal account in exchange for securing the contract for Global Shippers Inc. Manning did not directly agree to the payment but instead offered a luxurious trip to New York City. While Manning did not technically pay the bribe, his actions can be interpreted as an attempt to circumvent bribery laws.
- Providing gifts and entertainment: Manning paid for an expensive dinner and wine for the prime minister, flew him first-class to New York, provided all expenses paid luxurious accommodations, and showed him around the city. These gifts and entertainment were likely intended to influence the prime minister’s decision in awarding the contract to Global Shippers Inc.
- Offering a bribe to customs officials: Manning paid $100 each to customs officials to expedite the shipment of goods from Neristan. This action is also considered bribery and is illegal.
- Failing to report illegal activity: Manning failed to report the potential illegal activity to his superiors at Colossal Corporation until after the prime minister of Neristan was arrested for embezzling government funds. Manning’s delayed reporting could be seen as an attempt to cover up his own involvement in the unethical and potentially illegal actions.
Given the gravity of these actions, it is unlikely that Colossal Corporation would defend Manning’s actions as legal or ethical. Instead, they may conduct an internal investigation and potentially report their findings to relevant law enforcement agencies. Additionally, Manning and Global Shippers Inc. could face legal and financial consequences for their actions, including fines and even imprisonment for violating bribery and corruption laws.
Manning’s actions raise concerns under both the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act, as well as ethical considerations in light of differing cultural norms.
- The Foreign Corrupt Practices Act (FCPA)
The FCPA prohibits bribing foreign officials in order to obtain or retain business. The act applies to companies and individuals with ties to the United States, which includes Global Shippers Inc. Manning’s actions could be seen as a violation of the FCPA in several ways:
a) Offering a bribe: The prime minister’s request for a payment of $100,000 in exchange for awarding the contract to Global Shippers Inc. constituted a bribe. Manning’s response did not immediately reject the offer and instead suggested an all-expenses-paid trip to New York, which could be seen as an attempt to circumvent the FCPA.
b) Improper payments: Manning paid for the prime minister’s dinner and wine, as well as his expenses for the New York and Los Angeles trips, out of his corporate accounts. While such payments are not inherently illegal, they could be seen as improper payments if they were made to influence the awarding of the contract.
c) Bribery of customs officials: Manning’s actions in slipping the customs officials $100 each to expedite the shipment could also be seen as a violation of the FCPA, as this constituted a bribe to foreign officials to obtain business advantage.
In summary, Manning’s actions could be seen as a violation of the FCPA, which could result in significant penalties, including fines and imprisonment for both the company and individuals involved.
- The UK Bribery Act
The UK Bribery Act is similar to the FCPA, and it criminalizes the act of bribing a foreign official in order to obtain or retain business. Manning’s actions could also be seen as a violation of the UK Bribery Act in several ways:
a) Offering a bribe: Manning’s response to the prime minister’s request for a payment of $100,000 could be seen as an attempt to circumvent the UK Bribery Act by offering a trip to New York instead of a direct payment.
b) Improper payments: Similarly, Manning’s payment for the prime minister’s dinner and wine, as well as his expenses for the New York and Los Angeles trips, could be seen as an attempt to influence the awarding of the contract.
c) Bribery of customs officials: Manning’s actions in slipping the customs officials $100 each to expedite the shipment could be seen as a violation of the UK Bribery Act.
In summary, Manning’s actions could be seen as a violation of the UK Bribery Act, which could also result in significant penalties, including fines and imprisonment for both the company and individuals involved.
- Ethical considerations
Manning’s actions also raise ethical concerns, particularly in light of differing cultural norms. While the prime minister’s request for a payment may be seen as customary in Neristan, it does not justify engaging in bribery or other unethical behavior. As a representative of Global Shippers Inc., Manning had a duty to act with integrity and in compliance with local laws and regulations. Manning’s actions in paying for the prime minister’s dinner, wine, and travel expenses, as well as slipping bribes to customs officials, could be seen as unethical and damaging to the reputation of Global Shippers Inc.
In conclusion, Manning’s actions could be seen as a violation of both the FCPA and the UK Bribery Act, as well as ethical considerations, and could result in significant penalties for both the company and individuals involved. Companies and individuals operating internationally must be aware of the legal and ethical implications of their actions and act with integrity and compliance with local laws and regulations
Response 2-Monika Rettenmayer posted Feb 23, 2023 7:16 PM
Manning’s actions can be broken down as follows:
-Participated in lavish $3,500 dinner and wine with a government official, paid for with his corporate card. During dinner he received a bribery offer which he declined. Instead, he extended an invitation for travel to discuss business, promising a stay in high value accommodations and extended trip amenities, not related to business. Dinner took place in Neristan.
-Flew the government official first class to New York, where business was discussed for 1 day. They then traveled around the city, attended a Broadway show and enjoyed fine dining. Trip lasted a few more days, then first class to Los Angeles to enjoy the town for more days before finally meeting with the board, where it was announced that the contract was awarded to Global Shippers. The government official continued his all expenses paid trip for two more weeks.
-Manning paid $100 each to customs officials to expedite clearance of the first shipment. Customs still needed to complete their inspection but after these payments, the shipment went out the next day (“Global Shippers, Inc.”, 2023).
Were Manning’s actions legal under the Foreign Corrupt Practices Act, and what are the possible penalties for violating the act?
Manning actions were not legal under FCPA. They included an offer of something of value to the prime minister, who in his official capacity can determine contract award, and the intent was to secure the award of new business. The invitation is directly extended as an alternative to the payment request (clearly a bribe). The FCPA prohibits providing or promising to provide anything of value to a foreign official to obtain/retain business or secure an improper advantage. The FCPA does allow for gift giving, within reason, but in this case the travel and entertainment are extravagant and can be seen as bribes and not gifts (“Gifts, Travel, Entertainment, and Other Things of Value”, 2023).
Although the FCPA bribery provision allows facilitation payments, they only apply when they are made to expedite routine government actions, commonly performed by a foreign official. The focus is not on the size of payment but on its purpose. By making small payments to the customs officials, Manning was asking them to ignore their process and expedite the shipment, without completing their regular check for contraband. This does not meet the parameters of an exception and constitutes bribery. Under FCPA, these actions can carry the following penalties:
-Criminal: Up to $250K per violation and up to 5 yrs. in prison for individuals. For companies the penalties include up to $2M per violation.
-Civil: Up to $16K per violation for individuals and companies.
Additional potential fines could be enforced under the Alternative Fines Act. These fines can be up to two times the amount of any benefit obtained through a bribe (“Foreign Corrupt Practices Act”, 2023).
Were Manning’s actions legal under the UK Bribery Act and what are the possible penalties for violating the act?
Manning’s actions were also not legal under the UK Bribery Act. Overall, the FCPA and the UK Bribery Act focus on the same goal of preventing global corruption, and they both extend bribery laws beyond borders. The Bribery Act does include stricter and more comprehensive provisions, including not allowing bribery to or from private persons and public officials. In addition, companies can be held liable for failing to prevent bribes by anyone in their employment, and facilitation payments of any kind are not allowed.
The only payments that would constitute an exception would be fast track or admin fees. Manning’s payments to the customs officials do not qualify as allowable under these rules. The potential civil and criminal penalties would be up to 10 yrs.in prison for an individual, and no cap on fines (“Global Bribery”, 2023).
Were Manning’s actions ethical, particularly in light of differing cultural norms?
If we analyze Manning’s behavior by applying two of the major ethical perspectives, utilitarianism, and deontology, we conclude that his actions were not ethical. Utilitarianism focuses on the results of an action, and whether they benefit the greater good (“Major Ethical Perspectives”, 2023). To say that the results of Manning’s actions benefited himself and the company, and therefore the greater good is a mistake. Overall, the greater good for society would include actions that do not promote unfair competition or support corrupt practices. The contracts will benefit local business and the country of Neristan, but that would have been the result of anyone winning the business and not exclusive to Global Shipper’s award.
Deontology states that to be ethical, an action must be universal, and for that to be true, the decision would need to be evaluated in terms of reversibility and consistency. If Manning had to be on the other side of this case as a competitor, losing out on a business contract due to bribery would not pass the test. Consistency is not as simple to apply, as culturally his actions were expected as part of a way of doing business in Neristan, and possibly the only way to win a contract.
There are other options that Global Shippers and Manning could have adopted to comply with the cultural norms. Gift giving and invitations to travel to the US facilities are not out of scope. Had there been a set limit for these gifts and invitations, and assuming Global Shippers has a mission and corporate values that they expect employees to follow- Manning could have navigated these cultural differences, while still staying within the law and behaving ethically. Finally, it is important to note that these suggested actions may have decreased their chances of winning the business but could have also protected them from both legal and social consequences.
References
University of Maryland Global Campus (2023). Foreign Corrupt Practices Act. Document posted in UMGC MBA 630 9045 online classroom, archived at https://leocontent.umgc.edu/content/scor/uncurated…
University of Maryland Global Campus (2023). Gifts, Travel, Entertainment, and Other Things of Value. Document posted in UMGC MBA 630 9045 online classroom, archived at https://leocontent.umgc.edu/content/scor/uncurated…
University of Maryland Global Campus (2023). Global Bribery. Document posted in UMGC MBA 630 9045 online classroom, archived at https://leocontent.umgc.edu/content/scor/uncurated…
University of Maryland Global Campus (2023). Global Shippers Inc. Document posted in UMGC MBA 630 9045 online classroom, archived at https://leocontent.umgc.edu/content/umuc/tgs/mba/m…
University of Maryland Global Campus (2023). Major Ethical Perspectives. Document posted in UMGC MBA 630 9045 online classroom, archived at https://leocontent.umgc.edu/content/scor/uncurated/mba/2218-mba630/learning- resourcelist1/major-ethical-perspectives.html?ou=722307
