Tuesday, February 13, 2007

The More Things Change... 

This is an interesting story in that it is unusual for a company to announce publicly that an executive violated the Foreign Corrupt Practices Act (FCPA). The Act has been in force since 1977 when it was common for nearly all companies doing business outside of their borders to provide kickbacks to government officials and others. The US took a stand on the issue with the FCPA, and US businessmen complained it would damage the competitiveness of the country. It didn't but a new class of middlemen arose to whom US businesses sold their goods without kickbacks. What middlemen did was another issue.

Bribery and kickbacks are still in international business. US businessmen long ago learned ways to work around international competitors who "flash the cash" to win contracts. There is more than reputation at issue with such corruption. There is also the economic cost of doing business when money changes hands in order for goods to flow into a country. Kick-backs get factored into the sales price of goods.

The FPCA is a law that is always lurking in the background, and PR practitioners have to be aware of it and its significance. There will never be an end to greed and in pursuit of sales, temptations to bend rules are a constant.


Post a Comment

This page is powered by Blogger. Isn't yours?