MONDAY EXPORT CLASS
With
GODWIN OYEFESO (SUCCESSEDGE EXPORTERS NETWORK)
Topic: Ethical Conduct in Export Business (Part 1)
While conducting business across borders, companies need to be mindful of ethics and laws, especially as they relate to exporting. You will have to contend with different cultures, different rules and regulations of each country you plan to do business with, different perspectives, and different end goals. There are so-called right and wrong behaviors, and there are also gray behaviors, which can make things complex. In this chapter, I’ll talk about the impact of unethical behavior such as bribes, unveil how sound ethics are our best competitive advantage in the digital global economy, and discuss why each of us must have a moral compass.
Unethical behavior can damage a business or take it down. Just look at Enron,
WorldCom, Arthur Andersen and Bernard L. Madoff Investment Securities LLC. US firms are restricted from bribery, yet bribery abroad is rampant and is a serious issue facing all exporters.
What is a bribe ? A bribe is anything of significant value—including money— given to someone who influences the individual to do something she wouldn’t ordinarily do had she not received the special treatment for her own benefit. What constitutes bribery can vary from country to country, depending on local customs, values, and practices. But let me be perfectly clear about one point: If a US company offers a bribe, not only is it breaking the law; it is sending a signal that it can’t compete legally without illegal help. And that behavior typically starts with a cavalier attitude about the law.
In the case of an export business, bribes are sometimes made to foreign officials, foreign political parties, or candidates for foreign political office for the purpose of obtaining or retaining business. This is illegal and the penalties can be fierce. According to the Foreign Corrupt Practices Act (FCPA) , which affects every US company that does business outside the country, you can face large fines, prosecution and jail, and be barred from receiving US government contracts, for engaging in bribery.iv
Whether you are a broker, sales agent, supplier, or exporter, the temptation to accept or give bribes (to move goods through ports faster, to get unions to unload ships, or to have customs officials turn a blind eye to sketchy documentation, for example) or act unethically exists in the pursuit of business. When any of these things is done with the understanding that payoffs could come later, that’s a bribe. In other words, when another party persuades you with the logic “Do it now and good things will follow—and probably under the table,” they’re tempting you with bribery.
Why the FCPA?
In 1977, Congress enacted the US Foreign Corrupt Practices Act (F CPA , or “the act”) in “response to revelations of widespread bribery of foreign officials by U.S. companies. The Act was intended to halt those corrupt practices, create a level playing field for honest businesses, and restore public confidence in the integrity of the marketplace.”v
Congress said this when drafting the FCPA: “The payment of bribes to influence the acts or decisions of foreign officials, foreign political parties or candidates for foreign political office is unethical. It is counter to the moral expectations and values of the American public. But not only is it unethical, it is bad business as well. It erodes public confidence in the integrity of the free market system. It short-circuits the marketplace by directing business to those companies too inefficient to compete in terms of price, quality or service, or too lazy to engage in honest salesmanship, or too intent upon unloading marginal products. In short, it rewards corruption instead of efficiency and puts pressure on ethical enterprises to lower their standards or risk losing business.”vi
The bottom line: FCPA rules apply to all companies, irrespective of size, and its terms are not negotiable. As a small business exporter, even though you may lack the time, human resource capabilities, legal expertise, or financial resources to meet overseas regulatory requirements, you must still have an effective compliance program and measure in place. What’s worse is that criminal penalties may impact a small business exporter at a far greater magnitude than they do a large business, because the fines imposed will make up a larger proportion of the small business exporter’s earnings.
TO BE CONTINUED……
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Till then, you will succeed