David Bourget (Western Ontario)
David Chalmers (ANU, NYU)
Rafael De Clercq
Jack Alan Reynolds
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Journal of Business Ethics 93 (2):255 - 276 (2010)
Although corruption is ubiquitous, attitudes toward it differ among countries. Until the 1997 OECD Convention, the U.S. had been one of the only two countries with an explicit extraterritorial anti-bribery law, the Foreign Corrupt Practices Act (FCPA) of 1977. The FCPA employs a two-pronged approach to control the supply side of corruption: (1) anti-bribery provisions; and (2) accounting (books and record and internal controls) provisions. I offer evidence, albeit indirect, to show that the FCPA had limited success. The OECD Convention adopts the same two-pronged approach, but, since it is a multilateral treaty, is likely to be more successful provided that enforcement is vigorous enough. The signatory nations effectively form a cartel to reduce the cost of doing business. As with any cartel, however, each multinational corporation has an incentive to deviate. Thus, the mutual enforcement of the agreement is crucial for its success. However, the two-pronged approach is not sufficient, since internal control does not adequately monitor decisions made at the top level. I argue that the two lessons drawn from the U.S. experience are: (1) law enforcement must be credible; and (2) internal controls alone are not sufficient. Stronger and more effective corporate governance within an appropriate regulatory framework is needed to ensure that multinational corporations conduct their business in an ethical manner.
|Keywords||bribery cartel corruption corporate governance FCPA internal control OECD convention|
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References found in this work BETA
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Citations of this work BETA
Onyeka Osuji (2011). Fluidity of Regulation-CSR Nexus: The Multinational Corporate Corruption Example. [REVIEW] Journal of Business Ethics 103 (1):31-57.
James Weber & David M. Wasieleski (2013). Corporate Ethics and Compliance Programs: A Report, Analysis and Critique. [REVIEW] Journal of Business Ethics 112 (4):609-626.
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