"CASE 18 Managing the Risks of Global Bribery in Business*Bribery is one of the most pervasive forms of corruption in global business. In the United States,the United Kingdom, and many other countries, bribery in business is illegal, particularly when itinvolves the bribing of foreign officials. Unfortunately, bribery plagues even the most well- respected organizations. Corporations past and present have witnessed or participated in thisillegal practice. Multinational organizations face the added challenge of having to monitor theirsubsidiaries in various countries, including some where bribes are expected as part of the normalcourse of business. IBM, for instance, paid fines of $10 million to settle claims it paid officials inChina and Korea with gifts and other bribes to secure contracts. With fines often reaching intothe millions, it is essential for companies to have systems in place to prevent this form ofmisconduct. Bribery is defined as the offering of payments or other incentives to gain illicitadvantages. In business, bribery can be used to influence an organization or individual to providepreferential treatment. Although bribery occurs on a widespread level, it is far from harmless;rather, it interrupts the competitive process between organizations. Many cultures, including theUnited States and the United Kingdom, consider bribery to be an unfair way of conductingbusiness. For years corporations have adopted anti-bribery and anti-corruption policies in theirorganizations. However, these efforts mean little if they are not enforced. The form andfrequency of bribery vary depending on the culture. In some cultures, bribery is a common wayof doing business. Many cultures, including the United States, allow companies to providehospitality or small gifts to those with whom they wish to do business. In fact, in Japan it is oftenconsidered rude not to bring a gift. One challenge for many companies is how to determine whatconstitutes a gift or an act of hospitality and what can be construed as a bribe. Giving a potentialclient a mug with the company logo on it is likely to be seen as a form of hospitality because it is so small in value it will not likely influence the client’s business decision. An all-expenses paidtrip to the Bahamas is another question entirely. However, other items are not as easily defined.For instance, is a bottle of wine a gift or a bribe? What if the wine costs $20? How about if itcosts $175? The distinction between gifts and bribes can be a gray area. It is the firm’sresponsibility to be aware of the bribery laws within each country it operates in and conductbusiness accordingly. Even if the business has operations in a country where bribery isacceptable, antibribery laws sometimes reach across borders. For example, the U.S. ForeignCorrupt Practices Act and the United Kingdom Bribery Act prohibit companies with operationsin the *This case was prepared by Danielle Jolley, Julian Mathias, Michelle King, and JenniferSawayda for and under the direction of O. C. Ferrell and Linda Ferrell. Isaac Emmanuelprovided editorial assistance. It was prepared for classroom discussion rather than to illustrateeither effective or ineffective handling of an administrative, ethical, or legal decision bymanagement. All sources used for this case were obtained through publicly available material ©2015.BK-CHE-FERRELL_11E-150190-Case 18.indd 599 Copyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, orduplicated, in whole or in part. Due to electronic rights, some third party content may besuppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressedcontent does not materially affect the overall learning experience. Cengage Learning reserves theright to remove additional content at any time if subsequent rights restrictions require it. 600 Part 5: CasesUnited States or the United Kingdom, respectively, from bribing foreign officials anywhere.Another important measure for combating international bribery is the OECD Anti-BriberyConvention, meant to criminalize international bribery of foreign public officials. All 34 OECDmember nations and 7 nonmember nations are subject to this convention, although somecountries are more proactive in enforcement than others. Even countries where bribery iscommonplace have passed bribery laws and are prosecuting individuals or companies for acts ofbribery. For example, China recently amended its criminal code to allow prosecution ofcompanies that offer bribes to foreign officials over $31,640 (RMB 200,000). Brazil alsorecently passed its owncorporate bribery law, making companies civilly liable for bribinggovernment or foreign officials. The new Brazilian law is actually much stricter in some waysthan its U.S. and U.K. counterparts, although how effectively it will be enforced remains to beseen. However, simply knowing the relevant bribery laws is only one step toward combating thispractice. Unfortunately, the distinction between a gift and a bribe continues to remainambiguous, and even the most wide-sweeping anti-bribery laws are not always clear on thisissue. To eliminate this uncertainty for employees, generally accepted practices regarding briberyshould be located in the company’s code of conduct as well as communicated to all employees.By implementing a code of conduct with clear distinctions between bribery and gifts orentertainment, a company can set a proper precedent that bribery will not be tolerated. This caseanalysis examines two of the major laws that impact the use of bribery on a global scale: theFederal Corrupt Practices Act of the United States and the Bribery Act of the United Kingdom.While there are many other global bribery laws, these are the most well-recognized anti-bribery "