"laws in the world. We begin by examining the backgrounds of these two laws and then discussthe rules and regulations of each. The case explains why these laws were enacted and who issubject to their standards. The analysis also provides specific examples of bribery and itsconsequences. Finally, we offer an overview of how bribery negatively impacts nationalinstitutions, including political, social, and economic.BACKGROUND OF THE UNITED STATES FOREIGN CORRUPT PRACTICES ACTThe Foreign Corrupt Practices Act of 1977 (FCPA) was developed after a number of scandalsshook the nation. The Watergate scandal brought corruption under greater scrutiny. AfterWatergate, the U.S. Securities and Exchange Commission began investigating more than 400U.S. companies, including long-term bribery at Lockheed Martin, and discovered many hadmade questionable and illegal payments to foreign officials in excess of $300 million. Theirfindings proved the necessity for regulation, which resulted in the creation of the FCPA. TheFCPA makes it illegal for individuals or entities to make payments to foreign governmentofficials to assist in securing or retaining business. The FCPA does, however, allow for smallpayments to expedite routine transactions, known as facilitation payments, which are arguablynecessary to conduct business in some countries. These facilitation payments are meant to speedup routine transactions and convince public officials to perform their functions, but are in no wayintended to convince government officials to provide preferential treatment to a firm. While thereis no set amount separating a bribe from a facilitation payment, gifts under $100 are generallydeemed to be acceptable. However, as mentioned earlier, distinguishing between gifts and bribescan be difficult. Under the BK-CHE-FERRELL_11E-150190-Case 18.indd 600Copyright 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.Case 18: Managing the Risks of Global Bribery in Business 601FCPA, a bribe can be anything of significant value, including money, gifts, travel, or varioustypes of entertainment. Forms of bribery vary from company to company; one organization mayview anything less than $100 as acceptable, while another company may see anything more than$10 as a bribe. To avoid discrepancies, it is necessary for companies to include their standards ongifts and entertainment in their codes of conduct. Any company with operations in the UnitedStates is subject to the FCPA over its entire business. The FCPA always applied to companieslisted on the U.S. Stock Exchange, and in 1998 the law began applying to foreign companies aswell. The FCPA was designed to encourage proper business transactions conducted bycompanies and individuals. Ultimately, Congress enacted the FCPA to bring a halt to the briberyof foreign officials and attempt to build and restore public confidence in the integrity of theAmerican business system. With the development of the FCPA, the implications andconsequences for bribes changed. Punishment for violating the FCPA varies from case to case.However, penalties generally include up to five years in prison and fines of up to $250,000 forindividuals. For business entities, fines can reach $2 million. Also, company executives whoknow about bribery but do not report it can face prison time. Bribing government officials comesin many forms. In 2014 HP paid $108 million to settle allegations that it had bribed foreignofficials in Mexico, Poland, and Russia. In 2012 Eli Lilly was charged with issuing improperpayments to foreign government officials in order to conduct business in Poland, China, Russia,and Brazil. Additionally, in 2012 the Securities and Exchange Commission found TycoInternational guilty of arranging improper payments to foreign officials in more than 12countries. While most of these incidents involve gifts or money, other incidents of bribery underthe FCPA have included improper travel, contributions to the public official’s favorite charity, "