Please respond to classmate post: a. Compare the Lockheed bribery scandals from over 50 years ago (and its impact) to the Airbus bribery scandal settled in 2020.
In 1970 to 1975 Lockheed Martin issued $38 million in bribery payments to foreign government officials as a means to sell aircraft. Former Lockheed directors have stated that this practice of paying foreign officials had been in existence since the 1950’s; however, it was not until the financial position of the organization started to deteriorate. (Jones and Berry, 1977).
In January 2020, a delayed prosecution agreement (DPA) was reached between Airbus and government agencies in France, the United Kingdom, and United States for bribery payments to foreign governments. In 2016, Airbus self-reported incidents of improper payments being made by their agents in order to win contracts for airplanes. (Milligan & Ryan, 2022).
Both cases reveal the inner workings of selling aircraft. Airbus and Lockheed both engaged in the act of paying foreign government officials to further and grow their respective businesses. The Lockheed scandal saw several government officials having to step down from their official capacity due to the acceptance of these bribery payments (Wikipedia, n.d).
b. Compare the international bribery allegations involving the following companies: Walmart, Novartis, Microsoft.
In 2019, Walmart agreed to pay fines of $282 million to settle their Foreign Corrupt Practices Act (FCPA) violations in Mexico and Canada. It is stated that Walmart facilitated bribery payments to officials in these regions to further their business growth. In Mexico in particular the payments were made in order to have expedited permits and approved zoning decisions. (Bose, 2019)
In 2020, Novartis entered into a delayed prosecution agreement (DPA) for violations of the FCPA. Novartis issued payments to foreign doctors and politicians in order to fix the price of its drugs. Novartis had previously violated the FCPA and had to pay fines for paying doctors in China to prescribe Novartis products. At the conclusion of the DPA, all outstanding FCPA investigations were closed. (Department of Justice,2020).
In 2019, Microsoft paid $25.3 million in fines to settle charges of violations to the Foreign Corrupt Practices Act. Microsoft acknowledge failure to properly account for improper payments. These payments were connected to the sale of licenses to Hungary government agencies between 2013 and 2015. (Jaeger, 2019).
c. Compare Volkswagen’s handling of the diesel emissions case to Takata’s handling of the airbag issue
In 2014, Volkswagen agreed to pay $4.3 billion in penalties for falsifying emissions tests. These tests were altered by the installation of “defeat devices” that switched to a different mode and regulated emissions differently when driving under normal circumstances as opposed to test. To fix the issue with consumers, Volkswagen administered buyback plans as well as recalls in order to rectify the issue. (Kennedy, 2017).
The Takata airbag recall, and scandal is one of the largest in the history of the automobile industry to date. In 2013 it was discovered that a part in the Takata airbag could malfunction and cause significant injury to drivers and passengers if the airbag deployed. The biggest difference between Takata and Volkswagen is that while Takata was aware of the airbag issue, they chose to not do anything about it. It was not until the hands were forced and the automakers such as Honda, Toyota, and Ford as well as the U.S. National Highway Traffic Safety Administration (NHTSA) implemented recalls to correct the defective part. (Bomey & Jones, 2017).
d. What is the latest congressional update on the FCPA? Are the FCPA penalties paid by companies going up or down?
Corporate fines and penalties for FCPA violations are increasing. In fact, 2020 set a record with $2.78 billion in fines and penalties. In September of 2020, the Securities and Exchange Commission (SEC) approved amendments to rules that govern the whistleblower program. Anticorruption and anti-bribery policies are also being enforced globally with $9 billion in global penalties being assessed due to FCPA resolution and enforcement. (Gibson Dunn, 2021).
e. How much of all this were you aware of? Were you surprised? Do you feel some of it is the unspoken (and perhaps unavoidable) reality of international business?
From this course, I was able to learn a lot of things that I never thought could occurred in the international business world. Although I heard about company’s lawsuit cases but was not familiar with the specifics. I’m really surprise to know the involvement of firms with corruptions. As the text pointed out this week, there are some cultures where bribery is commonplace and to be expected in order to carry out business initiatives. I also recognize that in today’s fiercely competitive business environment, organizations are more willing to take risks and take part in illegal activities. I am appreciative in the enforcement and oversight by the federal government as they have shown that it is more than just words on a paper.
References:
Bomey, N. & Jones, C. (2017, June 25th).Timeline: How Takata’s air-bag scandal erupted. Retrieved April 23, 2022, from https://www.usatoday.com/story/money/2017/06/25/takata-air-bag-scandal-timeline/103184598/
Bose, N.(2019, Jun 20th).Walmart to pay $282 million to settle seven-year global corruption probe. Retrieved April 23, 2022, from https://www.reuters.com/article/us-walmart-fcpa/walmart-to-pay-282-million-to-settle-seven-year-global-corruption-probe-idUSKCN1TL27J
Gibson Dunn.(2021,January 12th). 2020 Year-End FCPA Update. Retrieved April 22, 2022,from https://www.gibsondunn.com/2020-year-end-fcpa-update/
Jaeger,J.(2019,July 23rd). Microsoft to pay $25M in FCPA case. Retrieved April 23, 2022,from https://www.complianceweek.com/anti-corruption/microsoft-to-pay-25m-in-fcpa-case/27446.article#:~:text=Microsoft%20and%20Microsoft%20Hungary%2C%20a,the%20Foreign%20Corrupt%20Practices%20Act
Jones,W. & Berry, J.(1977,May 27th).Lockheed Paid $38 Million in Bribes Abroad. Retrieved April 23, 2022, from https://www.washingtonpost.com/archive/business/1977/05/27/lockheed-paid-38-million-in-bribes-abroad/800c355c-ddc2-4145-b430-0ae24afd6648/
Kennedy, M.(2017,January 11th).Volkswagen To Plead Guilty, Pay $4.3 Billion In Emissions Scheme Settlement. Retrieved April 22, 2022 from https://www.npr.org/sections/thetwo-way/2017/01/11/509318791/volkswagen-to-plead-guilty-pay-4-3-billion-in-emissions-scheme-settlement
Milligan, E. & Ryan, C.(2022,January 7th). Airbus Investors Sue for €300 Million Over Bribery Scandal. Retrieved April 23, 2022,from https://www.bloomberg.com/news/articles/2022-01-07/airbus-investors-sue-for-340-million-over-briberyscandal#:~:text=The%20case%20relates%20to%20a,and%20U.K.%20prosecutors%20in%202020.
United States Department of Justice.(2020,Jun 25th). Novartis AG and Subsidiaries to Pay $345 Million to Resolve Foreign Corrupt Practices Act Cases. Retrieved April 23, 2022,from https://www.justice.gov/usao-nj/pr/novartis-ag-and-subsidiaries-pay-345-million-resolve-foreign-corrupt-practices-act-cases#:~:text=Novartis%20Greece%20entered%20into%20a,of%20conspiracy%20to%20violate%20the
Wikipedia.(n.d). Lockheed bribery scandals.(n.d). Retrieved April 23, 2022, from https://en.wikipedia.org/wiki/Lockheed_bribery_scandals
