Thesis Proposal Sample on Anticorruption Laws

2021-07-01 19:30:55
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Boston College
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Thesis proposal
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Corruption is a problem that has been in existence for a long time now and it still growing roots within the human population. In fact, it has seemingly existed as long as the governments itself. If you look at the history books regarding corruption, you will realize that ancient philosophers such as Aristotle talked about the problem of self-interest among the human community. And from its inception, there have been multiple attempts to eradicate this problem ever since. The first attempt to regulate corruption through law was through the ancient English rule law which was promulgated in 1346. As much as the law tried to eradicate this menace, corruption persisted over the next centuries on a broader scale.

Introduction

In 1977, the United States enacted Foreign Corrupt Practices Act (FCPA) which was meant to ban business people from engaging in bribery activities overseas. Since then we have witnessed minimal enforcement of this law, most probably due to the fear of the consequences of implementing it. However, I must say that in recent years we have seen a tremendous increase in the enforcement of FCPA and by extension other international laws that fight against business corruption. According to Davis (2012), Brazil has been experiencing a lot of corruption acts in nearly every sector of its government. Surprisingly, this act continued until the Brazilians could not take it anymore and they decided to take it to the streets to complain about corruption. This forced the Brazilian government to enact a couple of anticorruption laws to help regulate this menace. However, in this article, we will be concerned in comparing the Foreign Corruption Practice Act in the US and the Brazilian anti-corruption law and moreover determine their respective effects on foreign investment (Davis, 2012).

Thesis statement: The different treatment of sanctions influences the perception that investors have about their investments

Based on Prado (2010) findings, since the end of the military rule, Brazil has experienced not only a relatively high growth cycle but also multiple corruption scandals occurring one after another. On the other hand, the US has also experienced a lot of corruption scandals, especially in its multinational agencies. It is important to know that, corruption in the international marketplace remains to be a huge problem. In fact, it is estimated that corruption affects competition for international commercial contracts worth billions of dollars yearly. Surprisingly, some of the big organization with prominent names appear on the list of agencies who have supposedly engaged in bribery of foreign public officials. A good example is a Patrobas Scandal which involved Brazils state-owned oil organization called Patrobras. It is believed that the corrupt government officials collaborated with Patroba's contractors to loot a lot of money from the government. When we see such scandals we tend to ask a lot of questions including; where are the anti-corruption laws? Are they effective? Among many more questions. Well, to answer this questions we will have to analyze anti-corruption laws in different countries and see their progress in the elimination of corruption and how their subsequent implementation affected the perception of the investors.

Bribery in international level results in a lot of adverse consequences this includes: it undermines democratic accountability, hinders economic development, distorts markets, and most importantly it causes misallocations of resources. In 2013, Brazil enacted Clean Companies Act which was meant to place civil and administrative liability on legal entities participating in bribery of public officials. According to Monteiro (2015), this move was meant to regulate malpractices of corruption which had become widespread and long-rooted in the country. In fact, in 2012 Brazil was ranked the 69th most corrupt nation by the Transparency International out of 174 countries on its International Corruptions Perception Index. This rank indicates that the country has a lot of problems with corruption. Before the implementation of Clean Companies Act, the existing anti-corruption laws only held individuals liable for participating in bribery of public officials, not legal entities. However, after the law was implemented, a lot of foreign investments operating in the country were closed. Some of the investors even sold their shares, the reason for this actions is not clearly defined. But I believe it is because of the strict provisions of the Clean Companies Act which required all foreign companies operating in the country to meet the required standards stipulated in the law.

We should also understand that Brazil signed an agreement with the Organization for Economic Co-operation and Development (OECD) to assist in combating bribery of foreign public officials in the International Business Transactions. This means that the foreign companies operating in the country will have to undergo a close scrutiny from the government to determine the integrity of their operations. Several foreign companies are not ready to undergo this kind of process and some of the investors have even gone to court to block the government from investigating their investments. The only question we are asking is what are they hiding? However, it will all depend on Brazil to properly enforce the law for the provisions of the new Brazilian Act to meet the OECDs expectations and those of its citizens (Monteiro, 2015).

In 1977, the US enacted The Foreign Corrupt Practices Act (FCPA) which was meant to deter inappropriate incentives to foreign officials in connection with business activities. And for it to attain its objectives it contains two mechanisms that are the accounting provisions and anti-bribery provisions. Anti-bribery provisions apply to three categories of people and entities: First, the issuers and their officers, directors, agents, shareholders, and employees. Second, domestic concerns and their officers, directors, agents, shareholders, and employees. Third, certain persons and entities. In general, anti-bribery provisions of the FCPA prohibits any offer or promise of payment of anything of value if the person offering the item understands that the portion of the item will be granted or promised to a foreign official or a foreign political party for the purpose if influencing a government decision. To implement the OECD Convention, the FCPA expanded in 1998 to include the nationality principle which explains that jurisdiction is based only on the status of an individual as a US citizen or whether the entity was established under the laws of the United States. The implementation of the FCPA inspired a lot of American investors to invest more on foreign countries since the FCPA only affected those entities that were established under the laws of the US.

From the analysis of these two laws, we notice that several investors saw the Brazils Clean Company Act as a threat to their investments. On the other hand, the FCPA inspired the American investors to more investments abroad.

Methods or Approach

Now that we have talked about the policies governing corruption, it is also important for us to understand the popular measures of corruption. Some of the measures include The World Banks Governance Indicators Database, The Transparency Internationals Corruption Perceptions Index and the PRS Groups International Country Risk Guide. And most interestingly, all of these measures indicate that Brazil is seen to be a nation with very corrupt public institutions. The Transparency International also released a Bribe Payers Index (BPI) which asks business individuals about their perception of the likelihood that foreign companies from various nations will offer bribes. The score from a 2008 BPI results shows that Brazil had a score of 7.7 on a scale of 0-10. This score indicates that Brazil was the second most corrupt country discussed in the report. The International Country Risk Guide (ICRG) report compiled by PRS group indicated that Brazil is perceived to have a serious problem with corruption in its public institution. And from these small incidences of corruption of in these public institutions rose the grand scandal the Patrobas scandal. Finally, from the World Banks Governance Indicators Database we notice that Brazil is in the fifty-ninth percentile for its perception of the effectiveness of anti-corruption measures.

Preliminary discussion and results

The Brazilian Clean Company Act is not specifically tied to foreign officials or foreign business; it includes public businesses and the Brazilian officials. The Comparison with FCPA penalties is enough, particularly given the same kind of misconduct is described that is the bribes offered to obtain or retain business. According to Maines (2013), the enforcement of FCPA is divided between the Security Exchange Commission (SEC) and the Department of Justice (DOJ). DOJ is responsible for investigation and prosecution of criminal charges while SEC has a civil enforcement authority limited to issuers as well as their directors, officers, agents, employees, and stockholders acting on their behalf. Comparing the FCPA and the Brazilian Clean Company Act to the OECD convention, you will realize that Brazilian Framework is mostly by the international convention than the FCPA and most significantly it is wide enough to make the ideology of taking bribes and making fraud not profitable. In that aspect, the FCPA has one more important provision that is not found in the Brazilian act that is the record and bookkeeping provisions. In fact, the book-keeping provision in the FCPA seems to be more important to the US framework since it has stiffer penalties compared to the penalties of the anti-bribery provisions. Another difference between these two frameworks is that: The Brazilian framework encourages the organizations to make a voluntary disclosure of illegal activities occurring in their operations, this way these companies will receive a 10 percent reduction of the fine. On the other hand, the US framework charges fines of up to 25 million dollars per violation in the case of record keeping. This exerts a huge pressure on organizations to keep track of their registers, particularly the book- keeping provisions. Finally, the Brazilian Clean Company Act has some transparent methodologies of fine calculation and most importantly this new legislation is by international standards while the FCPA has proven to have an efficient provision of record-keeping with extremely harsh penalties (Maines, 2013).

Work plan including timetable

For the next three months, I will be collecting data about the number of investments that were closed in Brazil during the initial implementation of the Clean Company Act and at the same time the number of investments that were initialized by the US companies during the initial implementation of the FCPA act. Analysis of these data will help me determine the influence this respective laws had on the perception of different investors.

Months Actions

1-3 Collection of data

4-6 Analysis of the collected data

6-9 Presentation of the analyzed data

Implications of the research

This paper will use the explanatory research to identify, compare and report the differences in the US and the Brazilian regulations on the treatment of sanctions and how they contribute to corruption. The results will then be used to identify the relationships between these laws and corruption. Jurisprudence cases involving Patrobas and Braskem will also be studied.

 

References

Davis, K. E. (2012). The Prospects for Anticorruption Law in Middle-Income Countries. Law an...

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